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Big Changes for Real Estate Industry: Complete Guide to the Real Estate Commission Lawsuit

by Emily Koelsch
Commission Update

Complete Guide to the Real Estate Commission Lawsuit

On March 15, 2024, the National Association of Realtors (NAR) reached a landmark settlement in a pending lawsuit over real estate commissions. The lawsuit was brought by a group of home sellers who challenged how NAR and real estate brokerages set commission rates. 

Here’s an overview of the lawsuit, details about the settlement, and a look at the shifts expected from this industry-changing litigation.  

The Real Estate Commission Lawsuit

In 2019, a group of home sellers in Missouri filed a lawsuit against NAR and several brokerages claiming that they conspired to keep real estate commissions high and to force sellers to pay the commission of the buyer’s agents.

In October 2023, a federal jury ruled in favor of the home sellers and ordered the defendants to pay nearly $1.8 billion in damages. NAR initially said it would appeal the verdict, a process that would take years. In a surprising shift, however, NAR agreed to settle the case in March. 

NAR Settlement Explained 

In its settlement, NAR agreed to pay $418 million in damages and, notably, agreed to changes in the rules governing the home selling and buying process. 

Here’s a look at the most notable rule changes from the settlement: 

  1. MLS listings will no longer include information about agent compensation. Previously, this was where the seller agreed to pay a certain commission to the buyer’s agent.  
  2. Real estate agents are no longer required to subscribe to the MLS.
  3. Buyers must enter into a written agreement with their real estate agent. 

The changes will go into effect in July, pending court approval. 

What the New Rules Mean for the Real Estate Industry 

While these changes should officially go into effect in July, there likely will be some lag time before they cause major shifts in the industry. Even so, this settlement promises to change how people buy and sell houses. 

Broadly speaking, the settlement should lead to: 

  1. Lower transaction costs when selling a home because sellers will no longer pay the buyer’s agent’s commission. 
  2. Reduced commissions paid in real estate transactions. 
  3. Buyers negotiating their agent’s compensation. 

Some additional changes that we’d expect to see over time are: 

  • Increased competition among buyers’ agents, leading to reduced prices and agent compensation; 
  • More buyers deciding they don’t want to pay an agent’s fee and instead opting to buy a home without an agent; 
  • Increased negotiation between buyers and sellers regarding agent compensation; 
  • Changes in regulation to allow for rolling real estate commission costs into buyers’ mortgages; 
  • Support to help first-time homebuyers who could be priced out of representation; 
  • The development of new models for buying and selling

All in all, we think big changes are ahead for home buyers and sellers. These changes should lead to reduced transaction costs for investors and more options when buying and selling properties. 

Visit ezLandlordForms.com for More Real Estate Industry Updates

It will take some time to see the full effects of the settlement, but it’s safe to say this is the biggest change for the real estate industry in decades. To stay up-to-date with any changes or additional real estate news, visit ezLandlordForms.com.

Emily Koelsch, ezLandlordForms Contributing Writer

Emily Koelsch WriterEmily Koelsch is a freelance writer and blogger, who primarily writes about business, real estate, and technology.



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