Settlement could change how New Mexicans buy and sell homes

Mar. 16—A nationwide settlement ending litigation brought on behalf of home sellers related to broker commissions could mean homes will be cheaper to purchase.

The expected ruling, which would go into effect in July, makes it easier for home buyers to negotiate fees with Realtors or skip working with agents. The upside for buyers would mean driving down commission rates.

The end result could lead to hundreds of thousands of Realtors being pushed out of the industry, according to real-estate industry analysts.

Under the terms of the agreement, the National Association of Realtors (NAR) announced it would pay $418 million over approximately four years. In addition to financial payments, NAR has agreed to put in place a new Multiple Listing Services (MLS) rule prohibiting offers of broker compensation on the MLS. Offers of compensation could continue to be an option consumers can pursue off MLS through negotiation and consultation with real estate professionals.

A leader of an Albuquerque Realtor association said the settlement, if approved, marks a transformative moment for the industry.

"Throughout its history, NAR has evolved to adapt to the ever-changing real estate landscape," said Morgan Cannaday, president of the Greater Albuquerque Association of Realtors Board of Directors. "This settlement represents a pivotal moment for the association and the real estate industry. And I have full confidence in NAR's ability to evolve once more to do what is needed to lead its Realtors for years to come."

Ryan Tomasello, a real-estate industry analyst with Keefe, Bruyette & Woods, told the Wall Street Journal the settlement could eventually reduce the $100 billion that Americans pay annually in real estate commissions by 30%, which could drive Realtors out of the industry.

NAR has agreed to enact a rule that would require MLS participants working with buyers to enter into written agreements with their buyers.

"Using buyer broker agreements will mandate what we have long encouraged our members to do — enter into written agreements that help consumers understand exactly what services and value will be provided and for how much," Cannaday added.

The settlement, which is subject to court approval, made clear that NAR continues to deny any wrongdoing in connection with the Multiple Listing Service cooperative compensation model rule, according to Cannaday.

"Two critical achievements of this resolution are the release of most NAR members and many industry stakeholders from liability in these matters and the fact that cooperative compensation remains a choice for consumers when buying or selling a home," she said.