Let’s talk about the NAR lawsuit, buyer’s agents and more

While inventory, inflation and interest rates dominated the headlines for most of 2023, another event that happened last year will continue to play out and affect all of us in real estate over the course of this year, too. We’re talking about the federal Sitzer/Burnett court case and a series of other lawsuits challenging the long-standing commission structure of a real estate transaction. All of this legal activity has undoubtedly added more uncertainty from the public about how commissions work in real estate.

The core issue. Class-action lawsuits from across the country allege that policies from the National Association of REALTORS® and others are anti-competitive. The traditional “cooperative compensation” system has come under the most fire. That is the requirement that the agent for the seller must offer compensation to the buyer’s agent as a condition for listing homes on the Realtors’ Multiple Listing Service (MLS). The plaintiffs argued that this artificially inflates the cost of housing, as it typically involves a commission split of 5% to 6% between the seller’s and buyer’s agents. 

The Sitzer/Burnett decision. A pivotal moment in this legal battle came in October from a federal court in Missouri when NAR and two brokerage firms were found liable for $1.8 billion in damages for conspiring to keep commissions high. The decision has spurred similar lawsuits since. In response, NAR has defended its practices, saying its system promotes efficiency, transparency, and market-driven pricing options for home buyers and sellers. In addition, the association continues to assert that the American model of local broker marketplaces is among the best in the world. 

What does this mean for you? Despite the amount of money in damages awarded, the real impact for most people across the country could be if the decision ultimately changes how a buyer’s agent is paid. The real estate industry could see a seismic shift because the ruling could ultimately redefine the standard commission structure and fundamentally change real estate transaction practices on a national level. It could also lead to changes to the MLS and possible competing listing services. Though a final resolution to this specific case is probably still years down the road, ramifications are certainly happening now. 

When it comes to our REALTOR® friends, all this news means you need to keep emphasizing all the benefits you bring to the table for your clients, especially if you specialize on the buyer’s side. The role of a buyer’s agent has long been misunderstood, and the publicity from this case will only lead to more questions. Be ready to answer them. Show your value, and people will quickly realize that this issue is about how agents are paid, not whether you’re worth it or not.   

Consumers should know there are professionals ready to help and serve their best interests, whether you’re buying or selling. Be diligent when it comes to picking the right agent for you. The best ones in our communities are ready to guide you on your journey home!

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