National Association of Realtors Found Liable
On October 31, 2023, a jury reached a decision that could potentially change how real estate transactions are conducted in the U.S., creating opportunities for significant changes to commissions paid to real estate agents. In the case, Burnett v. NAR et al, the Kansas City, MO, jury found the National Association of Realtors (NAR), and some of the largest national real-estate broker franchisors conspired to artificially inflate home-sale commissions.
The basis of the conspiracy is the condition that a home seller must agree to pay a commission to the buyer’s agent before the home can be listed on NAR’s nationwide Multiple Listings Service database – a database controlled by local NAR associations. And, since most home sales are through the MLS marketplace, the plaintiffs claim home sellers are forced to pay a cost that should be paid by the buyer.
Under the new model, sellers may no longer be responsible for covering the seller’s and buyer’s agents’ commissions, allowing negotiation of different compensation models, and having buyers assume the responsibility of directly compensating their agents.
The NAR believes this could be a substantial challenge for first-time and low-income buyers who might lack the upfront funds to pay an agent, potentially depriving them of valuable expertise.
According to Worldwide ERC, the resolution of this and other related lawsuits could potentially change today’s real estate business by bringing competition, cutting costs, and providing customers with more options.
With uncertainty on how the ruling plays out, and NAR planning to appeal the decision with confidence, NEI will continue to monitor the situation and will offer updates as they become available. If you have any questions, please contact your NEI Client Relations Manager or NEI Client Development Contact at 800.533.7353.
National Association of Realtors Found Liable
On October 31, 2023, a jury reached a decision that could potentially change how real estate transactions are conducted in the U.S., creating opportunities for significant changes to commissions paid to real estate agents. In the case, Burnett v. NAR et al, the Kansas City, MO, jury found the National Association of Realtors (NAR), and some of the largest national real-estate broker franchisors conspired to artificially inflate home-sale commissions.
The basis of the conspiracy is the condition that a home seller must agree to pay a commission to the buyer’s agent before the home can be listed on NAR’s nationwide Multiple Listings Service database – a database controlled by local NAR associations. And, since most home sales are through the MLS marketplace, the plaintiffs claim home sellers are forced to pay a cost that should be paid by the buyer.
Under the new model, sellers may no longer be responsible for covering the seller’s and buyer’s agents’ commissions, allowing negotiation of different compensation models, and having buyers assume the responsibility of directly compensating their agents.
The NAR believes this could be a substantial challenge for first-time and low-income buyers who might lack the upfront funds to pay an agent, potentially depriving them of valuable expertise.
According to Worldwide ERC, the resolution of this and other related lawsuits could potentially change today’s real estate business by bringing competition, cutting costs, and providing customers with more options.
With uncertainty on how the ruling plays out, and NAR planning to appeal the decision with confidence, NEI will continue to monitor the situation and will offer updates as they become available. If you have any questions, please contact your NEI Client Relations Manager or NEI Client Development Contact at 800.533.7353.
