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  • Writer's picturePineyro Capital Group #420112

Unpacking the NAR Settlement: A Brief Overview

The National Association of REALTORS® (NAR) announced a proposed settlement agreement to end litigation over home seller claims related to broker commissions, which includes a release of liability for over a million NAR members and various other parties, requires MLS practice changes, and involves NAR paying $418 million, while continuing to deny wrongdoing.

NAR Lawsuit explained for REALTORS®: Quick summary of the NAR Settlement

In this legal case, the plaintiffs took action against the cooperative compensation system they said was prevalent in the United States. The recent verdict favored the plaintiffs, ruling against the National Association of Realtors (NAR).

The jury's decision stated that NAR's cooperative compensation system was a form of collusion, resulting in artificially inflated commission rates. The plaintiff's attorney has repeatedly pointed out that in other countries, commissions are as low as 2-3%, contrasting sharply with the 5-6% charged to the public in the US.  

What is the case about?

The core issue is whether buyer agent commissions have remained artificially high because of rules in place requiring home sellers to offer compensation to the buyer-broker.

Who is involved? The NAR Lawsuit battle involves two main parties.

On one side, we have the plaintiffs, a group of Missouri homeowners represented by individuals such as Rhonda Burnett, Jerod Breit, Jeremy Keel, Hollee Ellis, and Frances Harvey. These homeowners are the ones who have brought the lawsuit forward, and they are essentially challenging certain practices in the real estate industry.

On the other side, we have the defendants. Which include prominent entities in the real estate world: the National Association of Realtors (NAR), Keller Williams, and HomeServices of America. Originally, RE/MAX and Anywhere Real Estate were also named as defendants, but they have since settled by agreeing to pay a combined total of $138.5 million in damages and making changes to how they handle compensation for buyer agents.

Stephen Bough, a U.S. District Court Judge who has served in the Western District of Missouri since December 2014, presided over the legal proceedings. This judge will play a crucial role in overseeing the case and ultimately making a decision based on the evidence presented. 

Key Points Regarding the NAR Lawsuit for Realtors: A Comprehensive Insight

1. State Court Ruling:

It's crucial to remember that the recent ruling pertains specifically to the state of Missouri and will be subject to appeal. NAR has expressed its intent to appeal, and the outcome remains uncertain. Proponents argue that our cooperative commission system maximizes exposure for listings and contributes to higher sale prices. Additionally, commissions are routinely shared, resulting in a division of the 5-6% into 2-3%, aligning with practices in other countries.

2. Potential Supreme Court Appeal:

If the case undergoes further appeal, it could eventually reach the Supreme Court.

3. Time for Resolution:

It's essential to recognize that the legal process will take time, and NAR is prepared for a protracted battle. Some question the plaintiff's attorney and suggest that the jury's decision might have been influenced by confusion.

4. Anticipating Different Outcomes:

As the case progresses and involves legal professionals well-versed in antitrust matters, such as appellate court justices and Supreme Court justices, we may witness varying outcomes.

5. Protecting Yourself:

Consider employing Buyer Agency Agreements to safeguard your interests. NAR has emphasized the importance of these agreements. Overcome any hesitation to use them, as fear can lead to legal disputes. Be transparent about your compensation and agency relationship with clients. Clearly explain what you expect and the fees involved. Improved communication can help prevent issues related to commissions.

6. Promoting Transparency:

To address commission confusion, we may see increased disclosure requirements for every real estate transaction in the U.S., outlining how commissions are distributed. Alternatively, commissions paid to listing and buyer agents may become publicly disclosed for each listing, enhancing transparency in the industry.

7. Don't Succumb to Headline Hype:

Keep in mind that media coverage tends to magnify events like this. The current ruling is only from a lower court, and the legal process is ongoing. Stay focused on your business, on your sphere and farm, and on keeping your balance. Realtors are some of the most resilient and adaptable professionals in the world. We will be right here every step of the way to help you navigate as listing agents and buyers’ agents to ensure you have everything you need. 


NAR Lawsuit Settlement Information


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