The U.S. District Court for the Western District of Missouri has granted final approval of the National Association of Realtors (NAR) proposed settlement agreement to resolve class action claims related to broker commissions. The Court heard from all parties, as well as objectors and the Department of Justice (DOJ). Once arguments concluded, the Court ruled to grant final approval. The Court is expected to soon issue a formal written order.
The settlement secures a release of liability for more than 1.4 million NAR members, all state/territorial and local Realtor associations, Realtor Multiple Listing Services (MLSs), NAR’s affiliate organizations and all brokerages with an NAR member as principal that had a residential transaction volume in 2022 of $2 billion or below. The settlement also releases MLSs and brokerages that chose to opt-in to the agreement.
“This is an important moment for NAR members, home buyers and sellers, and the real estate industry,” said NAR President Kevin Sears, Broker-Associate of Sears Real Estate/Lamacchia Realty in Springfield, Massachusetts. “As consumer champions, NAR’s members have been working tirelessly to implement the practice changes required by the settlement and shepherd consumers through this period of transition. The principles of transparency, competition and choice are core to the settlement agreement and empower real estate professionals and consumers to negotiate the services and compensation that work for them.”
Under the settlement, NAR will also pay $418 million over approximately four years to the settlement fund. NAR membership dues for 2025 will remain unchanged from 2024.
NAR’s settlement accomplished two essential goals: it released most NAR members and many industry stakeholders from liability in these instances, and it ensured that cooperative compensation remains an option for customers when purchasing or selling a house. NAR also obtained in the deal a mechanism enabling practically all brokerage organizations with a residential transaction volume of more than $2 billion in 2022, as well as MLSs that are not completely controlled by Realtor’s associations, to acquire releases efficiently if they so desire.
“NAR is committed to empowering Realtors to help home buyers and sellers successfully navigate what is often the most important financial transaction of their lives,” NAR CEO Nykia Wright said. “Today and every day, NAR is focused on demonstrating the importance of agents who are Realtors® in the marketplace, creating a transparent and inclusive home buying and selling process, and advancing the right to real property for all.”
Redfin recently conducted a poll to gauge how drastically the market has shifted since the new commission rules went into effect. The study found that commissions paid to real estate agents representing buyers have remained essentially unchanged since new rules on commissions went into effect on August 17. The average buyer’s agent commission for homes sold in October was 2.34%, ticking down just one basis point from 2.35% for homes sold in August, when the new changes took effect. That’s down from an average of 2.45% year-over-year.
“Redfin agents say the biggest difference since August 17 is the need to educate customers about rule changes and have conversations about agent fees with buyers at the start,” said Redfin Chief Economist Daryl Fairweather. “Our agents see that as a positive, as it encourages more communication upfront and increases transparency around fees.”
