NAR settles compensation lawsuits for $418 million and will ban commissions on MLS

by Patrick Regan

The National Association of REALTORS® (NAR) has reached an agreement to end the ongoing broker commission litigation that rocked the real estate industry in recent months. 

In an announcement Friday, NAR said the settlement “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.”

As part of the settlement, NAR will pay $418 million over four years and has agreed to amend its compensation regulations. The changes:

  • NAR will prohibit offers of broker compensation or commission on the MLS. Broker compensation still can be negotiated and discussed, but it cannot be done through the MLS, NAR said. 
  • MLS participants working with buyers will be required to enter into written agreements with those buyers. NAR has encouraged these agreements for years as a way to help clients understand what services and value will be provided and for how much. 

These changes will go into effect in mid-July 2024, NAR said.

In October, a jury in the now-infamous Sitzer-Burnett case found NAR, Keller Williams and HomeServices of America liable for conspiring to inflate commissions and ordered them to pay damages totaling $1.78 billion. HomeServices of America is still litigating the case and is not part of the NAR settlement. 

“NAR has worked hard for years to resolve this litigation in a manner that benefits our members and American consumers. It has always been our goal to preserve consumer choice and protect our members to the greatest extent possible. This settlement achieves both of those goals,” Nykia Wright, interim CEO of NAR, said in a news release.

The settlement still needs court approval before it is finalized.

“NAR exists to serve our members and American consumers, and while the settlement comes at a significant cost, we believe the benefits it will provide to our industry are worth that cost,” NAR President Kevin Sears said. “NAR is focused firmly on the future and on leading this industry forward. We are committed to innovation and defining the next steps that will allow us to continue providing unmatched value to members and American consumers. This will be a time of adjustment, but the fundamentals will remain: buyers and sellers will continue to have many choices when deciding to buy or sell a home, and NAR members will continue to use their skill, care, and diligence to protect the interests of their clients.”

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