New provisions could limit brokers' ability to attract clients
Today marks the final hearing on the class-action settlement in Sitzer/Burnett v. National Association of Realtors (NAR) at the U.S. District Court for the Western District of Missouri, bringing a close to the five-year-long debate over real estate commissions. Just two days prior, the Department of Justice (DOJ) issued a final statement expressing concerns about the impact of realtor buyer agreements in the settlement.
In August 2024, NAR reached a settlement in the class action that introduced changes to the structure of buyer-broker fees in real estate transactions. While the case has largely been peripheral to the mortgage industry, its implications may soon be felt as new policies are rolled out. Experts from Mitchell Sandler’s mortgage regulatory team have shared their insights, along with feedback from mortgage lenders.
Historically, NAR’s cooperative compensation policies and other rules that restricted commission negotiations led to buyers’ agents steering clients toward properties that offered higher commissions, ultimately resulting in home sellers paying inflated buyer-broker fees. Though the DOJ has not officially opposed the settlement as a whole, it raised concerns about the class action’s challenge to "blanket unilateral offers of compensation" to buyer agents, arguing that such practices harm both buyers and sellers.
In the DOJ’s final statement, the focus shifted from cooperative compensation to a specific clause in the settlement that requires buyers and their agents to sign written agreements before viewing homes. NAR has supported the idea of written agreements between buyers and their agents (MLS participants), and since August 17, 2024, the settlement mandates this requirement before home tours can take place. However, the DOJ voiced concerns that this provision could stifle competition and limit the number of clients brokers are able to attract.
“The provision requiring buyers and brokers to enter into written agreements prior to touring homes could limit competition and harm buyers,” the DOJ’s statement read. “This resembles past industry restrictions that courts have found to violate antitrust laws, potentially reducing — rather than increasing — competition among buyer brokers.”
In response to these concerns, the DOJ recommended either removing the requirement for buyer-broker agreements or clarifying that the settlement does not offer immunity from antitrust laws. The DOJ also urged the court to make clear that approval of the settlement does not shield the buyer agreement clause from future antitrust scrutiny.
Furthermore, to avoid potential future legal complications, the DOJ requested that Judge Stephen Bough clarify that, if the settlement is approved, it does not serve as confirmation that existing violations are resolved, past remedies are satisfied, or that antitrust compliance is ensured.
The DOJ's filing also emphasized that brokers, agents, or NAR entities facing future antitrust claims may try to use the court’s ruling as a defense, which could complicate future legal matters.
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