A settlement that would rewrite the way many real estate agents are paid in the United States has received preliminary approval from a federal judge.
On Tuesday morning, U.S. District Judge Stephen R. Baugh ruled against the National Association of Realtors and Housing, which had sued the real estate industry group over long-standing rules on agent commissions that the real estate industry group called mandatory. Signed an agreement with the vendor. Paying excessive fees.
The agreement is still subject to a hearing for final court approval, scheduled for November 22nd. But that hearing was largely a formality, with Judge Baugh’s case in the U.S. District Court for the Western District of Missouri now paving the way. NAR will begin implementing fundamental rule changes required by the agreement. This change is expected to be fully applied to securities companies nationwide by September 16th.
NAR welcomed preliminary approval of the settlement in a statement from spokesperson Mantil Williams.
“It has always been NAR’s goal to resolve this litigation in a manner that preserves consumer choice and protects our members as much as possible,” he said in an email. “There is a strong basis for the court to approve this settlement as it is in the best interest of all parties and class participants.”
NAR reached an agreement in March to resolve the lawsuit and a series of similar claims by paying $418 million in damages, with changes. Months earlier, in October, a jury had reached a verdict requiring NAR to pay at least $1.8 billion in damages, alleging that NAR’s brokerage commission rules forced it to pay excessive commissions when selling properties. The homeowners agreed.
The Chicago-based group, which has 1.5 million members, has wielded tremendous influence in the real estate industry for more than a century. But Missouri home sellers facing multiple counterfeit claims after a lawsuit against NAR and several brokers say the group says seller’s agents must make commission offers to buyer’s agents. successfully argued that the rules had led to higher fees and required different rules. Competition was stifled by the agent listing homes in a database maintained by his NAR affiliate.
The lawsuit alleges that by requiring agents for sellers and buyers to split commissions, NAR and brokers that required agents to be members of NAR violated antitrust laws. These rules have resulted in industry-wide standard commissions remaining at nearly 6%, according to the complaint. Going forward, agents will essentially be blocked from making these fee offers, and some industry analysts say this change will force fees to drop across the board and ultimately drive down home prices. It is said that it will happen.
Real estate agents are bracing for pain.
“We’re concerned about our buyers and how we’re going to be compensated for working with them going forward. There’s a lot of ambiguity,” said Karen Pagel Gernt, a real estate agent in Duluth, Minnesota. ” he said.
The preliminary approval of the settlement comes as the Justice Department reopens its own investigation into the industry group. Earlier this month, the U.S. Court of Appeals for the District of Columbia Court of Appeals reversed a 2023 lower court ruling that struck down the Justice Department’s request for information from NAR about broker commissions and how real estate properties are sold. They now have permission to scrutinize his fees and other NAR rules that have long confused consumers.
“This is the first step in bringing long-awaited change,” said Michael Ketchmark. Attorney who represented home sellers in major lawsuits. “Later this summer, NAR will begin to change the way homes are bought and sold in our country, ultimately leading to billions of dollars in money and savings for homeowners.”
Under the proposed settlement, homeowners who have sold their homes in the past seven years may be eligible to receive a small lump sum class action award. Depending on how many homeowners file applications by the May 9, 2025 deadline, tens of millions of Americans could end up applying.
