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Judge Approves $418M Deal, Billions in Home Seller Savings Ahead

New York City

National Association of Realtors, class-action lawsuit, broker commissions, co-ops and condos.

Brokers for buyers are unsure how they will get paid under the N.R.A.'s new agreement.

April 23, 2024

Americans who sell their homes — from co-op and condo apartments to single-family houses — are about to save billions of dollars.

Judge Stephen R. Bough, a federal judge in Missouri, on Tuesday signed off on a $418 million agreement between the National Association of Realtors (N.A.R.) and home sellers who sued the real estate trade group over its longstanding rules on commissions to agents that they say forced them to pay excessive fees.

The ruling paves the way for N.A.R. to begin implementing the sweeping rule changes required by the deal, the New York Times reports. The changes will likely go into full effect among brokerages across the country by mid-September.

N.A.R. has wielded immense influence over the real estate industry for more than a century. But home sellers in Missouri, whose lawsuit against N.A.R. and several brokerages was followed by multiple copycat claims, successfully argued that the group’s rule that a seller’s agent must make an offer of commission to a buyer’s agent led to inflated fees, and that another rule requiring agents to list homes on databases controlled by N.A.R. affiliates stifled competition.

By mandating that commission be split between agents for the seller and buyer, N.A.R., and brokerages who required their agents to be members of N.A.R., violated antitrust laws, according to the lawsuits. Such rules led to an industrywide standard commission that hovers near 6%, the lawsuits said. Now, agents will be essentially blocked from making those commission offers, a shift that will, some industry analysts say, lower commissions across the board and eventually force down home prices as a result.

“This is the first step in bringing about the long awaited change,” says Michael Ketchmark, the lawyer who represented the home sellers in the main lawsuit. “Later this summer, N.A.R. will begin changing the way that homes are bought and sold in our country and this will eventually lead to billions of dollars in savings for homeowners.”

Under the settlement, homeowners who sold homes in the last seven years could be eligible for a small piece of a consolidated class-action payout. Depending on how many homeowners file claims by the deadline of May 9, 2025, that could mean tens of millions of Americans.

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