On November 26, 2024, a significant milestone was reached in the ongoing litigation concerning broker commissions in the U.S. The judge overseeing the National Association of REALTORS® (NAR)'s proposed nationwide class action settlement granted final approval, resolving a long-running case brought by home sellers related to how real estate commissions are handled. This settlement is poised to reshape several practices within the real estate industry and will have a far-reaching impact on brokers, agents, and consumers alike.
What the NAR Settlement Means
This settlement resolves the litigation stemming from challenges to broker commission structures, offering clarity on several key issues for REALTORS® moving forward. One of the most significant outcomes of this settlement is the maintenance of recent MLS rule changes, which were enacted earlier in 2024. These new rules, updated on November 14, 2024, are now firmly in place, ensuring that the commission structures that were at the heart of the litigation remain unchanged.
Importantly, this settlement also leads to the dismissal of numerous “pile-on” lawsuits that had been filed in various courts across the country. While this dismissal process will take some time for judges and parties in each case to finalize, it brings an end to these additional legal battles for most involved. However, some MLSs and brokers that did not "opt in" to the settlement may continue to face litigation.
The DOJ's Role and Ongoing Investigations
Despite the approval of the settlement, the U.S. Department of Justice (DOJ) continues to scrutinize the real estate industry's practices. Their investigations are unrelated to the settlement’s approval and are still very much ongoing. The DOJ remains particularly focused on antitrust concerns, such as price-fixing and information exchanges, and will continue to monitor these practices closely.
The settlement, however, does not protect real estate agents and brokers from antitrust laws. These laws are still very much in force, and REALTORS® are reminded that practices like price-fixing, steering, filtering, and boycotting remain illegal. One area of particular concern is the potential for price-fixing through "information exchanges"—instances where data about what others are being paid for commissions is shared. This could happen through a variety of channels, including websites, media companies, or even informal conversations with title companies that have access to commission data. Such exchanges are a common target for antitrust investigations, and REALTORS® must remain vigilant in how they price and market their services to avoid unintentional violations.
What's Next for the Industry?
While the settlement has now been approved, the landscape of the real estate industry is still shifting. Separate class actions involving home buyers continue to move forward, specifically targeting NAR and a select group of defendants. These cases may take some time to reach a resolution, and REALTORS® should stay informed about any developments.
Additionally, a key point of the settlement is the continued use of offers of compensation.
The DOJ has sought a complete decoupling of compensation between buyer and seller brokers, but NAR fought to preserve offers of compensation, which it argues help make professional representation more accessible and affordable for homebuyers. The settlement explicitly maintains the allowance for these compensation offers, a stance that NAR firmly supports, believing that such offers increase fair housing opportunities and support a larger pool of potential buyers for sellers.
A Step Toward Transparency and Consumer Empowerment
One of the more contentious aspects of the settlement involved the use of written buyer agreements. The DOJ raised objections to this aspect, although many states already require such agreements by law. NAR maintains that written buyer agreements create transparency and empower consumers to make informed choices in real estate transactions. Despite the DOJ’s objections, the settlement allows these agreements to continue, reinforcing the importance of transparency in the industry.
Looking Ahead: What REALTORS® Should Know
With the settlement now in place, the real estate industry must remain focused on compliance and best practices as the new rules take effect. REALTORS® must adapt to the updated MLS rules, maintain proper buyer and seller agreements, and ensure they are not engaging in any practices that could be construed as anticompetitive.
For those looking for more information and guidance on how to navigate the changes, MIAMI REALTORS® is hosting a webinar on December 3, 2024, at 1:00 PM ET. The webinar will provide an important legal update on the NAR settlement and offer insights into the next steps. REALTORS® can register for the webinar and submit questions ahead of time to ensure they are fully informed.
Additionally, resources such as toolkits and educational materials are available to help brokers and agents adjust to the new regulations. Brokers are also encouraged to license MIAMI REALTORS® courses to customize training for their teams and ensure compliance with the updated MLS rules.
In closing, the final approval of the NAR settlement marks a turning point in the industry. While the settlement resolves some key issues, the work is far from over. REALTORS® must continue to operate in good faith, uphold the principles of transparency and consumer choice, and always be mindful of antitrust laws. Through these efforts, the industry can continue to serve clients with integrity and maintain its vital role in supporting homeownership across the country.
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