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  • Writer's pictureREWI

NAR Settlement and the Upcoming Real Estate Disruption

Updated: Apr 17

The National Association of Realtors (NAR) reached a settlement agreement to resolve a series of lawsuits against the organization. The key issue in the lawsuits was the practice of “tying,” whereby NAR members require that commissions paid to buyers’ agents be set by the seller’s agent when a home is listed. These NAR practices dominate the realty market in the United States, as close to 90% of all homes sold are listed through a Multiple Listing Service (MLS). The settlement agreement could upend the entire realty market and meaningfully change how Americans buy and sell homes. Given the size of the market—each year American consumers pay around $100 billion in real estate commissions—the agreement has also the potential to impact the U.S. economy more broadly.

On March 15, 2024, NAR offered a settlement to resolve several lawsuits claiming that NAR’s policies drove up commission prices and harmed home sellers. The settlement comes in the wake of the October 2023 verdict to the Sitzer-Burnett case, which directed NAR and some of the nation’s largest real estate brokerages to pay $1.8 billion in damages. The verdict accompanies a series of similar lawsuits with targets that included NAR, regional realtor associations, real estate brokerages, and listing services. The agreement would protect NAR and most of its members from these lawsuits and reduce the damages they must pay.

If the agreement is approved, NAR will pay $418 million in damages. More importantly, tied compensation for sellers’ and buyers’ agents will no longer occur on MLSs. Furthermore, buyers and their agents will have to explicitly agree about what services agents will provide, online MLS databases will no longer display commission rates, and NAR will also be required to permit real estate agents to be paid for their work without subscribing to an MLS.

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