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The issues that were brought to light through these lawsuits focused on the exploits of inflating their agent service commissions as well as hiding potentially lower commissions from the buyers. Buyers were previously unable to negotiate agent commission, something that has been historically practiced since the 1990's.
Prior to the lawsuit, a 5 to 6% "cooperative compensation" commission would've been paid by the seller to the agent working with both the seller and buyer of a certain property, which can translate to tens of thousands of additional dollars needed to be payed when forgoing property sales.
With this settlement, it is predicted that, with the individuals being able to negotiate lower commissions with agents, a decrease in house prices as a result, but with the case being settled very recently, the future implications are still unknown.
https://www.vox.com/money/24106230/nar-realtors-settlement-real-estate-house-prices
2 comments:
I'm happy to hear that this association is fighting to lower housing costs. Affordable housing is so important for social mobility and alleviating poverty. I also support providing relief from commission costs to lower these prices. From your description, it seems these costs are rent-seeking, as we learned about in microeconomics. The commission doesn't seem to add any true value to the housing, and yet it drives up costs. Limiting these costs to promote affordable housing seems like a beneficial change.
I agree with what Carole said, I think we will see a lot of positives come out of the settlement such as again lower house prices. It seems like the NAR had a monopoly on the process of selling houses as "Almost 9 in 10 home sales are handled by real estate agents affiliated with NAR". In fact, the lawsuits argued that the structure harms competition and leads to higher prices, sounds familiar to monopolies. This will have an impact on house Realtors though as they get roughly 6% of the house sale but I definitely see more good coming out of the settlement than bad.
https://www.cbsnews.com/news/realtor-commission-settlement-nar-national-association-realtors/
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