William: Buying and selling a home could get quite a bit cheaper. That is because the national association of realtors has agreed to rewrite a number of the rules that regulate America's housing industry. John yang unpacks the details. John: Typically a person pays a commission of five or 6% of the purchase price, but for federal judges -- approves a proposed settlement, that will change. The national association of realtors has agreed to abandon its rules about how commissions are set, advertised, and paid. A New York Times real estate reporter's investigation led to the resignation of its president. Debra, let's start with this question of the commissions. What is going to be the effect on someone who sells their home and someone who buys a home? >> We definitely know what the effect is going to be on someone who sells their home. Commission will go down. You were responsible for paying commissions to your agent, the seller's agent, and that once put the commission with the buyers agent. That was between 5% or 6%. That settlement is going to go down. Sellers will have more money to go out and buy their next house. For buyers, the onus for paying will be on them and that is where we are's -- are expecting the settlement to hurt the most. John: Who brought this settlement and why? >> It was brought by a handful of home sellers and maggiore -- in Missouri. They are really average people. They also the home in the past two years and when they sold at home, they did not feel they were told are able to negotiate the commissions they paid to real estate agents and they felt that the rules set by nar made it that they were not able to negotiate and there might be antitrust violations. They contacted a lawyer and brought a class-action suit into the great surprise of the housing industry, they won and now it is settled. John: These homeowners did something that the justice department is trying to do and hasn't been able to do. >> These homeowners were basically able to make a change and many small upstate real estate technology companies were not able to do so. For many years, people have been trying to break this anticompetitive rule that the lawsuits alleged. The reason the home sellers believe they were successful is because in a court of law, they were a bunch of average Americans talking to a jury also comprised of average Americans and in that way they had a leg up in these arguments and they were successful. John: I want to go back to the homebuyers. They were not part of this lawsuit. >> That's correct. It was brought only by home sellers. John: I've read some real estate experts saying that there may be unintended consequences for first-time buyers. >> You are absolutely right. For first-time homebuyers, it is often difficult to scrape together the money you need to get the down payment to buy that first home, especially now when the housing market is so tight and expensive. In the past, one thing homebuyers did not have to worry about was paying their real estate agents. As this settlement has its effects, one thing we might see is that homebuyers file also have to pay my real estate agent on top of everything. But most likely, we will see new models for compensation evolve out of this that didn't exist before, where the way we pay real estate agents on the buy side might be completely different. It could be a flat fee, by the hour. There are all sorts of ways to pay that never existed before because there wasn't competition in the market. John: This is going to change the way people buy and sell homes. What about for the industry? This is breaking the trade group's powers in a way. What is the effect going to be? >> For the national association of realtors, they have had extreme power and dominance for more than 100 years. Pretty much no one has been able to break them. Now, they stand to lose a lot of that power, namely because one of the primary regions -- reasons agents felt they had to join was to have access to mls's, multiple listing services where homes are bought and stalled. Nar subgroups control those databases. The settlement affects the rules about listing homes on these databases. Agents are now saying, maybe we won't pay dues to nar or B members and they stand to lose two thirds of their members by some estimates. John: They are also going to lose, the industry as a whole if the nar's weekend, it seems to lose a voice in Washington and lobbying. They >> Are America's most dominant political action committee. They give more money to candidates who are pro their initiatives and spend more money fighting candidates against their initiatives than any other group. They have a hugely dominant arm in Washington. That is one of the reasons it took so long for anyone to be successful in challenging them. If membership goes down, the pool of people who donate to them goes down, so I think it is a very likely scenario that in the future their dominance in Washington is going to go down, but it's also going to open the door for other groups to enter and have dominance in their own way. John: Thank you very much. >> Thank you.
