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March 22, 2024

How National Association of Realtors $418M settlement could affect CT

Contributed A home for sale.
By Andrew Larson

A settlement reached last week by the National Association of Realtors (NAR) over real estate agent commissions has sent shockwaves through the industry and piqued fears that buying a home could become even more expensive if broker fees become the responsibility of buyers.

In the lawsuit, NAR agreed to pay $418 million to resolve litigation brought by home sellers accusing the trade group of setting unlawful agent commissions and indirectly inflating home prices. 

The case could change how brokers charge fees, which typically range from 5% to 6% and are paid by sellers, but there is likely to be less impact on Connecticut than on other states that don’t already require the use of written buyer representation agreements.

“There is much misinformation being reported in the national media and we would like to emphasize there is absolutely no standard commission rate,” said Carl Lantz, president of CT REALTORS, the state’s largest trade association, which represents nearly 19,000 members. 

He continued, “Real estate compensation amounts are independently negotiated between real estate agents and their clients. There are many options provided in various real estate business models that continue to be options going forward, including cooperative compensation, flat fees, fees for specific services or hourly rates.”  

If the NAR settlement is approved, the major change in Connecticut, Lantz said, is that in mid-July, “it’s anticipated that cooperative compensation will no longer be able to be communicated via a multiple listing service (MLS).”

“Cooperative compensation is where a listing agent agrees to share a portion of the real estate commission being paid by the seller to the buyer agent in the transaction,” said Lantz, a West Hartford Realtor.

But consumers have the same options in Connecticut now that they will have in mid-July, he added.  

The NAR settlement mandates the use of written buyer representation agreements in states that don’t already have that requirement.

“Connecticut law has required written buyer agency agreements and a required notice for consumers about fees being negotiable for over 20 years,” Lantz said. “Those buyer agency agreements lay out the fee due from the buyer to their agent for their services.”

Court approval of the settlement could take several months.

NAR’s Interim CEO Nykia Wright said the settlement, which has taken years to negotiate, will resolve the litigation in a way 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,” Wright said. “This settlement achieves both of those goals.”
 

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