Summary of the Class Action Case Leading to the NAR Settlement 2024
The NAR Settlement 2024 began as a civil action complaint filed in The United States District Court for the Northern District of Illinois by Christopher Moehrl. It was on behalf of himself and all others similarly situated on March 6, 2019. The law firm of Cohen Milstein took the lead in filing the original complaint against the defendants. They were later named as co-counsel in the certified class action versus The National Association of Realtors (NAR), Realogy Holdings Corp., Homeservices of America, Inc., Re/Max Holdings, Inc., and Keller Williams Realty, Inc.
The gist of the NAR Class Action Lawsuit listed as Case 1:19-cv-01610 was that the named defendants, the National Association of Realtors (NAR) along with four of the largest representative realtors conspired to maintain price fixing by a conspiracy using anti-competitive NAR rules as part of its Handbook on Multiple Listing Policy adopted in November 1996.
As with all class action actions, other complaints by plaintiffs with similar claims were filed against the NAR et al in the various courts around the nation. The legal process that led to the NAR settlement 2024 as detailed by Cohen/Milstein included motions to dismiss by the defendants, appointment of lead and co-counsel for the plaintiffs, appeals to higher courts, jury verdicts with compensatory monetary judgements, settlements by individual defendants, court approvals of settlements and finally on April 23, 2024 Preliminary Approval by the Settlement (NAR) by the court.
The Verdict
It was the guilty verdict in the case of Sitzer/Burnett v. NAR et al that brought the NAR Settlement 2024 to the table. In the Sitzer/Burnett v. NAR et al case a Kansas City, MO federal jury found the NAR and six named realtors guilty of all counts presented in regard to commission conspiracy. The jury awarded $1,785,310,872 in damages, which, under the law, will be automatically trebled to $5.356 billion
The NAR Settlement 2024 Explained
The $418 million in damages sounds like a lot of money. However, industry insiders are warning consumers not to expect much. If fact, if you are eligible to file for the current NAR Settlement 2024 which stems from the damages awarded in one of more than twenty class action lawsuits filed. Legal and real estate experts are expecting that an individual share of the $418 million will be about $13 after lawyer fees.
The NAR Settlement Claim Filing
More than 21 million other Americans who feel they were victims of the price fixing commission scheme. They will be filing at www.RealEstateCommissionLitigation.com or by printing and mailing a claim form to Burnett et al. v. The National Association of Realtors et al., c/o JND Legal Administration, PO Box 91479, Seattle, WA 98111. As always the easier way to file is online where you will receive a verifying email and the opportunity for payment electronically. Claims for a share of the NAR Settlement 2024 for buyers and sellers who are eligible must be submitted electronically or postmarked by May 9, 2025.
As with any class action, plaintiffs who take the lead in seeking legal counsel and filing a suit against defendants will receive more than the average share of the damage awards.
Greater Transparency in Real Estate Agreement
Along with the monetary damages assessed as part of NAR settlement 2024 key agreements include changes in real estate rules, MLS rules, along with buyer and seller commission percentages. The plaintiffs and The Department of Justice (DOJ) were focused on adding transparency to real estate agent rules. The intention is to offer more consumer protection for home buyers and home sellers.
Although the DOJ is reserving their right to file an appeal and challenge the judgement pending the outcome of other cases working their way through the courts. They appear to have accepted the rule. MLS rules and new buyer agency agreements and seller agency agreements that will now be the norm in residential real estate.
The DOJ is hinting at taking the case in a different direction. The class action lawsuits were on the grounds of collusion and conspiracy in setting commission. The NAR Settlement addresses with new MLS rules, consumer protection in the forms of more written contracts including a buyer agency agreement and a seller agency agreement for showing a house. The DOJ is putting together facts in pursuit of violation of anti-trust laws. The last movement on that front was that an appeals court ruled in April 2024 that the DOJ could reopen its investigation of the NAR.
Effective Date of The NAR Settlement
The NAR announced that the settlement effective date was August 17, 2024. In a full court press they explained how the NAR settlement 2024 will affect real estate sales going forward. The NAR website seem to be determined to put to rest misinformation about the settlement.
The NAR updated their website on May 24, 2024, on a posted page bearing the headline, What the NAR Settlement Means for Home Buyers and Sellers that explained the NAR take on the settlement. The key points of the settlement submitted to the court by the NAR for approval noted transparency in broker contracts between buyers and sellers are summarized.
How The NAR Settlement 2024 Affects Real Estate Agents?
The NAR Settlement 2024 does not limit or restrict Agents on the buy side or the sell side of a real estate transaction. What it does do is demand transparency. It requires Real Estate Agents to have signed contracts when showing homes for another agent or an MLS listing. The contract must explicitly state the commission that the agent will earn and who will pay it.
As per the NAR website,
Those written agreements must include:
A specific and conspicuous disclosure of the amount or rate of compensation the real estate agent will receive or how this amount will be determined.
Compensation that is objective (e.g., $0, X flat fee, X percent, X hourly rate)—and not open-ended (e.g., cannot be “buyer broker compensation shall be whatever the amount the seller is offering to the buyer”).
A term that prohibits the agent from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer; and
A conspicuous statement that broker fees and commissions are fully negotiable and not set by law.
How Home Buyers and Home Sellers are Affected by the NAR Settlement 2024?
In a continuing effort to blunt false press reports about automatic lower commissions for home buyers and home sellers the NAR explains the fact on their website plainly,
If you are a buyer and your agent is using an MLS, you will need to sign a written agreement with your agent before touring a home so you understand exactly what services will be provided, and for how much.
Written agreements are required for both in-person and live virtual home tours.
You do not need a written agreement if you are just speaking to an agent at an open house or asking them about their services.
Agent compensation for home buyers and sellers continues to be fully negotiable.
When finding an agent to work with, ask questions about their services, compensation and these written agreements.
More details about these changes and what they mean can be found at facts realtor.
How The Press is Reporting The NAR Settlement Agreement 2024?
Truth be told no one knows how the NAR Settlement 2024 will shake up the housing market, real estate professionals or buyers and sellers.
In a story published on August 15, 2024 in Mortgage Reports, What the $418M NAR Settlement Means for Buyers, Sellers, and Real Estate Agents by: Craig Berry and reviewed by: Aleksandra Kadzielawski, Mr. Berry writes, Brad Nix, CEO of Path and Post Real Estate, says,
I don’t expect housing to become more affordable. If costs are reduced, then sellers are likely to just pocket the extra savings.
In a story published on the same date August 15, 2024, in US News and World Reports, How the NAR Settlement Is Changing Homebuying and Selling By Aly J. Yale Edited by Dawn Bradbury Reviewed by Liisa Rajala a Florida Real Estate Agent had this take,
Sellers expecting to net more on the sale of their home may be surprised that buyers will now be making offers lower than the asking price, due to factoring in the cost of paying for the buyer’s agent’s commission.
says Alex Mendel, an agent with Keller Williams Realty Boca Raton in Florida.
The Bottom Line Changes
First twenty-one million filers will be paid from the settlement fund. The bottom line is that there may not be any substantial changes in the commission for real estate buyers or sellers. Unless they start negotiating better and more often. The NAR Settlement will require Real Estate Agents to have more contracts signed. They should spell out every detail about compensation for showing a house on MLS or for other brokers. Other wording states that Agents cannot shun listings that offer smaller or no commissions. How will that be enforced has not been spelled out on the NAR Settlement FAQs published on National Association of Realtors website. The site has answered 119 frequently asked questions about NAR Settlement 2024.
