A"Sale Pending" sign is posted in front of a home for sale on Nov. 30, 2023, in San Anselmo, California. Real estate agents face lower commissions after a major settlement has upended the way Americans buy and sell homes.A"Sale Pending" sign is posted in front of a home for sale on Nov. 30, 2023, in San Anselmo, California. Real estate agents face lower commissions after a major settlement has upended the way Americans buy and sell homes.
For years, sellers have effectively set the commission paid to buyers' agents as a condition of using a multiple listing service — a regional roundup of homes for sale. The combined commission — shared by buyers' and sellers' agents — is typically 5% to 6%, which is higher than in most other countries.
There's also a potential conflict in having the home seller decide how much the buyer's agent is paid, since they have different objectives in negotiating a home sale.Under the settlement, commissions will be subject to more negotiation, which could lower the cost of buying and selling a home. It could also drive some real estate agents out of business. Home sellers can still offer a commission to the buyer's agent, but that will no longer be a condition of using an MLS.
As part of the settlement, the National Association of Realtors did not admit to any wrongdoing but agreed to pay $418 million over the next four years. The settlement still needs approval from a federal judge. The changes to real estate commissions are set to take effect in July.
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