Real estate fees set to fall after settlement with US agents

Agency fees in the US could be slashed by up to almost a third, the New York Times reported over the weekend, citing economists, after a real estate trade group agreed to slash commissions to settle lawsuits against it.

The National Association of Realtors (NAR) agreed on Friday to pay $418m (£328.2m) over roughly four years to resolve all claims against the group by home sellers related to broker commissions. The agreement must still be approved by a court.

Almost nine in ten residential property sales in the USA are handled by real estate agents affiliated with NAR. The organization, the country’s largest trade association, requires vendors to determine a commission rate, typically 6%, before listing homes on its property database, known as the Multiple Listing Service, or MLS.

The lawsuits argued that the structure harms competition and leads to higher prices.

“NAR has worked hard for years to resolve this litigation in a manner that benefits our members and American consumers. It has always been our goal to preserve consumer choice and protect our members to the greatest extent possible,” NAR interim CEO Nykia Wright said in a statement Friday. “This settlement achieves both of those goals,”

Standard commission rates in the U.S. are among the highest in the world. But the landmark deal will slash realtors’ standard 6% sales fee, potentially leading to significant savings for homeowners. The group had been found liable for inflating agent compensation.

The reduction in fees could impact earnings for 1.6 million real estate agents, who could see their $100bn (£78.5bn) annual commission pool shrink by about one-third, analysts with Keefe, Bruyette & Woods wrote in a report last year about the pending litigation.



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  1. Chris Arnold

    About time. Why should the seller be forced to pay the fee of the buyer’s agent?
    It’s no good arguing that the other agent brings in buyers – if that is part of the role of the selling agent.
    Buyers and their agents have to learn to survive on their own, without the need to impose themselves on a seller. As it stood, both agents and buyer were content – the seller was the fall guy/girl.

  2. Richard Rawlings

    Although I specialise in helping estate agents increase their fees substantially, and have done in the US as well, I have always felt that 6% is unconscionably high (even though I used to charge “the standard” 7% in South Africa!)

    I know we do SO much for our clients (and much more in the UK than they do in the US, by far) but for a seller of an average US property at $418,000 (£328,000) to shell out the equivalent of over £21,000 was always outrageous.

    It is nevertheless, in a distorted kind of way, commendable that US agents were able to persuade the public to pay such sums for decades. It’s proves that the issue of “they’d never pay that” lies not with the public, but in the agent’s mind. We can certainly learn from this in our quest to raise our own, often pathetic, levels of commission to the minimum 2% good agents in the UK deserve.

    1. Mrlondon52

      I think its more complex than that. If you have 90% of the market refusing to lower fees then norms will be established very quickly.

      1. jan-byers


      2. Richard Rawlings

        Completely agree. But so many UK agents just don’t trust their own ability or have not been trained in how to defend a decent level of commission. Every industry has its cheap competitors and we cannot legally conspire for 90% to fix fees. But we can train our agents to walk tall and give them the resources/attitudes/dialogues they need to charge a reassuringly profitable level of commission with skill, confidence and authority.

      3. fluter

        Very true Mrlondon52, perhaps someone should mention this to Rightmove?

  3. jan-byers

    An agent I usedm to work with does a lot of “cash” deals
    Local guy lived in the area for 40 years knows many people from playing footbnall and cricket and local pubs
    They all get offered a VAT free fee
    Market leader in the town by a country mile


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