Previously, the buyer’s and seller’s agents would split the commission, but now, the buyer and seller will both be responsible for paying their respective agents.

“What the settlement does is [it] enables both the buyer and the seller to negotiate with the broker upfront of what level of service they want and what their fees are going to be,” said Ted Tozer, a fellow at the Urban Institute, who specializes in housing finance. “I think, in the long run, this is very positive.”

How will the world of real estate change? 

Likely, quite a bit.

Because commission rates can’t be set up front, realtors will have to compete for business and may offer lower rates to their clients. But it could also mean bad news for part-time realtors, who have otherwise relied on that 5%–6% commission as an occasional income.

“If you’re a realtor and you only sell a couple houses a month, you’re going to have a tough time making it,” Tozer said. “You will probably have less realtors in numbers, but the ones that are doing business are probably going to be more effective at what they’re doing because they’ll have to make it a full-time job.”

What does all this mean for me, a home buyer or seller? 

Firstly, because this is a class-action lawsuit, some home sellers might be entitled to compensation. But it doesn’t include California. It only pertains to metro areas in Arizona, Colorado, Florida, Nevada, North Carolina, Ohio, Texas, Utah, Minnesota, Pennsylvania, Virginia and Washington, D.C.

That said, the proposed settlement will likely empower home buyers and sellers to negotiate the commission rate with their agents.

“What the lawsuit was all about was that the sellers felt like they should have more control,” Tozer said. “I should have the ability to have a say in what I’m paying.”