Realtor Group Settles Commission Lawsuits
The National Association of Realtors has announced an agreement to settle the wave of commission lawsuits brought by home sellers.
The settlement will bring significant changes to the way brokers are paid. It could dramatically lower the commission fees currently paid to realtors, which range from 5% to 6% on most homes sold in the U.S.
“For years, anticompetitive rules in the real estate industry have financially harmed millions of Americans,” says attorney Benjamin Brown, who represented plaintiffs in the earliest in the volley of lawsuits against the organization. “This settlement will bring sweeping reforms that will help countless American families.”
Shares of
Zillow
,
which sells advertising leads to real estate agents, was down 8.9% on the news Friday morning. A reduction in agent commissions could cut into business the company. Rival
was down 3.9%.
Shares of
—which operates Realtor.com under license from NAR—were down 0.4%. Friday morning. News Corp. also owns Dow Jones, the publisher of Barron’s.
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Meanwhile,
which owns Homes.com—an alternative to Realtor.com—was up 4.8% on the settlement news.
NAR denied wrongdoing in a press release about the terms of its settlement Friday morning. The Realtor group, which has roughly 1.5 million members, said it will pay $418 million over about four years. NAR, along with several of the nation’s largest brokerages, had been found guilty of conspiring to inflate commissions in a $1.8 billion Missouri antitrust case late last year. Barron’s wrote about the potential impact of the lawsuit in a recent cover story.
The agreement, which is subject to court approval, “would resolve claims against NAR, over one million NAR members, all state/territorial and local REALTOR® associations, all association-owned MLSs, and all brokerages with an NAR member as principal that had a residential transaction volume in 2022 of $2 billion or below,” NAR said in a statement.
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The Department of Justice, which has been seeking to investigate NAR over alleged anticompetitive practices, is expected to weigh in whether the settlement is in the public’s interest, says Brown, whose case, led by plaintiff Christopher Moehrl, was filed in U.S. District Court for the Northern District of Illinois.
The proposed settlement brings changes to the commission rules that have been under fire. The trade group will prohibit sellers and their agents from offering broker compensation on the multiple listings service. “This would mean that offers of broker compensation could not be communicated via the MLS, but they could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals,” the release said.
The trade group would also require MLS participants to use buyer-broker agreements. “NAR continues, as it has done for years, to encourage its members to use buyer-brokerage agreements that help consumers understand exactly what services and value will be provided, and for how much,” the trade group said, adding that the changes will take place in mid-July.
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Brown, a partner with the firm Cohen Milstein, says the settlement could clear the way for new innovations in home sales that have failed to gain traction in the past.
“Competition has been stifled in real estate brokerage services market for decades,” he says. “In coming years, Americans will see new and significant business models that are designed to provide better services and lower prices for buyer-broker services.”
Write to Shaina Mishkin at shaina.mishkin@dowjones.com
