NAR agrees to settle commission lawsuits for $418M



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NAR would agree not to create rules that allow listing agents to set compensation for buyer brokers as part of the settlement. HomeServices of America not included in the deal.

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The National Association of Realtors has agreed to settle the lawsuits that have upended the real estate industry, promising to pay plaintiffs and make sweeping changes to the way homes in the U.S. are bought and sold.

NAR will pay $418 million in damages over the next four years and agreed to several reforms as part of the settlement in the Sitzer | Burnett and other lawsuits that have piled up across the country, the group said Friday.

NAR would agree not to create rules that allow listing agents to set compensation for buyer brokers. Offers of compensation wouldn’t be displayed in the multiple listing services.

“We have always wanted to reduce the significant strain on our members and provide a path forward for the industry,” NAR President Kevin Sears said in an email to members Friday morning. “That’s why today we announced a proposed settlement agreement that would end litigation of claims brought on behalf of home sellers related to broker commissions. The settlement is subject to court approval.”

The agreement would settle claims against NAR, over 1 million members, all state and local Realtor organizations, all multiple listing services owned by Realtor associations and all brokerages with an NAR member as principal that had a residential transaction volume in 2022 of $2 billion or less, according to the terms shared by NAR.

It also doesn’t include MLSs that aren’t wholly owned by Realtor organizations, but it does create a mechanism for coverage if they agree to change practices and pay a per-subscriber fee to the settlement fund.

NAR has agreed to create a new rule prohibiting offers of compensation from appearing in the MLS, which will take effect in mid-July.

“Offers of compensation could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals,” NAR said. “Sellers can offer buyer concessions on an MLS (for example — concessions for buyer closing costs).”

MLS participants will be required to work with buyers to enter into written buyer representation agreements before touring homes.

Buyer brokers would still be allowed to negotiate offers of compensation outside the MLSs, but that communication can’t happen through the MLS, NAR said.

Brokers could still negotiate pay via fixed-fee commissions paid directly by consumers, concessions from sellers or a portion of the listing broker’s compensation.

“The settlement expressly provides that sellers may communicate seller concessions — such as buyer closing costs — via the MLS provided that such concessions are not conditioned on the use of or payment to a buyer broker,” NAR said.

NAR had defended the rules and requirements it helped create and enforce for decades. It had vowed to appeal a $5.3 billion verdict until reaching a settlement on Friday.

NAR said it had contemplated filing for bankruptcy as a way to resolve the existential crisis created by the Sitzer verdict and other lawsuits.

But it said it decided not to go down that path, which would have left its 1.5 million members at risk.

“Chapter 11 would also have paused the litigation against NAR but not the other defendants in the cooperative compensation cases,” the group said.

Still, many in the industry expected the group to reach a settlement with a growing list of plaintiffs who had accused the trade organization of overseeing an illegal conspiracy to inflate commissions and keep them high.

The proposed settlement, which would need to be approved in court, could bring to an end the wave of lawsuits that have been filed in recent months after NAR lost a landmark class action case in Missouri.

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The proposal will likely be scrutinized by the U.S. Department of Justice, which showed it wouldn’t accept settlements it felt didn’t led to enough reform for the industry.

The DOJ called for rules that require buyers to negotiate broker compensation on their own. NAR has apparently agreed to take steps in that direction, according to the report.

If commissions are decoupled, researchers believe the competition will drive real estate commissions down.

NAR didn’t respond to a request for comment, or to confirm the Times’ reporting. Michael Ketchmark, the lead counsel for the plaintiffs in the Sitzer | Burnett lawsuit, and Ethan Glass, lead counsel for NAR, also didn’t immediately respond to a request for comment.

This story will be updated.

Email Taylor Anderson





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