A federal judge has approved the agreement between the National Association of Realtors (NAR) and a group of plaintiffs who sued the trade organization over its commission rules, paving the way for fundamental changes to the way real estate professionals are paid.
On Tuesday, Judge Stephen R. Bough, who presided over the initial case that eventually led to a historic settlement from the NAR, deemed the changes proposed within the settlement agreement “fair, reasonable and adequate.” Under the terms of the agreement, the NAR will put $418 million into a settlement fund over four years, among other concessions.
The settlement is still technically subject to final court approval, with Bough scheduling a November hearing for final approval. The plaintiffs — a group of home sellers from various states who contended that the NAR’s longstanding commission structure paved the way for them to get charged disproportionately large fees — requested that hearing to be set on Nov. 26, although that hearing is likely a mere formality at this point.
The judge’s approval essentially greenlights the NAR’s implementation of far-reaching rule changes, including the elimination of the aforementioned commission. Before the suit, the NAR required a home seller to agree to a commission rate, which is nominally negotiable but has long been typically 6%, before the seller’s property is listed on the Multiple Listing Service (MLS). But now, prospective homebuyers will theoretically be free to shop around on commission fees before they decide to purchase a property.
The changes spurred by the settlement are set to be implemented by July and are expected to go into effect nationwide by mid-September.
