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Realtor lawsuit will lower commission fees
A landmark deal will dramatically reduce the cost of buying or selling a home, essentially slashing a realtor's standard commission. FOX 5 NY's Linda Schmidt looks at how this will change the real estate market.
NEW YORK - The National Association of Realtors has agreed to pay $418M to settle a lawsuit and eliminate the customary 6% commission that sellers have to pay to their brokers.
Instead, sellers and buyers will now be able to negotiate commissions.
"There's going to be increased competition, and it's basically shining a light on something that people thought they had no control over," said Uri Man, a real estate developer and licensed broker.
According to Man, the new structure will save money for both sellers and buyers.
"The average home price in the United States is in the range of $420,000. That means the commission is in the range of $25,000 today," Man said. "That's going to be reduced by anywhere from $12,000 to $18,000. So, that just made buying a home in the United States more affordable."
"Fees have been a bit rigid, and so it is about time we see more price competition on the fee side," said Dr. Norm Miller, an Emeritus Professor of Real Estate at the University of San Diego.
The new rules are scheduled to take effect in July, but before that happens, the settlement must be approved by a court.