Breaking Down the Impact: How NAR’s Settlement Impacts You as a Consumer and Broker

Understanding the Implications of the National Association of Realtors’ Settlement for Consumers and Brokers In November 2020, the National Association of Realtors (NAR) agreed to a settlement in response to an antitrust lawsuit. The litigation, brought forth by the Department of Justice (DOJ), accused the NAR of implementing rules that were unfair to both home sellers and real estate brokers. Deeming the regulations as anti-competitive, the lawsuit marked a significant milestone in real estate industry dynamics. Bearing significant implications, it is important to understand how individuals and professionals in real estate – consumers and brokers – are impacted. Impacts on Consumers Primarily, the settlement implies several changes to consumers’ experiences when it comes to buying houses. Firstly, the settlement eliminates the rule that previously stated buyers’ brokers couldn’t make public the commission rates offered by sellers’ brokers. This means home buyers will now have increased visibility into real estate commission rates, ultimately encouraging transparency and competition among brokers. Secondly, the settlement agreement prohibits rules that misled consumers about the costs they bear. Earlier, some buyers were led to believe that they didn’t pay for their agents’ commission – which was false. Post-settlement, all misleading practices would have to be eliminated, thus allowing consumers to be accurately informed about all costs involved in real estate transactions. Lastly, consumers will now have a fairer relationship with brokers. Previously, some brokers would filter out listings from their websites that offered lower commissions. With the rule now revised, all property listings, regardless of their commission rates, must be visible on the broker’s website, thereby granting home buyers a broader and unbiased choice of listings. Impacts on Brokers The NAR settlement will also change the landscape for brokers doing business in the real estate sector. Prior to the settlement, some brokers had to comply with certain policies that prevented them from promoting their cost-saving business models to consumers. However, with the new policies in place, brokers can advertise the savings they offer to consumers, fostering competition that could bring commission rates down over time. Moreover, the settlement opens doors for real estate brokers to introduce new models of business. Brokerage firms that aim to offer more competitive commission structures – for example, by offering rebates or discounts – will be more accepted post-settlement. Additionally, NAR agreed to stop allowing brokers to represent both the buyer and the seller in the same transaction without clear consent – a practice known as dual agency. This new rule puts brokers