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An Update on the NAR Broker Commission Rule Lawsuits

Kyle Angelotti

An Update on the NAR Broker Commission Rule Lawsuits
Gary Burchell via Getty Images

Introduction

On November 27, 2024, U.S. District Judge Stephen R. Bough issued an order approving the final settlement between the National Association of Realtors and a nationwide class of home sellers in Burnett, et al. v. Nat’l Ass’n of Realtors, et al. (the “NAR Settlement”). This final approval settled the antitrust lawsuit between a nationwide class of home sellers and the National Association of Realtors (“NAR”) over real estate broker commission rules and practices. The home sellers had alleged that NAR rules that required seller brokers to offer compensation to buyer brokers violated antitrust laws by eliminating competition that could have lowered fees among buyer brokers.

Despite the settlement, antitrust scrutiny of NAR rules is not ending. The DOJ filed a Statement of Interest prior to the final approval of the NAR Settlement indicating it believes some provisions of the settlement may violate antitrust laws. Furthermore, NAR’s petition for writ of certiorari related to the DOJ’s investigation into NAR’s buyer broker rules was recently denied. It appears that antitrust enforcer interest in real estate broker practices will continue.

NAR Settlement

The NAR Settlement was first filed with the court on April 19, 2024. It required NAR to pay $418 million into a settlement fund. Additionally, the settlement contained a number of conduct provisions. Notably, the NAR Settlement:

  • Prohibits the inclusion of buyer broker compensation on Multiple Listing Service (“MLS”) listings.
  • Requires prospective home buyers and buyer brokers to enter into a written agreement before the buyer broker shows any houses. The agreement must include buyer broker compensation.
  • Requires buyer brokers make certain disclosures to prospective home buyers related to buyer broker compensation.

The settlement released claims against NAR, NAR’s realtor members, brokerages with residential home sales of less than $2 billion, and Realtor MLS companies, provided that they agree to the conduct changes outlined in the NAR Settlement. The agreement covers claims held by “persons who sold a home that was listed on a [MLS]” nationwide, within date ranges varying by state and MLS.

At a November 26, 2024 hearing, the Court approved the proposed settlement. In a written order that followed one day later, Judge Bough held that the NAR Settlement was fair, reasonable, and adequate, satisfying the FRCP 23(e)(2) factors for approval of class action settlements. The Court also held that the NAR Settlement satisfied the Eighth Circuit’s Van Horn factors for class action settlement approval. Given the risks and expenses associated with ongoing complex litigation, the Court found that the certainty of recovery from the NAR Settlement weighed in favor of its approval. Finally, Judge Bough overruled objections from various individuals and entities, including plaintiffs in other lawsuits who objected to the nationwide settlement of claims.

DOJ Statement of Interest

Two days before the Court’s hearing on the NAR Settlement in Barnett, the Department of Justice filed a statement of interest with the court. While the DOJ took “no position on whether the proposed settlement satisfies” the requirements of the federal rules of civil procedure, it did express concerns with several of the provisions of the proposed settlement. The government noted that the NAR Settlement does not eliminate buyer broker fees or seller broker advertisement of the amount of buyer broker fees to be paid—the settlement only forbids listing buyer broker fees on a MLS. It appears the government may be concerned that continuing to allow public offers of buyer broker compensation will not remedy the alleged antitrust harm from the NAR commission rules. The Statement of Interest also suggests that the NAR Settlement provision requiring buyers to enter into written agreements with brokers prior to any home tours could independently violate antitrust laws by restricting competition among buyer brokers. Throughout the Statement of Interest, the DOJ highlighted its position that approval of the NAR Settlement would not insulate NAR from future antitrust scrutiny.

NAR filed a response to the Statement of Interest, claiming that the government’s concerns were “unfounded.” NAR argued that the settlement only required buyer brokers and buyers to enter into written agreements before the broker shows a house, and took the position that requiring an agreement does not restrain competition. The DOJ’s Statement of Interest was not addressed by the Court in its written order approving the NAR Settlement.

The Statement of Interest was filed against the backdrop of the DOJ’s dispute with NAR over the government’s investigation into NAR’s rules about compensation offers to buyer brokers. While NAR claimed that a 2020 consent decree precluded the DOJ from continuing to investigate NAR’s buyer broker rules, the DOJ argued that the settlement never committed the DOJ “to refrain from reopening [its] antitrust investigation.” After NAR received a civil investigative demand from the DOJ, they moved to quash in the U.S. District Court for D.C., which granted the motion. The D.C. Circuit then reversed the district court, holding that the government never agreed to refrain from reopening its investigation. NAR’s Petition for a Writ of Certiorari was denied on January 13, 2025, and presumably the DOJ’s investigation will continue.

Conclusion

The order approving the NAR Settlement brings NAR’s role in the class action lawsuit over buyer broker commissions to a close. This settlement changes how real estate brokers, both sellers and buyers, will conduct business moving forward. However, the DOJ’s Statement of Interest and DOJ’s ongoing investigation show that antitrust scrutiny of NAR rules and practices is ongoing.

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