The National Association of Realtors (NAR) settled a lawsuit in which a federal jury ruled the organization had conspired to artificially inflate commissions. The group agreed to pay $418 million in damages and amend several rules around commissions.
KBW Managing Director Ryan Tomasello joins Yahoo Finance to discuss the settlement and how it may affect other players in the housing market.
Tomasello explains that consumers will have the most to benefit from the settlement: "We think these changing enacted in the settlement, if it goes through, are gonna stand to reshape the housing market in the greatest fashion we've seen in over 50 years. Historically, consumers have lacked a lot of transparency around the process of how commissions are set and paid, particularly home buyers. We think that these changes ultimately bring a lot more knowledge to home buyers in their ability to negotiate and sign off on those commissions. At the end of the day, hopefully that reduces commissions in aggregate by as much as 30% or more, we've estimated."
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Editor's note: This article was written by Nicholas Jacobino
Video Transcript
BRAD SMITH: The National Association of Realtors settled landmark lawsuits, agreeing to pay $418 million in damages and amend several rules around commissions. The implications could be widespread not only for home buyers but also for the number of companies and businesses in the sector.
Let's bring in Ryan Tomasello who is the managing director and real estate technology analyst at KBW with Stifel company to discuss more here. Great to have you here with us. Who is the biggest beneficiary as the result of this settlement?
RYAN TOMASELLO: Thankfully, consumers, we think that these changes enacted in the settlement, if it goes through, are going to stand to reshape the housing market in the greatest fashion we've seen in over 50 years. Historically, consumers have lacked a lot of transparency around the process of how commissions are set and paid, particularly home-buyers. And we think that these changes ultimately bring a lot more knowledge to homebuyers in their ability to negotiate and sign off on those commissions. And then at the end of the day, hopefully, that reduces commissions in aggregate by as much as 30% or more, we've estimated.
SEANA SMITH: Ryan, to what extent is this going to reshape the housing market? And I ask that because we were talking to Jim Tobin, he was NAHB CEO earlier in the hour. He was talking about the impact that he sees, at least, it having for homebuilders here in the longer term. How do you see that ultimately potentially boosting activity here over the next several months or once it goes into effect in the summer?