A landmark settlement governing how homes are bought and sold in the U.S. is scheduled to take effect Aug. 17, possibly upending the decades-old home sales process.
In the past, most home sellers paid both buyer and seller commissions after closing a sale. Most buyers paid their agents nothing.
Under the settlement, the traditional compensation system for agents and brokers could change, and it’s possible buyers will have to pay commissions on their own.
At a minimum, all homebuyers must sign a contract with their agent before that agent can start showing them homes.
In addition, agents for sellers must stop posting buyer commission offers in the real estate listing database, or MLS. Offers of compensation can continue, but can’t be publicized in the Realtor-run listing services.
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In recent years, home sellers in Illinois, Massachusetts and Missouri filed class-action lawsuits against the National Association of Realtors and several top real estate chains, arguing that the traditional compensation system keeps real estate commissions artificially high.
Following a federal trial in Kansas City, a jury issued a $1.8 billion verdict against NAR and its co-defendants, leading to an out-of-court settlement in March.
As part of that settlement, NAR agreed to pay $418 million over four years to home sellers and to plaintiffs attorneys. In addition, they agreed to practice changes that may — or may not — result in U.S. homebuyers paying their own commissions directly to their agents.
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