Automatic broker commissions for homebuyers and sellers waived in $418 million deal

The National Association of Realtors reached a landmark settlement to eliminate real estate brokers' obligatory commissions, often amounting to 6% of the transaction price.

Homebuyers and sellers could negotiate agency fees upfront. If the $418 million legal arrangement is allowed by a federal court, consumer advocates expect real estate salespeople to leave, lowering commissions.

"For years, anti-competitive rules in the real estate industry have financially harmed millions," said Benjamin Brown, managing partner at the Cohen Milstein law firm and one of the settlement's negotiators. "This settlement bring sweeping reforms that will help countless American families."

A home seller must pay a brokerage charge to list their property on an MLS, usually 5% or 6% depending on their location. Seller's listing agent gets half of the sale fee, while buyer's agent gets the other half.

The deal will remove brokerage commissions from MLS sites and allow sellers to negotiate, among other measures. Homebuyers can negotiate costs more readily with a broker, but experts think the new system may encourage more buyers to avoid brokers.

After settlement approval, brokerage-fee adjustments would commence within months. A preliminary hearing to approve the purchase is scheduled for weeks.