Realtor settlement on commission-fixing could create seismic changes in how Americans buy homes | CNN Business
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The 6% commission, a standard in home purchase transactions, is no more.

The 6% commission, a standard in home purchase transactions, is no more.

In a sweeping move expected to reduce the cost of buying and selling a home, the National Association of Realtors announced Friday a settlement with groups of homesellers of landmark antitrust lawsuits by agreeing to pay $418 million in damages and eliminating rules on commissions.

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In November, a federal jury in Missouri found the NAR and two brokerages liable for $1.8 billion in damages for conspiring to keep agent commissions artificially high. The NAR had pledged to appeal the case, but other brokerages settled — and, eventually, so did the NAR on Friday.

NAR had required homesellers to pay a set 6% commission that is typically split evenly between the seller’s agent and the buyer’s agent. Although the NAR said the commission was negotiable and helped make housing more affordable for buyers, critics have long argued that the fees were effectively set and made housing more expensive.

  • dogslayeggs@lemmy.world
    0·
    6 months ago

    The percentage is one issue. While it takes more work to find the buyer for a $10 million home than for a $200k home, it doesn’t take $488,000 more work. But that’s an edge case, since not many of those are sold so it is more about the lack of volume requiring more money. The real issue is in places like SoCal where every house costs a million, so every commission is $60k. That’s a big chunk of change for average buyers trying to get into a starter home.

    • TropicalDingdong@lemmy.world
      0·
      6 months ago

      I mean it also just continuously inflates the price every transaction cycle because that cost gets baked into the loan.

      So you are adding substantial inflation to home prices with that 3-6% if the average home is bought and sold ~10 years.

      • tal@lemmy.todayEnglish
        0·
        6 months ago

        There’s a broader concern to the American economy in discouraging labor mobility. There is a benefit to the country’s economy in having a mobile labor force and high transaction costs discourage labor mobility.

        It’s one argument to have more people renting, as there’s a lower cost to move for renters than owners.

        A country benefits if workers are relatively able and willing to move to wherever demand for labor is. If there’s an artificial barrier to such a move, then it makes it harder to connect workers and demand for labor; a worker would be artificially-inclined to work in a less-productive job that didn’t require a move and it’s harder for an employer who has some more-productive job to manage to get workers.

        https://en.wikipedia.org/wiki/Labor_mobility

        Labor or worker mobility is the geographical and occupational movement of workers.[1] Impediments to mobility are easily divided into two distinct classes with one being personal and the other being systemic. Personal impediments include physical location, and physical and mental ability. The systemic impediments include educational opportunities as well as various laws and political contrivances and even barriers and hurdles arising from historical happenstance.

        Increasing and maintaining a high level of labor mobility allows a more efficient allocation of resources and greater productivity.

        That being said, I understand that the American labor force has historically been relatively-mobile, though I recall reading that that has fallen off in recent decades (maybe it’s due to the process of urbanization starting to wrap up in the fairly-developed US, as I’m sure that urbanization drives some labor mobility – gotta move if one is to move to a city).

      • EatATaco@lemm.eeEnglish
        0·
        6 months ago

        Can you explain this? I can’t make sense of it. If it’s a fixed rate, I don’t see how it adds to the inflation of the home value.

    • ChicoSuave@lemmy.world
      0·
      6 months ago

      The general idea of saving 15 to 20 percent for a down payment becomes a lot less worthwhile of a grind when that money all goes to realtor fees.