Judge approves $418 million damages for home sellers overcharged by Realtors - will YOU receive a payout?

A $418 million settlement that will change the way Americans buy and sell homes forever has received preliminary approval from a federal judge.

US district judge Stephen R. Bough this week signed off an agreement involving the National Association of Realtors (NAR) after it was accused of artificially raising commissions by enabling brokers to collude on sales.

The NAR was sued in a landmark case by home sellers in Missouri which paved the way for multiple copycat lawsuits.

Homeowners who sold properties in the last seven years may now qualify for a payout - though they must submit a claim by May 9, 2025. Eligible sellers must have listed the home on a multiple listing service (MLS) and paid a commission to a real estate brokerage.

While Judge Bough has signed off the deal, it is still subject to final court approval on November 26, according to Reuters. This is largely seen as a formality.

Michael Ketchmark (pictured) was the lead attorney in the class-action lawsuit brought against the NAR in Missouri

Agents in the US charge home sellers an average commission of between 5 and 6 percent of the sale price of their property. That is more than twice the average fees charged in the UK, according to investment bank Keefe, Bruyette & Woods

The NAR - which has 1.5 million members - will begin implementing sweeping rule changes to the way their agents operate from September 16. 

The crux of the case centered on the commissions NAR agents earnt on home sales.

Agents in the US charge home sellers an average commission of between 5 and 6 percent of the sale price of their property - more than twice the average fees charged in the UK, for example. 

It is paid entirely by the seller but, in accordance with standards specified by the NAR, is split down the middle between the two brokers.

The NAR is the largest trade association in the US and only its fee-paying members are allowed to call themselves 'Realtors'. They are also the only people with access to its database of properties available for sale.

Those databases are referred to as 'multiple listing services' or MLSs and require the seller's agent to list the amount of commission their client is paying. In theory, the system enables agents to 'steer' buyers to houses on which the commission is higher so they can profit more from a sale.

According to a survey by consulting firm 1000watt, more than 76 percent of 640 real estate agents in the US said buyers' agents would be more likely to show a property if they knew the seller was paying higher commission.

In turn the seller's agent can tell clients that if they don't offer up enough commission, buyers won't see their house.

But under the new ruling, agents will be essentially blocked from making those commission offers. 

The buyer's agent can see which properties have the best sales commission and 'steer' buyers to them. More than 76 percent of real estate agents said buyer's agents would be more likely to show a property if the seller was offering a higher commission

Realtor Desirae Wyckoff previously told DailyMail.com last year: 'I feel like realtors are getting an unfair reputation from this.

NAR spokesman Mantill Williams said of the preliminary approval: 'It has always been NAR’s goal to resolve this litigation in a way that preserves consumer choice and protects our members to the greatest extent possible.

'There are strong grounds for the court to approve this settlement because it is in the best interests of all parties and class members.'

The decision was welcomed by attorney Michael Ketchmark who represented sellers in the suit.

He said: 'This is the first step in bringing about the long-awaited change. Later this summer, NAR will begin changing the way that homes are bought and sold in our country and this will eventually lead to billions of dollars and savings for homeowners.'

Realtors have previously expressed concern over how the litigation will impact their earnings. 

Desirae Wyckoff told DailyMail.com last year: 'I feel like realtors are getting an unfair reputation from this. 

'I could see a lot of these people hanging up their license.'

The Justice Department has also reopened its investigation into the NAR to scrutinize broker commissions and how real estate listings are marketed.