The National Association of Realtors (NAR) has reached an unprecedented nationwide settlement, potentially spelling the end of the long-standing 6 percent commission structure in home transactions. Under this groundbreaking agreement, the NAR, representing over 1 million realtors, has pledged to pay $418 million in damages and introduce a series of transformative reforms. The most notable change is the elimination of rules dictating commissions, marking a seismic shift away from the traditional model where sellers foot both their and the buyer’s agents’ fees, CNN reported.

This development is expected to dramatically reduce the cost of buying and selling a home.

Home sellers behind various lawsuits against the NAR and several major brokerages argued that the trade group’s rules governing homes listed for sale on its affiliated Multiple Listing Services unfairly propped up agent commissions.

The settlement arises from antitrust lawsuits alleging that the NAR and its affiliates conspired to keep agent commissions artificially high. With these suits threatening to reshape the real estate landscape, the NAR opted for a game-changing resolution. As part of the settlement, new regulations will be implemented to foster greater transparency and competition within the industry.

One significant rule change prohibits agents’ compensation from being included on centralized listing portals, detaching commissions from listings. This move aims to eliminate incentives for brokers to prioritize higher-priced properties. Additionally, requirements mandating broker subscription to multiple listing services, often NAR subsidiaries, will cease, allowing more flexibility in market exposure.

The repercussions of this settlement extend far beyond legal circles, potentially reshaping the entire homebuying and selling process. It will eliminate the need for sellers pay both their broker and a buyer’s broker, which many have blamed for driving housing prices artificially higher.

Industry analysts predict a substantial reduction in real estate commissions, with estimates ranging from 25 percent to 50 percent, significantly alleviating the financial burden on homebuyers and sellers. The average commission for realtors, hovering around $25,000 for a $417,000 home, could see a major decrease, offering relief to buyers in an increasingly competitive market.

This could also potentially help boost Black homeownership as lower fees would make the process more affordable.

Real estate fees in America are notably higher compared to other countries. For instance, in places like Israel, Singapore, and the UK, brokers typically charge between 1% to 2% for services that agents in the United States charge much more for.

The settlement is pending approval from a federal judge, with the changes to real estate commissions scheduled to come into effect in July, NPR reported.

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