Realtors settlement eliminates standard 6% commission

MINNEAPOLIS (FOX 9) - Some are calling it a seismic settlement that could upend the bedrock of the residential real estate market.

The National Association of Realtors (NAR) has agreed to pay $418 million in damages and eliminate its rules on commissions to settle several antitrust class action lawsuits.

"I think it's really an exciting development. It will lead to major changes in how real estate brokers are compensated," said attorney Marisa Katz, who represented a home seller in Minneapolis who was the first to file one of the suits.

Katz says that currently, a seller pays their real estate agent a standard 5% to 6% commission, which the agent then shares with the buyer's agent. 
Critics have said that the policy kept commissions artificially high.

Katz says now buyers will have to pay their own agents, and both buyers and sellers can negotiate lower commission fees.

"The changes that are going to be made as a result of this settlement is really how the residential real estate market should have always worked but hadn't been working," said Katz.

Greg Lawrence owns a realty company, Home Avenue, which charges a flat fee that he believes is fairer for customers.

"I think it's a historic moment for the industry. I think this is a big win for consumers, and I'm 100% in favor of it," said Lawrence.

The settlement still has to be approved by a judge and the changes would take effect in July. But Lawrence believes they will eventually bring down overall housing costs and could put thousands of dollars back in consumers’ pockets.

"That's changing the whole ballgame essentially," said Lawrence.