Real estate payouts may drop after settlement with US agents.

A resolution in a case against U.S. real estate agents could result in lowering the cost of buying and selling residential homes. The National Association of Realtors (NAR) and real estate companies have been accused of artificially inflating sales commissions in a series of lawsuits. The settlement, which includes a $418 million (£328 million) compensation payment, was announced on Friday. NAR has agreed to reduce commission and make it easier for buyers to negotiate payments, which could ultimately lead to lower home buying and selling costs.

The authorization is expected to increase competition in the US real estate market, where a 6% commission on the sale price is considered standard. With the average US home costing $417,700 (£328,000), the standard commission is just over $25,000, a cost that is often passed on to the buyer in whole or in part. In November 2023, a federal jury in Missouri ordered NAR and brokerage firms to pay $1.78 billion (£1.4 billion). Under US antitrust law, these damages could have been trebled by the judge. The case ultimately led to the settlement announced on Friday.

NAR, headquartered in Chicago, says about 1 million of its members are affected by the permit, which is subject to final court approval. The association operates a real estate database called the "multiple listing service," or MLS, and requires home sellers to offer an unchanged commission rate before their properties are listed.

Without this requirement, buyers will have more freedom to negotiate lower commission rates or flat payment rates at the time of sale. The authorization also includes other provisions that have the potential to reduce transaction costs. "NAR has worked for years to resolve this litigation in a way that is in the best interest of our members and American consumers," said NAR acting head Nikkia Wright in a statement. "Our goals have always been to preserve consumer choice and protect our members to the greatest extent possible. This authorization accomplishes both goals."

Under the terms of the authorization, which will take effect in July, NAR and real estate companies are not required to plead guilty. Robert Brown, a Chicago attorney representing buyers in two class-action lawsuits against real estate agents, called it "a big change from the previous regulations." "But whether it will actually affect prices in the real estate market remains to be seen," Mr. Brown said in an email. The authorization also does not settle other lawsuits against real estate companies or a possible federal investigation of NAR. Canada is also facing similar litigation over payments for buying and selling real estate.