Lawsuit Against Real Estate Brokerages and NAR Association: A Comprehensive Overview

Lawsuit Against Real Estate Brokerages and NAR Association: A Comprehensive Overview

In October 2023, a federal jury in Kansas City, Missouri, found the National Association of Realtors (NAR) and several large real estate brokerages liable for conspiring to artificially inflate commissions for home sales.

The verdict awarded $1.78 billion in damages to a class of home sellers who alleged that they were forced to pay excessive commissions as a result of the defendants' anticompetitive conduct.

Lawsuit Against Real Estate Brokerages and NAR Association

The lawsuit alleged that NAR, the largest trade association for real estate agents in the United States, used its market power to implement and enforce rules that made it difficult for home sellers to negotiate lower commissions. One of the key rules at issue was the Buyer Broker Commission Rule, which requires all brokers to make a blanket, non-negotiable offer of buyer broker compensation when listing a property on the Multiple Listing Service (MLS). The MLS is a database of home listings that is used by millions of real estate agents and consumers across the country.

The lawsuit also alleged that NAR and the defendant brokerages conspired to retaliate against any brokers who attempted to negotiate lower commissions or offer alternative commission structures. For example, the lawsuit alleged that NAR threatened to expel brokers from its membership and deny them access to the MLS if they did not comply with the Buyer Broker Commission Rule.

The jury's verdict was a major victory for home sellers and a significant setback for NAR and the defendant brokerages. The verdict could lead to lower real estate commissions for home sellers nationwide.

NAR's Response to the Lawsuit

NAR has denied any wrongdoing and has vowed to appeal the jury's verdict. NAR has argued that the Buyer Broker Commission Rule is pro-consumer and that it helps to ensure that buyers are represented by qualified real estate agents. NAR has also argued that the lawsuit is based on a flawed understanding of real estate markets and that it will ultimately harm consumers.

Impact of the Lawsuit

The lawsuit against NAR and the defendant brokerages is still ongoing, and it is unclear what the ultimate outcome will be. However, the jury's verdict has already had a significant impact on the real estate industry. Many home sellers are now more aware of their rights and are negotiating

lower commissions with their brokers. Additionally, some real estate brokerages have begun to offer alternative commission structures, such as flat fees and rebates.

What Home Sellers Can Do

Home sellers can protect themselves from excessive commissions by:

• Interviewing multiple real estate agents and negotiating the best commission rate possible.

• Being aware of their rights under state and federal law.

• Considering alternative commission structures, such as flat fees and rebates.

Home sellers should also be aware that NAR has a Code of Ethics that prohibits real estate agents from discussing commissions with sellers until they have entered into a written listing agreement. This rule is designed to protect sellers from being pressured to agree to a particular commission rate.

Conclusion

The lawsuit against NAR and the defendant brokerages is a significant development in the real estate industry. The jury's verdict could lead to lower real estate commissions for home sellers nationwide. Home sellers can protect themselves from excessive commissions by being aware of their rights and negotiating with their brokers.

The following real estate brokerage companies were involved in the lawsuit against NAR:

• Keller Williams Realty

• RE/MAX

• Compass

• Coldwell Banker

• Berkshire Hathaway HomeServices

• Compass

• eXp World Holdings

• Redfin

• Weichert Realtors

• United Real Estate

• Howard Hanna Real Estate

• Douglas Elliman

• Anywhere Real Estate