Listen
Show Notes
It’s been two months since the National Association of REALTORS®implenented a set of practice changes as part of a proposed settlement agreement, which if approved by a federal judge next month would put to rest a slew of class-action antitrust lawsuits from home sellers across the country. Today on Real Estate Backstage, we’re taking a look at the events that led up to the NAR settlement, what’s actually included in the terms of the settlement agreement, and what agents need to do in order to thrive in a post-settlement world.
Before we begin, I want to reiterate that at this point it is still a proposed settlement agreement. NAR agreed to the settlement back in March and implemented the practice changes in August, but the final hearing is scheduled for November 26th, and that’s when we’ll find out whether or not the settlement will be approved by the court.
The proposed settlement is the culmination of years of legal battles that have been brewing for years, and recently started working their way through the court system. A handful of sellers across the country got together to form a class action anti-trust lawsuit against NAR and large franchise brokerages like Keller Williams, ReMax, etc.
The allegation is that these organizations were colluding to artificially keep commission rates higher than they should be. The premise is “Why should I as a Seller have to pay for the Buyer’s Agent, who is working against my best interests?” In reality, Sellers never had to pay a Buyer’s Agent – They could hire a listing agent who is not a member of NAR – If they did choose to hire a REALTOR®, they could have offered as little as $1 to Buyer’s Agents to submit their listing to the MLS.
The Sitzer-Burnett case in Missouri was the first case to go to trial, and the jury awarded $1.8 billion in damages. Anti-trust damages are typically trebled, which means that one case alone could have ended up being about $5.4 billion in damages. There were larger cases looking in other states, so by the time it was all said and done the damages could have been tens and tens of billions of dollars. Because of this, settling was probably NAR’s best and only option.
The proposed settlement agreement consists of three core pillars: (1) NAR to pay $418 million over several years; (2) NAR secured a release of liability for itself along with all the NAR-affiliated state and local Associations and MLSs, and member-brokerages who had sold $2 billion or less worth of real estate in 2022; (3) NAR agreed to implement a series of practice changes.
(Click here to view the proposed settlement agreement)
The most important thing that Buyer’s Agents need to do is get comfortable articulating their value – What specific services do you provide to your clients? Next, make sure you understand and can explain to your clients the various ways that your compensation can be structured.
Leave a Comment