Breaking Down the NAR Settlement

The real estate industry has experienced a period of disruption and Higgerson & Company wants you to be aware of recent developments that are sure to have long term consequences on the way homes are bought and sold.

On Friday, the National Association of Realtors agreed to settle a wave of class action lawsuits that challenged the long-established practice of the seller paying the buyer-side commission out of the proceeds of a home sale, a standard that has been in place since the inception of buyer agency in the 1990’s. Home seller-plaintiffs in various commission lawsuits alleged the status quo was a conspiracy to inflate commissions. Juries agreed and awarded damages in the first settlement that exceeded an astonishing $5.3 billion.

Massive corporate real estate companies such as Anywhere Brands – owner of the Coldwell Banker, Sotheby’s International Realty, and CENTURY 21 franchises – also faced suits and settled prior to trial. Only Berkshire Hathaway Home Services remains as the sole corporate defendant.

In addition to damages, the ruling includes rules changes that affect the current commission landscape for buyers, sellers, brokers, and agents. If the settlement is approved, these changes will go into effect as early as July 2024, providing for a rapid move to a model where the seller and the buyer independently set the compensation they wish to pay to their respective agents. Sellers would no longer be required to pay the buyers’ agents, and buyer agents would be free to set their own commission rates.

If commissions are decoupled researchers believe the competition will drive real estate commissions down. Buyers and sellers now have new choices to make on who pays for what. The consumer has never been in more need of a trusted guide.

At Higgerson & Company we are largely unperturbed by these recent developments as our unique and independent position in the market makes us extremely agile, responsive, and highly effective. Being a proudly independent local small business and free of a top-heavy corporate structure, we can set our fees based upon the property and the scope of the project. With prospective clients we talk about the value we add and the enormous contribution we bring to the complicated process of selling a home.

There will always be agents who will work for less than we do. But our commitment to unsurpassed customer service, our knowledge of local real estate, our pursuit of the best in visual marketing and technology, and over 25 years of local experience sets us apart. We have an enduring reputation in our local communities for an exceptional level of service and professionalism.

We invite your questions and look forward to an ongoing dialogue as the industry adapts to the changes that are sure to lie ahead in how our clients search for and sell their homes.