Not long ago I had a Tip out on the now famous Case of Sitzer/Burnett v NAR, et al.
In this NAR Case, NAR and other real estate agents were sued in the Missouri Federal District Court, with the plaintiffs arguing that the defendants, NAR, et al, had engaged in anti-trust behavior to increase the fees or commissions charged to sellers when the sellers listed their houses for sale.
On 10/31/2023, the jury in the NAR case held against the defendants, with a judgment of about 1.8 million. That amount, under Federal antitrust law, is subject to being tripled, resulting in a total judgment of about 5.4 Billion!
Such resulting decision set off the fireworks. More cases were quickly filed against NAR and other large real estate brokerage companies.
A few settlements occurred with some large firms. (These were Anywhere Real Estate, Re/Max, and Keller Williams.) The amount of the settlements in total with these 3 large firms was over 200 million dollars.
Recently NAR reached an agreement with several plaintiffs, settling for about 418 million dollars.
Such settlement did not cover the large firms that were involved in over 2 billion of sales in 2022 for their firm. In other words, aside from the large firms that already settled, such as Re/Max, Keller Williams, and Anywhere Real Estate, the NAR settlement announced 3/15/2024, includes the smaller firms that fit the requirements of settlement, not the larger firms that exceeded the 2 billion amount as noted above.
At the time of writing this note, the NAR settlement of 3/15/2024 is subject to approval of the court. There is uncertainty as to exactly how the settlement and use of the 418 million will be put in play, assuming the court accepts this settlement among the parties. The court might also add additional terms of settlement.
What appears certain is the Sitzer Case and the subsequent settlements and payments will hugely impact the residential brokerage community. The projection by many pundits is a substantial drop in brokerage commissions on future sales and a reduction of how much commission the average seller of a residential property will pay in brokerage fees. It also appears that NAR will lose a good deal of members, since the structure of requiring the listing broker to cooperate or share commissions with the selling broker when placing a property in an MLS (Multiple Listing Service) will now be curtailed. Many members of NAR will now choose to withdraw from NAR and use the web and other means to deal with property on the market for sale.
Be ready for more major announcements on the NAR proposed settlement. This matter is not at an end. Further, there are other brokers that are not part of this proposed settlement. Thus, there will be other important cases decided in the near future.
By
Dr. Mark Lee Levine, Professor, University of Denver