National Association of Realtors to Pay $400m to Settle Lawsuit

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The National Association of Realtors also agreed to make critical changes to brokerage policies, potentially giving homeowners more flexibility in negotiating commissions and other rates.

The National Association of Realtors has agreed to pay more than $400 million to settle a lawsuit alleging that longstanding rules exploited homeowners by inflating sales commissions.

According to The Associated Press, the agreement—announced on Friday—is expected to resolve a series of related claims against the National Association of Realtors and several prominent property brokerages.

In court documents, attorneys for the plaintiffs said that the N.A.R. set stringent internal trade rules for properties listed on its affiliated Multiple Listing Services—rules that incentivized high commissions, and which discouraged realtors representing buyers from showing their clients homes for which the seller’s broker was offering a lower commission than the buyer’s agent.

Under the terms of the settlement, the National Association of Relators said that it will no longer require that brokers advertising for-sale properties on Multiple Listing Services offer any up-front compensation to the buyer’s realtor.

Gavel on copy of lawsuit; image by Wirestock, via

The rule change, notes The Associated Press, will likely make it easier for individual homeowners to negotiate better sales prices with the buyer’s agent, even for transactions that are not listed on MLS.

Economists expect that the rule changes could lead to reductions in commission rates of up to 30%. By encouraging a “free market,” experts predict that property prices may decrease across the board.

“The forces of competition will be let loose,” said Benjamin Brown, co-chairman of antitrust practice at Cohen Milstein, and one of the lawyers who negotiated the settlement. “You’ll see some new pricing models, and some new and creative ways to provide services to home buyers. It’ll be a really exciting time for the industry.”

Mex Besbris, an associate professor of sociology at the University of Wisconsin in Madison, told The New York Times that the real estate industry and market will likely be subject to unexpected and near-unprecedented changes.

“This will really be a fundamental shift in how Americans buy, search for, and purchase and sell their housing. It will absolutely transform the real estate industry,” Besbris told the Times. “It will prompt one of the biggest transformations to the housing market since New Deal-era regulations were put in place.”

The National Association of Realtors, adds The Associated Press, has faced other claims concerning its commission practices and rate-setting procedures. In October, for instance, a federal jury in Missouri ordered the N.A.R. to pay $1.8 billion in damages after it that the association and its co-defendants violated antitrust laws by demanding that home-sellers pay buyers’ agents’ commissions.


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