The landmark settlement in the Burnett (Sitzer) v. National Association of Realtors (NAR) class action lawsuit has officially received final approval from U.S. District Judge Stephen R. Bough on November 27, 2024. This settlement is set to impact millions of homeowners across the U.S., offering substantial financial restitution and mandating significant changes in real estate practices. The full details of the court’s order and settlement terms are provided in the document below.
Judge Bough emphasized the fairness of the settlement, noting that it provides “substantial benefits to the class” while ensuring equitable treatment of all members. Over 491,000 claims have been filed as of November 14, 2024, with claims open until May 2025. Below are the key highlights:
Financial Compensation: Settlement class members who paid real estate commissions through any MLS-affiliated transaction are eligible for compensation.
Industry Practice Reforms: Changes include greater transparency in commission structures and improved practices across participating brokerages.
Comprehensive Notice Program: Nearly 40 million notices were sent, ensuring a broad reach, with over 300 million digital impressions.
Minimal Objections: Despite the large class size, only 39 members opted out, and objections were minimal.
Judge Bough described the settlement as “a significant and swift recovery for the Class,” underscoring its importance in resolving complex antitrust claims while avoiding protracted litigation.
For those in St. Louis, this settlement underscores the value of informed real estate practices. At MORE, REALTORS®, we are committed to transparency and exceptional service, ensuring buyers and sellers have the support they need in an ever-evolving market.
Learn more about the settlement and its implications by reviewing the full order below.
Burnett vs The National Association of REALTORS Settlement Order
The Department of Justice (DOJ) is turning up the heat on the National Association of Realtors (NAR) and the real estate industry at large. In a Statement of Interest filed in the class-action lawsuit Burnett v. NAR, the DOJ highlighted ongoing concerns about antitrust practices that could harm buyers, sellers, and competition within the real estate market.
The DOJ took particular aim at the current practice of unilateral offers of compensation to buyer brokers. These practices, the filing explains, pressure sellers to offer high commissions—often 2.5-3%—to buyer brokers to avoid “steering,” ultimately driving up home prices. This arrangement benefits neither buyers nor sellers, as it limits competition among brokers and prevents meaningful negotiations on fees.
Another area of concern is a proposed settlement provision requiring buyers and brokers to sign written agreements before any home tours. While intended to add transparency, the DOJ warns it could hinder competition among buyer brokers, making it harder for buyers to explore their options freely.
Importantly, the DOJ has not endorsed the proposed settlement in this case. Instead, it reserves the right to continue investigating and enforcing antitrust laws. Compliance with the settlement will not shield NAR or other entities from future legal scrutiny.
The DOJ’s filing serves as a reminder that transparency, competition, and fair practices are essential to keeping the real estate market accessible and equitable for everyone. For buyers, sellers, and agents alike, this case underscores the importance of choosing representation that prioritizes their interests over outdated or self-serving industry norms.
Department of Justice – Statement of Interest – NAR Settlement
Tanya Monestier, a tenured law professor at the University at Buffalo School of Law and former professor at Roger Williams University School of Law, has stepped into the Sitzer v. NAR lawsuit with a compelling and meticulously researched objection to the proposed settlement. Monestier, whose academic work on contract law and consumer protection has been cited by courts across North America—including the United States Court of Appeals and the Supreme Court of Canada—brings a formidable legal background to her critique. Her objection portrays the settlement as a superficial, paper-only solution that leaves consumers vulnerable to the same anti-competitive practices it claimed to remedy. As Monestier puts it, “The settlement makes sense—but only on paper… In the real world, the implementation of the settlement has been a disaster.”
Monestier argues that the industry’s entrenched practices remain unchallenged by the settlement. Steering persists, commissions are still locked at 5-6%, and sellers continue to shoulder both agents’ fees, contrary to the supposed reforms. She warns, “What matters is how the settlement is being implemented in real life. And it is being implemented in a way that preserves the status quo of sellers paying both brokers.” Her objection underscores the reality that, rather than empowering buyers to negotiate their agents’ compensation, the industry has doubled down on its old ways, sidestepping reform.
Another alarming aspect of Monestier’s objection is her contention that the settlement introduces confusion instead of clarity, leaving both buyers and sellers struggling to navigate a complex, quasi-regulatory landscape. “As long as this is possible, the current system of seller-financed commissions will remain intact,” she argues, stressing that this agreement risks setting the industry back by reinforcing behaviors it purported to dismantle.
Monestier’s objection is a call to action for the court to reconsider the settlement’s adequacy and fairness, cautioning against accepting it at face value. She warns, “Unless someone speaks up, this Court is likely to be convinced that this settlement is ‘fair, reasonable, and adequate.’ It is not. It simply reinforces the existing system of seller-paid inflated compensation while pretending to eliminate it.” For those interested in the full details of her objection, the complete document is available for review below.
See the entire objection that Tanya Monestier filed with the court HERE
There was an opinion piece published today on Inman News by Eric Bramlett that suggests that fears of a widespread shift in commission payments from sellers to buyers are overblown. Bramlett argues, “Sellers are primarily concerned with the net proceeds they’ll receive and the overall terms of the contract.” While I agree that many sellers will still “pay” the buyer’s agent commission, I don’t believe the traditional commission structure will endure. In fact, the St. Louis Association of REALTORS® is in the process of updating the forms that most of the St Louis area REALTORS®, including listing agreement. In this updated version, the seller will only be charged commission for the listing agent, with no provision for offering commission to a buyer’s agent. However, I expect that in many cases, buyers will negotiate for the seller to cover their agent’s commission as part of the overall deal—bringing more transparency to the process and putting the negotiation front and center.
As I’ve emphasized in prior articles about the NAR/Sitzer settlement, the real impact of these changes will be in how commissions are discussed and handled, not whether they are eliminated. This is a pivotal time for agents to educate their clients on the evolving commission landscape, ensuring buyers and sellers both understand who is paying for what and why. At MORE, REALTORS®, we’ve been preparing for this shift, and we’re committed to guiding our clients through these changes with clear communication and expert advice.
In a groundbreaking analysis from the National Bureau of Economic Research, a recent report has challenged some prevailing assumptions about the impact of lowering real estate agent fees on home prices. According to the findings, a reduction in agent fees, contrary to what some might expect, could lead to higher house prices. This is because lower future transaction costs enhance the overall value of housing as a durable asset, increasing consumer welfare, primarily benefiting current homeowners over prospective buyers.
For homeowners in St. Louis, this suggests a more complex real estate landscape where the benefits of lowered agent fees might not translate directly into lower home purchasing costs. Instead, the increased house values could affect both the affordability and investment perspectives on residential properties. This nuanced understanding of market dynamics underscores the need for professional guidance in navigating the real estate market, something MORE, REALTORS® is expertly equipped to provide.
For a deeper dive into these findings and their implications on the housing market, the full report is available for review. This detailed analysis can equip homeowners with the knowledge to make informed decisions in a shifting real estate environment. St. Louis residents looking to buy or sell homes can rely on the expert services of MORE, REALTORS®, where our deep local knowledge and commitment to client welfare drive every transaction. Read the full report here.
In a recent telephone interview with an Inman News reporter, Michael Ketchmark, lead plaintiffs’ counsel in the groundbreaking Sitzer | Burnett case, emphasized the importance of strict compliance with the National Association of Realtors’ (NAR) proposed settlement. Ketchmark and his team are keeping a close eye on how the real estate industry rolls out these changes, warning that any attempts to evade the new rules will be met with swift legal action. “If anyone thinks they’re going to be able to avoid the application of this settlement agreement and the law by creating some new forms or hiding this cooperation on new websites, they’re wrong,” Ketchmark stated. He also underscored the long-term impact of the settlement, anticipating that while it may take time, the free market will eventually adjust to lower commissions.
Ketchmark expressed concerns about Zillow’s business model, which he believes was built on practices now being challenged by the settlement. “We just cut the legs out from under that,” he said, referring to Zillow’s referral-based system. Looking to the future, Ketchmark highlighted the upcoming litigation against Berkshire Hathaway Energy, which could result in hundreds of billions of dollars in damages.
As these significant shifts in the industry unfold, it’s crucial for homebuyers and sellers to have knowledgeable and ethical representation. That’s where the agents at MORE, REALTORS® come in—dedicated professionals who are committed to navigating this evolving landscape while keeping your best interests at heart.
forAs a homeowner in the St. Louis metro area considering selling your property, one of the most pressing questions in the current real estate landscape is whether you should offer compensation to a buyer’s agent upfront. This question has gained significant importance due to the recent shifts in industry norms, especially following the National Association of Realtors (NAR) settlement of the Sitzer lawsuit and subsequent MLS rule changes. The outcome of these changes has dramatically altered how real estate transactions are approached, and it’s crucial to understand their implications on your selling strategy.
The Sitzer lawsuit settlement has made it clear that transparency and fair competition are now paramount in real estate transactions. Historically, it was customary for the seller to offer a commission to the buyer’s agent as an incentive to bring potential buyers to the table. However, with new regulations emphasizing transparency, the dynamics are shifting. The changes require more explicit disclosure of commissions, empowering buyers to negotiate their agent’s fees directly. This means that as a seller, you might not be obligated to offer upfront compensation to a buyer’s agent, but doing so can still play a strategic role in marketing your home effectively.
MLS rule changes have further transformed the landscape. Listings now clearly state what, if any, compensation is being offered to buyer agents, ensuring full transparency. This transparency means that the compensation for the buyer’s agent can now become a negotiating item between the buyer and the seller. Buyers are increasingly freed to include, as part of their offer, a request for a credit from the seller to cover the cost of their agent. This new approach can make the transaction more straightforward and tailored to the needs of both parties involved.
At MORE, REALTORS®, we understand the complexities of these changes and are here to guide you through the process. Our experienced agents are well-versed in the latest industry developments and can help you navigate these new waters effectively. Whether you decide to offer upfront compensation or negotiate it as part of the sale, our team will provide the expertise and support you need to make the best decision for your unique situation. Contact us today to learn more about how we can help you successfully sell your home in this evolving market.
Starting August 17, 2024, the National Association of REALTORS® (NAR) is implementing a new requirement on its members that will impact home buyers and REALTORS® alike. This new rule mandates that REALTORS® must have a written agreement with buyers before showing them any homes. This change is required as part of the settlement agreement of multiple massive class-action lawsuits where NAR was accused of anti-competitive practices. The settlement aimed to increase transparency and fairness in real estate transactions, ensuring that both buyers and agents have a clear understanding of their relationship and obligations. However, there’s a lot of confusion surrounding the new requirement, including some “PSA” messages posted by agents on social media that refer to the required agreement as a “Buyer’s Agency” agreement.
A Buyer’s Agency agreement is used when you wish to engage an agent to represent you as a buyer and establishes obligations upon the agent, including fiduciary duties to put your interests ahead of all others (including themselves). This is certainly the agreement I would recommend buyers use in most cases once ready to commit to an agent. However, while this certainly meets the requirement, it is not the only type of agreement that satisfies NAR’s new rule. In fact, representation is not required at all. Yes, a written agreement is necessary, but it doesn’t have to be a full-blown buyer representation agreement. Any written agreement to show a property will suffice. The intent here is not to complicate the home buying process but to protect buyers and clarify the REALTOR®’s role and responsibilities, including the cost, if any, to the buyer and where the compensation is coming from. It ensures that you understand the services you’re getting and how your REALTOR® will be compensated, making the whole process smoother and more transparent.
Is compensation required under the agreement?
That is, of course, dependent on the agreement itself, but there is no requirement by the NAR settlement that buyers be charged anything to enter into an agreement to be shown a home. Naturally, if the agreement is a Buyer’s Agency agreement where you will, in fact, receive representation, the agent, like every other professional involved in the home buying process, will need to be compensated, and how much and who pays will need to be laid out.
How long does the agreement obligate me?
Again, there is no requirement for the agreement to last any period of time. If it’s simply a showing agreement, it may last long enough for the agent to walk you through the home.
What if the listing agent shows you the home?
If the listing agent is giving you a tour of the home (as the seller’s agent) and not “working with” you, then the agreement may not be required. Personally, though, I think it is still a good idea to use it for transparency so that you, as the buyer, clearly understand whose interest that agent is required to put ahead of yours.
What is required in the “buyer agreement”?
According to the NAR settlement, the following are the only requirements for the agreement that must be signed before showing a home to a buyer they are working with:
Specify and conspicuously disclose the amount or rate of any compensation the MLS Participant will receive from any source.
The amount of compensation must be objectively ascertainable and may not be open-ended (e.g., “buyer broker compensation shall be whatever amount the seller is offering to the buyer”).
Include a statement that MLS Participants may not receive compensation from any source that exceeds the amount or rate agreed to with the buyer.
Disclose in conspicuous language that broker commissions are not set by law and are fully negotiable.
Include any provisions required by law.
At MORE, we are committed to providing exceptional service and ensuring complete transparency throughout your home buying journey. Our experienced agents are ready to guide you through this new process, making it as seamless as possible. Whether you’re a first-time homebuyer or looking for your next investment, MORE Realtors INLINE TEXT Link – goes to agent website MORE, REALTORS® is here to help you every step of the way.
Home sellers have reached a momentous $250 million settlement with HomeServices of America and its subsidiaries, including Long & Foster Companies, BHH Affiliates, LLC, and HSF Affiliates, LLC. This settlement, disclosed in a recent press release by the law firm representing the plaintiffs, resolves class action claims as part of a broader dispute over commission costs in the real estate industry.
In a landmark case held on October 31, 2023, a Missouri jury found HomeServices of America, along with the National Association of Realtors (NAR) and Keller Williams, culpable of conspiring to inflate commission fees, resulting in nearly $1.8 billion in damages. While this settlement absolves HomeServices of America from further claims in this specific litigation, it does not extend to Berkshire Hathaway Energy or its affiliates, maintaining their exposure to potential liabilities.
The recent $250 million agreement contributes to a total exceeding $943.25 million in settlements reached in related cases over the past year. Earlier settlements include a $418 million agreement with NAR in March 2024, and others involving major industry players such as Anywhere Real Estate, RE/MAX, Keller Williams, Compass, and Real Brokerage Inc., underscoring a significant reform movement within the real estate brokerage sector.
“These settlements mark a pivotal moment for American home sellers, who have historically been burdened with excessive commission fees,” remarked Benjamin D. Brown, Managing Partner of Cohen Milstein Sellers & Toll. The lawsuit originated from Moehrl, et al. v. National Association of Realtors, which challenged the NAR’s policy requiring home sellers to offer non-negotiable compensation to buyer brokers, significantly affecting the cost transparency and fairness in real estate transactions.
For more detailed information on the implications of these settlements and how they might affect your next real estate decision, consider consulting with a knowledgeable professional at MORE, REALTORS®, whose agents remain at the forefront of industry standards and practices.
In a significant development in the class-action lawsuit against the National Association of Realtors (NAR) and several major real estate entities, the U.S. District Court for the Western District of Missouri has granted preliminary approval for a proposed settlement. This lawsuit, led by plaintiffs Rhonda Burnett, Jerod Breit, Jeremy Keel, Hollee Ellis, and Frances Harvey, represents a class of U.S. homeowners who paid commissions to brokers upon the sale of their homes through multiple listing services during specific periods spanning from 2014 to the present. The court’s decision, as detailed in the document “Sitzer v NAR – Motion for Preliminary Approval of Proposed Settlement – Order Granted,” acknowledges the fairness, reasonableness, and adequacy of the settlement, setting the stage for final approval pending further review and a hearing scheduled for November 2024.
The complete details can be found in the courts order below.
The Council of Multiple Listing Services (CMLS), representing over 200 Multiple Listing Services nationwide, has filed a brief supporting the settlement reached between the parties in the lawsuit against MLS Property Information Network (MLS PIN). While this is not the settlement announced last week by the National Association of REALTORS® (NAR), it involves one of the several lawsuits tied to the NAR settlement.
CMLS filed their brief in response to the one filed by the Department of Justice (DOJ) in February, which opposed the MLS PIN settlement, arguing that it did not go far enough to change existing practices to lower commissions and increase competition. In their brief, CMLS points to data showing that a similar rule change adopted by the Northwest Multiple Listing Service (NWMLS) in 2019 saved homebuyers an average of $1,000 per transaction by reducing buyer agent commissions.
The DOJ has opposed the MLS PIN settlement, asserting that it would not meaningfully benefit consumers. CMLS contends that the DOJ’s analysis is flawed and that its preferred solution – an outright ban on buyer agent compensation – could disrupt the real estate market and harm consumers.
It is doubtful that the judge will make a ruling in the MLS PIN case while the NAR settlement is pending. However, the briefs filed by the DOJ and CMLS in the MLS PIN lawsuit may have an impact on the decision regarding the NAR settlement.
One of the issues receiving significant attention following the announcement of the REALTOR® commission suit settlement is the topic of buyer commissions, specifically regarding whether a buyer has to pay them and how lenders will treat the commissions.
In a recent letter to the Federal Housing Finance Agency (FHFA), Federal Housing Administration (FHA), Fannie Mae, and Freddie Mac, NAR and MBA sought confirmation on the treatment of buyer agent commissions following a proposed settlement agreement in the Burnett et al and Moehrl et al cases.
What does this mean for homebuyers? Under the settlement, cooperative commissions will no longer be displayed on Multiple Listing Services (MLS), but listing brokers and sellers will still be able to offer compensation for buyer broker services through other means. Additionally, the settlement does not prohibit home sellers from paying buyer agent commissions directly.
NAR and MBA believe that FHA and Government-Sponsored Enterprise (GSE) policies should continue to exclude seller or listing agent payments of buyer agents’ commissions from Interested Party Contributions (IPCs). IPCs are concessions from the seller to the buyer for items traditionally paid by the buyer, such as loan closing costs or rate buy-downs. Maintaining this practice is essential to ensure that the flow of mortgage capital to homebuyers remains uninterrupted.
As a homeowner or potential buyer, it’s important to stay informed about these developments and how they may impact your buying or selling process. NAR and MBA have requested confirmation from the FHFA, FHA, Fannie Mae, and Freddie Mac as soon as possible to prevent any confusion and potential disruptions that may cost you money or even jeopardize your home purchase.
Previously, I wrote about the settlement reached by the National Association of Realtors (NAR) aiming to resolve litigation concerning alleged anticompetitive practices, potentially leading to financial compensation for certain home sellers in St. Louis and beyond. This litigation, which centers on claims of inflated commission rates, could see a transformative resolution pending court approval expected by summer. If approved by the court, this settlement, alongside those reached with other corporate defendants like RE/MAX, Keller Williams, Realogy, and Compass, would provide eligible home sellers a pathway to claim financial redress for the commissions paid during the specified periods.
Eligibility Criteria and Key Details:
Moehrl v. NAR Eligibility:
Sold a home between March 6, 2015, and December 31, 2020.
Utilized a real estate agent or broker affiliated with specific defendants, including Keller Williams, RE/MAX, and Anywhere Real Estate, among others.
Paid a commission for the sale listed on a covered Multiple Listing Service (MLS) in certain areas.
Filing Deadline: The deadline to submit a claim is May 9, 2025.
Burnett et al. v. NAR Eligibility:
Sold a home within the eligible date range specified in the Long Form Notices.
Listed the sold home on an MLS in any part of the United States.
Paid a commission to any real estate brokerage in connection with the sale.
Not restricted to homes sold using agents from Anywhere, RE/MAX, or Keller Williams.
Filing Deadline: The deadline to submit a claim is May 9, 2025.
Next Steps for Eligible Home Sellers:
Verify Eligibility: Sellers should review the detailed eligibility criteria on the settlement websites to determine if their home sale qualifies.
Submit a Claim: To be considered for a payment, eligible sellers must file a claim by the May 9, 2025 deadline. Claim forms are accessible by clicking the links below:
You’ve probably heard about these changes happening with real estate commissions, right? It’s been all over the news lately. You might have seen headlines like “Real estate commissions are being slashed!” or “Selling your house will now be less expensive!” Sounds pretty exciting, doesn’t it? And the media has a great track record, right? Let me tell you, there’s a lot more to it than meets the eye.
Even the most informed of us agents and brokers out here are scratching our heads because the lawsuit changed gears so quickly. Nobody really knows exactly how it’s all going to work yet. And those flashy headlines? Well, they’re a bit misleading because the truth is, nobody knows for sure if commissions will go down or up. I can easily make a case for both up and down.
Here’s the deal: if this settlement gets approved by the courts, sellers won’t be able to advertise agent commissions anymore. But they can still offer them, just not in their listing. And for buyers, they’ll have to sign a written agreement with an agent if they want representation—like Missouri License Law has said for over 20 years.
But before you get too excited about saving some cash, there are a few things you should consider. For sellers, allowing your listing broker to offer commissions might still be in your best interest. And buyers, well, going it alone might not be as easy as it sounds. You’ll still have to do all the legwork and negotiations yourself AND the biggest risk in, likely, your largest transaction: you don’t know what you don’t know. Remember, unless the listing agent is hired as a transaction broker, the listing agent represents the seller first and foremost. If they are a transaction broker, they cannot give you advice.
So, while these changes could be a big deal, the reality is, we’re all still waiting to see how it shakes out. If you’re feeling curious or worried about what’s coming, your best bet is to chat with your trusted real estate advisor. They’ll be able to give you the lowdown and keep you in the loop as things progress. And it they can’t, the agents and brokers here at MORE, REALTORS ® certainly can. We’ve been covering this issue since 2019.
Bottom line? Don’t believe all the hype just yet. Real estate, in general, is a wild card. While we’ll just have to wait and see how it all plays out, just know that we here at MORE, REALTORS® have been on top of this issue for years and have been adjusting accordingly. Oh yeah, remember, you can keep your doctor too. 😉
Last week, I wrote an article about the settlement reached by the National Association of REALTORS® in pending litigation concerning buyer agency compensation. This includes the “Sitzer” (now Burnett), “Moehrl,” and “MLS PIN” suits, among others. As mentioned, this is an early stage in the process; the settlement agreement, although agreed upon by the parties involved, has not yet been filed with the court. Given these are large class action lawsuits alleging antitrust violations, numerous hurdles must be overcome. These could necessitate changes to the settlement terms on the path to court approval—if the court approves it at all.
Hurdles include the court holding a fairness hearing to assess if the proposed settlement is fair, reasonable, and adequate for class members. This hearing allows class members to express objections and concerns. Moreover, antitrust class action lawsuits like this one, which impact market competition and consumer protection, prompt the court to consider broader public interest implications when approving settlements. This attention often draws input from professional associations, consumer organizations, and, as seen in the MLS PIN suit, the United States, giving their opinion on the settlement’s sufficiency.
Ultimately, the decision rests with the judge, who will consider all these aspects.
I should have led with this, but I am not an attorney, and this is not legal advice. As a real estate broker with over four decades in the residential real estate industry, I have a keen interest in the legal facets of our business and the issues at hand, closely following these cases since 2019. I’m a staunch advocate for transparency and education for real estate professionals, clients, and everyone involved. The more accurate knowledge consumers have about buying and selling a home, the better choices they can make. This is especially true when selecting a real estate agent, as not all are created equal.
Back to the matter at hand.
What will the DOJ say about the NAR Settlement?
Assuming the Department of Justice files an amicus brief in this case, as they did with MLS PIN—a safe assumption, in my view—it’s intriguing to speculate on their comments regarding this settlement. While I lack a crystal ball or insider information, considering the DOJ’s Statement of Interest filed on February 15, 2024, in Nosalek V. MLS Property Information Network (MLS PIN), and assuming their opinion hasn’t shifted in the last five weeks, offers a logical foundation for analysis.
I sought an objective analysis from my trusty AI Assistant, which, for the sake of this discussion, is an outstanding attorney specializing in antitrust law (or at least that is what I’ve told it to think of itself as). Applying the DOJ’s recent statement to this settlement, here’s what it suggests the DOJ might say:
Inadequate Address of Core Antitrust Concerns: The settlement’s proposed rule changes fail to resolve the fundamental antitrust issues raised in the complaint fully. While allowing $0 cooperative compensation offers and requiring commission negotiation disclosures, the continued practice of blanket unilateral compensation offers to buyer brokers by sellers and listing brokers could perpetuate steering risks and obstruct genuine price competition.
Broad Release of Potential Antitrust Claims: The extensive release of antitrust claims against a wide range of parties, including NAR, REALTOR® associations, MLSs, and individual brokers and agents, is concerning. Given the settlement’s limited injunctive relief, this broad release might inadequately serve class members.
Insufficient Monetary Relief: The $418 million settlement fund, potentially inadequate for the damages at issue, may not ensure compensation for class members after litigation expenses and attorney’s fees. The settlement lacks a clear mechanism for maximizing class member payouts.
Potential Chilling Effect on Future Antitrust Challenges: The settlement could deter or complicate future anticompetitive practice challenges by immunizing modified rules from further scrutiny, making subsequent lawsuits more difficult.
Comparison to MLS PIN Settlement: Despite more extensive practice changes than the MLS PIN agreement, the settlement doesn’t effectively address core antitrust concerns, marginally improving over the MLS PIN agreement.
In conclusion, despite offering more monetary relief and practice changes than the MLS PIN agreement, the settlement inadequately addresses fundamental antitrust issues. The court must weigh whether the settlement’s limited benefits justify the broad release of claims and the potential chilling effect on future antitrust enforcement. As in the MLS PIN case, a more effective remedy might prohibit the seller-paid buyer broker commission model, fostering genuine market competition.
This is all based on publicly available information. We must wait to see the DOJ’s stance and whether the judge deems the settlement adequate.
Yesterday, I reported on the groundbreaking settlement proposed by the National Association of Realtors (NAR) to resolve the ongoing litigation surrounding broker commissions. Today, I want to dive deeper into the specifics of this settlement agreement and what it means for homeowners and real estate professionals here in the St. Louis area.
Key Points of the NAR Settlement Agreement
Broad Coverage: The settlement class is expansive, including home sellers who listed properties on MLSs anywhere in the U.S. during specified date ranges and paid a commission to any brokerage. For the St. Louis region, sellers are covered if they sold homes between October 31, 2018, and the date of the official Class Notice.
Released Parties: The settlement releases a wide range of parties from future claims related to broker commissions, including NAR, REALTOR associations, and MLSs that adhere to the required practice changes. Brokerages with 2022 transaction volumes under $2 billion are also released if they comply with the new rules.
Practice Changes: The agreement mandates significant shifts in industry practices, including:
“eliminate and prohibit any requirement by the National Association of REALTORS®, REALTOR® MLS, or Member Boards that listing brokers or sellers must make offers of compensation to buyer brokers or other buyer representatives (either directly or through buyers), and eliminate and prohibit any requirement that such offers, if made, must be blanket, unconditional, or unilateral;”
“prohibit REALTOR® MLS Participants, subscribers, other real estate brokers, other real estate agents, and their sellers from (a) making offers of compensation on the MLS to buyer brokers or other buyer representatives (either directly or through buyers) or (b) requiring that offers of compensation be made on the MLS to buyer brokers or other buyer representatives (either directly or through buyers);”
“require that REALTOR® MLS Participants who work with buyers enter into written agreements with their buyer clients that specify the broker compensation and how it will be paid, including if it will be paid by the buyer;”
“require that REALTOR® MLSs and REALTOR® MLS Participants provide, with any MLS listings that include a listing broker’s offer of compensation to a buyer broker or other buyer representative (either directly or through buyers), (i) disclosure as to the amount of that offer of compensation and (ii) a searchable field that displays buyer broker compensation offers;”
“prohibit REALTOR® MLSs, REALTOR® MLS Participants, and REALTOR® Member Boards from taking any adverse action against any Person making offers of compensation to buyer brokers at any price, or no price, either on or off the MLS;”
Financial Payout: NAR will pay a total of $418 million over four years to resolve the claims, with the first payment of $5 million due within 30 days of preliminary approval of the settlement. What This Means for St. Louis
What This Means for St. Louis
For homeowners in the St. Louis area, this settlement could bring more transparency to the commission structure when selling a home. By removing the requirement for listing brokers to offer buyer broker compensation through the MLS, the agreement aims to give sellers more control over how commissions are negotiated and paid.
Real estate agents and brokerages in our region will need to adapt to these changes, focusing on educating clients about compensation options and ensuring compliance with the new rules. At MORE, REALTORS®, we’ve been preparing for these shifts and are ready to guide our clients through the evolving landscape.
The full text of the NAR settlement agreement can be found below. As always, I’ll continue to keep you informed about how these developments impact our local market.
This morning, Kevin Sears, President of the National Association of Realtors (NAR), unveiled a proposed settlement designed to bring to a close the contentious litigation surrounding broker commissions, a move that could significantly alter the landscape of the real estate industry. This development comes on the heels of the Sitzer-Burnett verdict, which cast the traditional practices of real estate professionals, particularly those concerning hiring and compensation methods, into the spotlight, sparking a series of lawsuits and raising questions about the future of the industry.
A Closer Look at the Proposed Settlement
The core aim of the proposed settlement is to resolve the ongoing litigation against NAR, its members, and associated real estate entities by addressing the claims related to broker commissions. Key components of the settlement include:
Liability Release: More than one million NAR members, along with various real estate entities, will be absolved from liability for claims akin to those highlighted in the lawsuits.
Compensation Offers: A pivotal change involves the elimination of compensation offers from MLS listings, a rule set to take effect in mid-July 2024.
Written Agreements: Starting mid-July 2024, MLS participants working with buyers will be required to engage through written representation agreements.
Financial Implications: NAR has committed to paying $418 million over a four-year span, a significant financial undertaking that will not result in an increase in the 2024 membership dues according to the release. (Noted is the fact they didn’t commit to no increases as a result beyond 2024)
Kevin Sears Weighs In
Sears articulated the objectives of the settlement, stating, “This proposed settlement achieves our goals to reduce strain on our members and chart a path forward for the industry.” He further emphasized the industry’s resilience and adaptability, expressing confidence that the agreement “allows us to move forward, preserving the right to real property for all.”
MORE, REALTORS® Prepared for the Future
Yes, this might come off as a shameless plug, but it would be a disservice not to mention how myself, alongside our brokerage’s leadership team, brokers, and agents, have been proactively preparing for the anticipated changes. We’ve delved deep into the issues raised by these lawsuits, identifying practices in need of rectification, regardless of the legal outcomes. Thus, while the shift away from MLS compensation offerings may catch many off guard, our team stands ready. We’re equipped to demystify the compensation process for our clients transparently, dedicating our focus to their needs. Discover more about our exceptional team at MORERealtors.com.
In yet another pivotal moment for the real estate industry, oral arguments were made yesterday before a three-judge panel at the United States Court of Appeals for the District of Columbia Circuit in the ongoing battle between the National Association of REALTORS (NAR) and the Department of Justice (DOJ). The panel, consisting of Circuit Judges Henderson, Walker, and Pan, will now deliberate and make a ruling in the future, a decision that could significantly impact the industry.
The case centers on NAR’s attempt to prevent the DOJ from reopening an investigation into the organization’s commission-sharing policies. The dispute revolves around a 2020 closure agreement, which NAR interprets as barring any future investigations. However, this interpretation faced scrutiny from the judges, particularly Judge Florence Pan, who questioned the permanence of the agreement.
Representing the DOJ, Frederick Liu argued that there was never an intention to indefinitely halt the investigation. He emphasized that during the negotiation process, the DOJ’s antitrust division did not make explicit commitments to end the probe permanently.
This legal showdown is crucial for NAR, an association with more than 1.5 million members. Just last month, NAR, along with other defendants, lost a nearly $1.8 Billion anti-trust lawsuit here in Missouri (Sitzer v NAR) and NAR is currently facing multiple other antitrust lawsuits, including a substantial class-action suit in Illinois, potentially leading to damages of $40 billion.
NAR’s attorney, Christopher Michel, stressed the significance of the closure agreement, arguing that reopening the investigation would render it meaningless. Judge Justin Walker, however, highlighted the inherent risk NAR took in depending on the continuity of the DOJ’s personnel after the election.
The decision by this appellate court will be closely watched, as it could herald significant changes in how real estate transactions are conducted, affecting agents, buyers, and sellers alike. Stay updated with St Louis Real Estate News for the latest on this critical legal development.
In a remarkable turn of events, just minutes after the jury sided with the homeseller-plaintiffs in the landmark Sitzer | Burnett trial, attorney Michael Ketchmark wasted no time in launching another legal salvo against the real estate industry. This new class action lawsuit, filed on behalf of three new homesellers, aims to further scrutinize the practices surrounding agent commissions.
The Defendants
This new lawsuit expands the list of defendants to include: Compass, eXp World Holdings, Redfin, Weichert Realtors, United Real Estate, Howard Hanna, and Douglas Elliman. Notably, the National Association of Realtors is once again named as a defendant, marking its continued entanglement in legal challenges related to commission structures.
The Allegations
The plaintiffs in this new case echo the grievances aired in the Sitzer | Burnett lawsuit, claiming they have been adversely affected by a “real estate industry conspiracy” that artificially inflates agent commissions. The suit alleges that this practice has a cascading effect, ultimately driving up costs for homesellers.
Legal Venue
The lawsuit has been filed in the United States District Court for the Western District of Missouri, the same jurisdiction that recently saw the Sitzer | Burnett plaintiffs awarded $1.785 billion in damages.
What This Means for the Industry
The filing of this new lawsuit so swiftly on the heels of the Sitzer | Burnett verdict could signal a wave of legal challenges aimed at traditional real estate commission models. Industry stakeholders will undoubtedly be watching closely as this new case unfolds, given its potential to further disrupt established practices and financial structures within the real estate market.
In a groundbreaking development, the jury in the Sitzer v National Association of REALTORS®, et al, lawsuit has returned a verdict in favor of the plaintiffs. According to reports by Inman News, the jury found against all defendants and awarded a staggering $1.785 billion in damages. This decision could have far-reaching implications for the real estate industry, potentially reshaping commission structures and business practices.
The lawsuit, which has been closely followed since its filing in 2019, questioned the legality of certain real estate commission practices. The verdict is likely to send shockwaves through the industry, prompting legal reviews and potentially setting the stage for further litigation.
It remains to be seen how this verdict will impact the real estate market in the long term, but it is clear that the decision marks a significant moment in the ongoing debate over real estate commissions and transparency.
Stay tuned for more updates and in-depth analysis on what this verdict means for the future of the real estate industry.
I’ve been discussing and writing about the Sitzer v National Association of REALTORS®, et al, lawsuit since it was originally filed in 2019. My previous articles on this case, as well as the Moerhl suit—a similar lawsuit filed in Illinois—can be found at the links below, which are in chronological order with the most recent first:
Today marks the end of the second week the trial has been underway, and it’s time to take stock of what has transpired so far.
Key Developments
Motions and Counter-Motions
Motion to Enforce Court Order: BHH Affiliates, LLC, HSF Affiliates, LLC, and HomeServices of America, Inc., filed a motion to enforce a court order. This motion was subsequently denied by District Judge Stephen R. Bough.
Deposition Designations: The court overruled most of the defendants’ objections regarding the deposition of Kevin Goffstein, allowing most of the deposition to be part of the trial record.
State Statutes and Regulations: A significant ruling came when the court prohibited the defendants from using state statutes and regulations as exhibits.
Legal Maneuvers
Pro Hac Vice Admission: Ian T. Hampton was allowed to appear pro hac vice to represent HomeServices of America, Inc.
Motions in Limine: Multiple motions in limine were filed by both parties, aiming to limit the evidence that can be presented during the trial.
Motions for Judgment as a Matter of Law: Both the National Association of Realtors and Keller Williams Realty, Inc., filed motions for judgment as a matter of law, which were denied by the court.
Trial Proceedings
Jury Trial: The jury trial has been ongoing, with proceedings taking place almost daily. The court has been in session for extended hours, indicating the complexity and importance of the case.
Witness Withdrawals: Plaintiffs withdrew David Liniger and Jay Papasan as witnesses to be called by videotaped deposition.
Jury Instructions: Various motions and objections were raised concerning the jury instructions, including a specific motion by Keller Williams Realty, Inc., for a Jury Instruction on Missouri State Law.
The first two weeks of the trial have been action-packed, with both sides employing various legal strategies. The court has been diligent in its rulings, aiming to ensure a fair trial. As we move into the next phase, it’s clear that the outcome of this case could have far-reaching implications for the real estate industry. Stay tuned for more updates as the trial progresses.
As if there wasn’t enough negative attention on the real estate industry, last week a study was released, “Et Tu, Agent? Commission-Based Steering in Residential Real Estate.” The study suggests that buyer agents may steer their clients away from properties offering low commissions. It argues that this is a key reason why agent commissions have remained high in the digital age, even as commissions in other industries have declined. According to the report, listings with the lowest commissions take 33% longer to sell and face a 75% greater risk of not selling at all.
So, is this true?
That’s a difficult question to answer. First, as the chart below indicates, the average commission rate offered to a buyer’s agent in the St. Louis market has remained relatively stable. For over 20 years, the annual average rate has been 2.7%, with the only exception occurring in March 2010 when it rose to 2.925%. Given that most listings offer the same commission rate, it’s challenging to determine if agents are steering away from low commissions. However, this consistency might support another allegation: that the industry has established a “normal” commission rate. It’s hard to deny some level of pressure on listing agents to offer a specific commission rate when thousands of listings end up offering the same rate. Moreover, offering a “below-normal” commission rate as a listing agent can attract criticism from peers.
Let me begin by saying that I’m not a sensationalist, nor am I an advocate for everything I write about. Additionally, I am not an attorney, so this not a legal opinion. I am simply a real estate broker that has been very active in the profession and industry for over 40 years now. I strive to stay on top of industry and market changes so that the agents in our firm, MORE, REALTORS®, and their clients can avoid surprises and be prepared. Another reason I do this is to share what I have learned with consumers. I believe that by sharing good, relevant and accurate information to consumers, they will be equipped to make better decisions when it comes to buying or selling real estate, including how to choose an agent to best represent them.
So, what is going to turn the real estate industry upside down?
Yes, I made a rather bold statement in my headline, but I believe it to be an accurate depiction of what is coming to the world of residential real estate, including right here in St Louis. The source of this disruption is not a single entity, but rather many. While there is a common theme to the multiple threats, they are coming from different sources. Over the past few months, I have written about all the issues I’m referring to, so below is a summary of them and links to the original articles:
Moerhl v NAR Lawsuit. 3/22/2019 – This suit was filed against The National Association of REALTORS® (NAR), Realogy Holdings Corp, HomeServices of America, Inc, Re/Max Holdings, Inc and Keller Williams Realty, Inc. The suit alleges that the defendants were “conspiring to require home sellers to pay the broker representing the buyer of their homes, and to pay at an inflated amount, in violation of federal antitrust law.” At the heart of this claim is the NAR rule that requires sellers to offer compensation to the buyer’s agent in order to be eligible for listing in the MLS.
Department of Justice (DOJ) Complaint against NAR. 12/01/2020. The DOJ filed a complaint against NAR, as well as a settlement agreement, focused on two primary issues; 1. Allowing buyer brokers to misrepresent to buyers that a buyer broker’s services are free; 2.Enabling buyer brokers to filter MLS listings based on the level of buyer broker commissions offered and to exclude homes with lower commissions from consideration by potential home buyers;
In an article published yesterday, I referenced the Sitzer vs National Association of REALTORS law suit and said I would have a more in-depth discussion about that suit and here it is. The lawsuit was filed by Joshua Sitzer, Amy Winger, Scott and Rhonda Burnett and Ryan Hendrickson on June 21, 2019 against the National Association of REALTORS® and the parent companies of major real estate companies and franchises including Coldwell Banker, ReMax, Keller Williams and Berkshire Hathaway Homeservices.
The Sitzer lawsuit was filed in the United States District Court for the Western District of Missouri sought to be certified as a class action lawsuit on behalf of “all persons and entities who listed properties on one of four Multiple Listing Services…and paid a broker commission from at least April 29, 2015 until the Present…“. The four MLS’s listed in the suit that this applies to are:
Heartland MLS (Kansas City, MO)
MARIS MLS (St Louis, MO)
Southern Missouri Regional MLS (Springfield, MO)
CBOR MLS (Columbia, MO)
Last Friday, April 22, 2022, Stephen R. Bough, a Federal Judge for in the Western District of Missouri, issued an order granting the class action status for the lawsuit the Plaintiffs sought.
The past several days have not been good for the National Association of REALTORS® (NAR) from a legal perspective at least.
First, last Friday, April 22, 2022, Stephen R. Bough, a Federal Judge for in the Western District of Missouri, certified a lawsuit against NAR as a class action suit.The suit, known as the “Sitzer” suit as the original plaintiffs were Joshua Sitzer and Amy Winger, alleges that the defendant, the National Association of REALTORS® “created and implemented anticompetitive rules which require home sellers to pay commission to the broker representing the home buyer“. The plaintiffs in the suit also allege that the other defendants, which include Realogy Holdings Corp, Homeservices of America, Inc., Re/MAX LLC and Keller Williams Realty, Inc., “enforce those rules through anticompetitive practices.” I believe this action by the court was expected and likely did not come as a surprise to anyone but it was not good news for NAR or the other defendants. In the coming days I’ll be doing an in-depth article on this one.
Then, yesterday, the United States Court of Appeals for the 9th Circuit delivered another and this time, a likely unexpected, blow to the National Association of REALTORS® in the form of a reversal of a suit against NAR that had been dismissed previously by a lower court. The suit, PLS.com v. the National Association of REALTORS®, is another suit alleging anti-trust violations by NAR and the other defendants which are all MLS’s. The suit was brought originally by PLS.com as a result of NAR enacting its “Clear Cooperation Policy” which for all intents and purposes, dictates to agents and brokers how and when they can market their listings. I’ve written several articles specifically on this policy in the past which can be found using the following links:
The National Association of REALTORS® (NAR) has come under attack over the past few months as a defendant in two class-action lawsuits, Christopher Moehrl v The National Association of REALTORS® and Joshua A. Sitzer and Amy Winger v The National Association of REALTORS® filed in March and April of 2019 respectively, and, most recently, a complaint brought by the Department of Justice, United States v National Association of REALTORS® filed this month. The latter came with a pre-arranged proposed settlement with NAR. I should also mention the two class-action lawsuits have as additional defendants Realogy Holdings Corp (the own and operate several franchises, some of the local ones include Coldwell Banker-Gundaker, Better Homes & Gardens, ERA, Sotheby’s, and Century-21), HomeServices of America, Inc. (owner of Berkshire Hathway Home Services), Re/Max and Keller Williams.
While there are additional issues raised in the lawsuits and DOJ complaint, central to them are buyer’s agents’ commissions. Issues raised include:
From the DOJ complaint:
Allowing buyer brokers to misrepresent to buyers that a buyer broker’s services are free;
Enabling buyer brokers to filter MLS listings based on the level of buyer broker commissions offered and to exclude homes with lower commissions from consideration by potential home buyers;
From the lawsuits:
Sellers of residential property have been forced to pay inflated costs to sell their homes through forced payments of commissions to buyer brokers;
Home sellers have been forced to set buyer broker commissions to induce buyer brokers to show the sellers’ homes to prospective buyers;
Price competition has been restrained among brokers seeking to be retained by home buyers, and by brokers seeking to represent home sellers; and
Defendant Franchisors and their franchisees have inflated their profits by a significant margin by the increased total commissions and increased buyer broker commissions.
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You’ve probably heard about these changes happening with real estate commissions, right? It’s been all over the news lately. You might have seen headlines like “Real estate commissions are being slashed!” or “Selling your house will now be less expensive!” Sounds pretty exciting, doesn’t it? And the media has a great track record, right? Let me tell you, there’s a lot more to it than meets the eye.
Last week, 
So, what is going to turn the real estate industry upside down?
