Many of you are aware of the Sitzer/Burnett class action lawsuit that affects residential Real Estate transactions throughout the United States. The lawsuit was filed in a Missouri Federal court by a group of home sellers suing the National Association of Realtors (NAR) over policies about how broker compensation is paid.
The home sellers claimed that NAR required home sellers to pay commissions to their agents and the agents of the buyers, and that real estate commission rates are inflated and fixed. The lawsuit also questioned NAR requiring agents to list homes on their affiliated Multiple Listing Service (MLS) database in order to sell them.
At the October 2023 trial, a jury ruled in favor of the plaintiffs. The judge ordered damages of at least $1.8 billion. In March 2024, NAR agreed to a global settlement paying $418 million in damages over the next four years. The settlement is subject to final court approval on November 26, 2024. There are still several active copycat cases accusing NAR and MLS of suppressing competition and violating antitrust laws.
The settlement requires NAR and MLS to make business practice changes effective August 17, 2024.
The key terms of the agreement include:
A release of liability for NAR individual members and brokerages whose residential transaction volume in 2022 was $2 billion or less. Brokerages exceeding $2 billion can obtain releases if they choose to opt in.
Offers of Realtor compensation on the MLS are prohibited.
Realtors working with buyers must have a signed buyer broker agreement before showing or touring a home for sale. The types of buyer broker compensation that is negotiable include: a fixed fee paid directly by consumers, concessions from the seller, or a portion of the listing broker's compensation.
NAR will continue to deny any wrongdoing.
Home buyers, sellers, and consumers are in a state of confusion about how this settlement will affect the market. Some believe home prices will drop because sellers will negotiate lower commissions to be paid. Some believe the industry wide standard commission of 5 or 6 percent will be a thing of the past. Some analysts predict one million real estate agents will leave the profession. No one knows how this settlement will affect the housing market.
Until the dust and confusion settle, there will undoubtedly be disputes. Mediation is NAR's preferred method of Real Estate dispute resolution and consumers are able to resolve disputes out of court. Mediations are faster than a trial, less expensive, and less stressful.
John R. Mayhew is a Florida Supreme Court Certified Circuit and County Mediator specializing in Real Estate Mediation. He is also a licensed Florida Realtor with over 30 years of experience in the Real Estate Industry. Make an appointment today at Mayhewmediations.com.