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Realtor group settles with DOJ in effort to make broker fees clearer to home buyers

November 20, 2020. Summarized by summa-bot.

As part of a settlement with the Department of Justice, the National Association of Realtors has agreed to change several of its policies in order to increase competition among brokers and make agent fees clearer to home buyers.

(CNN)As part of a settlement with the Department of Justice, the National Association of Realtors has agreed to change several of its policies in order to increase competition among brokers and make agent fees clearer to home buyers.

These practices, according to the complaint, include concealing buyer's broker commissions, allowing them to misrepresent their services as "free," enabling them to filter listings based on the commission offered and limiting access to homes for sale solely to brokers who work for a NAR-affiliated listing service.

Those changes -- including more disclosure around buyer's broker fees -- are expected to increase competition among brokers and lower the fees paid by home buyers.

If approved, the Justice Department said, the settlement would enhance competition in the real estate market, resulting in more choice and better service for consumers, as well as boost innovation in the industry.

"Home buyers and sellers should be aware of all the broker fees they are paying. "

Delrahim said the settlement prevents traditional brokers from blocking competition, including by internet-based methods of home buying and selling, by providing greater transparency to consumers about the fees they pay to brokers.

"This will increase price competition among brokers and lead to better quality of services for American home buyers and sellers," he said.

A home buyer does not pay up front for the services of seeing homes and purchasing one, and currently may be told that service is "free", but that is likely to change.

"Buyer's agents are going to have to start telling their buyers 'This commission doesn't pay me enough money for the services I offer, let's have an upfront conversation about what I charge,'" said Glenn Kelman, chief executive of Redfin.

Kelman said Redfin aims to help buyers save money using a model in which buyers receive part of the agent's commission.

"Even very savvy, affluent consumers do not understand how a buyer's agent is paid," he said.

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