This Consumer Alert is all about the sweeping changes coming this summer in the real estate industry.  Those changes are coming after the National Association of Realtors agreed to a $418 million settlement.

That settlement completely changes the way realtor commissions are paid, and consumer advocates say it puts more of the power in the hands of buyers and sellers.  Right now, the seller pays his realtor’s commission and the seller’s realtor then splits the commission with the buyer’s realtor.

For example, let’s say you’re selling your house for $200,000.  If you agree to giving your realtor the customary 6% commission, that’s $12,000. Since the 1990s, that commission has been split with the buyer’s agent. That means your agent and the buyer’s agent would each get $6,000.

But home sellers took the National Association of Realtors to court, saying that system unfairly inflated commissions. Here’s why: If you, the seller, wanted to negotiate a lower commission with your agent, the agent for the buyer might be less inclined to show his client your house because the buyer’s agent would get a lower commission as well.

A jury agreed with those sellers.  So now agents are no longer able to advertise commissions on the multiple listing service. Agents must now also sign upfront agreements with buyers, and buyers will be responsible for the commission if the seller chooses not to pay it.

“Now the buyer will have a contract that spells out exactly what’s going to happen — what services are offered and what commission is expected by that agent,” said Jennifer Stevenson, regional vice-president for the National Association of Realtors.

Asked how she responds to home sellers who believe in a competitive market they may not need a realtor, she responded, “Well, I do hear that. Still, the most you can get for your house is to get it out in the biggest platform that you can and to shout it from the rooftop — where you’re located. what the benefits of your house are, and what the pricing is.  You do need to price that correctly for the market.”

Also, if you sold a house in the last decade, you may have money coming your way from that settlement. Click here to learn more about the settlement and filing a claim.