New rules from National Association of Realtors settlement set to take effect

Rule changes from a landmark $418 million settlement by the National Association of Realtors to compensate home sellers will go into effect Saturday.

For years, people selling their homes would typically pay a commission of around 6% that would be split between the buyer's agent and their own. The National Association of Realtors agreed in March as part of a class-action case to implement new rules that would see this change.

The organization is no longer requiring a broker advertising a home on the Multiple Listing Service (MLS) to offer upfront compensation to a buyer's agent.

North Carolina State University economics professor Mike Walden says the settlement is likely the biggest change in the real estate industry he's seen in a lifetime.

"I think how the average homebuyers benefit is they're going to save some money when they go out and buy a house, not necessarily on the price of the house, but on the fees that typically go along with buying a house," he says.

Last year, a federal jury found real estate agents conspired to keep commissions high. The National Association of Realtors says on its website that the settlement makes clear it continues to deny any wrongdoing with the former model.

Walden says he believes the new rules will now force more competition, which could drive costs down.

"Real estate agents are going to have to compete for your business, just like pretty much everyone else does when you're shopping for a product or you're shopping for a service," Walden says.

He says another plus for buyers is that the settlement comes as inflation is easing.

"We've got two things I think that's going to help them buy that house," Walden says. "One, more competition in the buying process, which is going to lead to lower fees for home buyers. And then maybe in a month, we're going to see those mortgage rates down a little bit."

Walden says this could lead to a better playing field for purchasing a home in the latter part of 2024.