End of realtor commission model poses biggest 'jolt' in housing in 100 years

The National Association of REALTORS has reached a legal agreement where it will end the 6% commission that is routine in home sales.

In the settlement with homeowners, the association will pay $418 million in damages and end litigation on the matter.

Experts say that Americans pay $100 billion a year in real-estate commissions.

Andrew Lokenauth, who writes a finance newsletter, said on X that the deal would end the standard 6% commission and lead to more competition among realtors. He said it could lead to a 30% reduction in commission.

“With commissions potentially dropping 30%, that could put tens of billions of dollars back in the pockets of American home buyers and sellers every year,” Lokenauth said on X. “A seller of a $500,000 home could save $9,000 or more on a 3% commission instead of 6%. This is expected to drive down housing costs and significantly impact the U.S. housing market.”

“Housing experts predict that this could trigger one of the most significant jolts in the U.S. housing market in 100 years,” Lokenauth said.

A judge has to sign off on the settlement.

“NAR has worked hard for years to resolve this litigation in a manner 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. This settlement achieves both of those goals,” said Nykia Wright, Interim CEO of NAR, in a media release.