The National Association of Realtors (NAR) was found guilty by a jury in Kansas City of artificially maintaining high commission rates through its Clear Cooperation Rule.
The trade group, along with co-defendants HomeServices of America and Keller Williams, were ordered to pay $1.78 billion in damages in guilty in the Sitzer/Burnett case, which involved Missouri home sellers who claimed NAR and the two brokerages forced them to pay a commission that was split between buyer and seller agents. The class action, filed in U.S. District Court, represented roughly 500,000 Missouri home sellers and covered transactions between 2015 and 2022.
The verdict concludes a case that was first filed four years ago. A similar lawsuit filed in Illinois against NAR is scheduled to be heard early next year.
Prior to the verdict, NAR Chief Legal Office Katie Johnson alleged the sellers’ attorneys were “mischaracterizing our rules and do not understand how the rules work themselves. And then the practice of cooperation between real estate professionals has contributed to this efficient pro-consumer model that we have and have had for 100 years for transacting real estate in America.”
Keller Williams issued a statement that said: “The Sitzer-Burnett case was a civil matter, not a criminal one. It is not correct to state that any defendant was found guilty. Keller Williams and the other co-defendants are not facing criminal penalties. Rather, the jury’s verdict imposed civil liability for breaches of Missouri antitrust laws — a result we vehemently disagree and are pursuing all avenues to appeal. Keller Williams followed the law regarding cooperative compensation and stands by the evidence presented on the 100-year-old practice of sellers’ agents offering commissions to other agents.”
This is a sad state of affairs. Not sure how we got to this point but I suspect this will just encourage many others to come after us.
I agree, Jayne. People have a total misconception of how hard Realtors work. We often work for months or even years on a transaction before we actually get paid. It just happens to come in a lump some so it appears as if we are making a lot of money. I guess we will see what this does to the industry.
Completely agree. They’re just going to continue to ruin the industry. They’ve already ruined the real estate market.
Do non-realtors understand the enormous amount of dollars that realtors spend to be a realtor and keep abreast of the laws, markets advertising and appropriate research for each client?
In order for the commission rules to change, the entire realtor compensation needs to change. Maybe real estate companies should FINALLY pay their agents instead of agents handing part of their commissions over to them. Until agents are paid fairly, this will never change. So glad I finally left this profession after 16 years. And agents should not have to pay NAR yearly dues – real estate companies should pay them directly.
And most times properties in the recent market have sold in hours… drop the fees when that happens and more people won’t be as angry.
To begin with an exclusive right to sell is a contractual agreement with a Seller and an Agency. The listing Agency & Seller agree to a % of the selling price. The Seller also permits that Agency to co-broke a percentage. Therefore it is not the Seller compensating a Buyers Agency. It is the listing Agency.
Can you imagine if there were ONLY listing Agencies? Buyers would have no choice but to be serviced by the Listing Agency be subjected to a Dual Agency, a Desingated Agency or have NO representation at all. Many Buyers could not afford a Buyers Agency when they can barely come up with the down payment & closing cost. Many request Seller’s concessions for their closing cost.
I heard that the DOJ was behind this which is another example of Government over reach to eliminate the private sector & capitalism.
The only way to make this work if it’s enforced is to require buyers to hire attorneys, otherwise it’s a total disaster. This doesn’t help buyers find a home or buy a home that’s right for them, but it would at least offset the harm this stupid decision causes to buyers.
You nailed it!
Perhaps the word Commission should be replaced with Finders Fee?
Great point… or like Tom Hopkins said ” fee for service “.
Is it not bad enough they already think that REALTORS do nothing but collect a big check after showing a house?
It’s not just finder’s fee. There is much more to it than that. When a REALTOR takes a listing, they commit to honest full service to their client, in marketing, showing, opening, facilitating, negotiating, aiding other agents, and mostly, securing a buyer who would otherwise go away and continue being a weekend looky-loo forever. Selling is an artform.
Then there’s walking them through the financing, credit services, home repair, fighting the appraiser, occasionally the surveyor, keeping posted on the closing, the buyer’s agent, etc.. A lot goes into it.
If your going to reduce the name of the fee, the consumer will collectively pay according to their reduced perception of services.
Every product in the US is sold and the seller builds in an amount of money to pay for production, labor, marketing and time of employees, Realtors recommend that the seller of a home do the same, The Realtor is doing all of the work to find a buyer and get the home to closing for no money until the seller receives their funds. Would you work for nothing?
If we keep allowing companies like Zillow to get bigger and bigger, they’ll just take our tools and give it to the public for free. Meanwhile we pay for all the data and MLS information they populate on the internet for free.
The bigger question is, why are our Real Estate Companies and MLS agreeing to cooperate with Zillow and the rest?
Somebody is getting paid by Zillow and it’s not the agents.
And where do you think they get all the info? NAR set that whole thing up for them. REALTORS never should have given the geeks the keys to the kingdom.
No seller is forced to do anything. If you don’t want to pay a commission, you are free to sell the home yourself. Sellers have been doing it for years. This is a job that we work hard to complete. We offer many different opportunities to sellers that would require them to pay multiple organizations to provide including professional photography, staging, etc and it’s all part of the service offered by realtors. I have spent more hours than I can count helping customers pack because they were in no physical condition to do so. I cooperate with other agents who have buyers that are pre-approved and actually eligible to buy the home. How is that cheating the seller. I share these details when competing for a listing. This isn’t a charity.
There are many good honest agents out there but on the flip side of the coin there are many more agents conducting themselves in a slimy and deceitful manner. These sub-par agents are the ones always presented to the public. These agents simply do not explain the details of the industry and the contract offered. As such the general public views the industry as a whole untrustworthy and hiding behind a veil of legitimacy. I have witnessed agents conduct themselves in a borderline illegal manner but when I brought it to the broker he turned a blind eye. The public needs to view our industry as valuable and a key step in selling or buying a home. There are TOO MANY agents looking to churn a deal at the first low ball offer to their client so as to go on to the next deal.
about time they nailed NAR….nothing but an extortion group.
You have no idea how hard we all work! We make zero $$ until we secure a buyer for a property. It can take months and years. Do you work without a salary benefits assurances? I think not. Spend a week with a Realtor and inform yourself.
Realtors work very hard and finally get paid when we work hard to close the contract for the buyer and seller
And most times properties in the recent market have sold in hours… drop the fees when that happens and more people won’t be as angry.
You’ve obviously enjoyed the good times and have never been around in markets where it takes 180+ days to sell. It wasn’t too long ago that we were in a market where the mortgagee was taking a hit on a short sale to keep from having to foreclose.
Enjoying the good times is only appreciated by those who have worked their tails off in the bad times.
One talks about we’ve been doing the same for over 100 years, but realize prior to 1995, only sellers were represented about clients and as buyers were considered customers, unrepresented. I am surprised it took this long.
We all can wait until every state in the US is affected or we can solve this now. Firstly, stop disclosed dual agency. Listing broker represent the seller, relationship with a buyer is transactional. If the buyer wants to be represented by a buyers broker, they can go to another company.
Either way, the fee to the sellers broker or the buyers broker be incorporated into the selling price. (It’s done that way now).
However, the lenders have to also be on board with the same.
If this works, first time homebuyers have a chance to become home-owners, otherwise they will continue to rent (interesting how developers are building more rentals than fee simple properties may be more than coincidental).
If NAR has to pay the judgment, do they assess the members and on what basis?
I am sure the Fascist Democrat Party is behind this anti-private property attack. This is part of their socialist “social justice” and “social equity” plan to destroy America.
Well said
this won’t be the things we say as a professional member of Realtor. despite how angry I might be at this moment.
This would never be one of the member of real estate professional would say. Remember whichever side you might be, we are all working towards a common goal, which is homeownership.
You Trumpers throw around words like fascist and communist without a clue as to what they mean. Fact: Your fuhrer wants to rip up the Constitution, bury our Democracy and become dictator for life. Maybe you should relive your childhood, study your Civics lessons and learn how government works. The Justice Department is not weaponized if it’s doing its job of enforcing the law. Turn off Newsmax and get your head out of your arse.
Well said.
How are you “sure”? What verifiable facts do you have that support your position or are you just spewing unsupported nonsense to create divisiveness? I have verifiable facts for you: a) most civil lawsuits take 8-10 years to get to trial so this would have started years ago, b) the first opinion in this lawsuit was issued on 10/16/19, c) this lawsuit was filed by individuals and not a governmental entity. I don’t agree with the outcome and I also don’t agree with ignorant comments like yours that have no basis in fact and are basically designed to create divisions.
I have been following this and I would like to know the alternative. Does anyone have that suggestion. Obviously, every state deals with NAR and the rules for years- how can this be retroactive and why hasn’t any suggestive alternatives been discussed with NAR instead of just a law suit that every state can now follow. If these law suits put NAR and every state’s board of realtors at a financial ruin then what will the USA do without the multi billions of dollars that is made in many facets of business with buying and selling homes – the spin off is unsurmountable.
I am so glad I am no longer selling real estate or a member. If this happens in California I want to be a plaintiff. Down with the National Association of Realtors and Down with your State & local Association of Realtors!!! Time to get rid of the scum!
You are nuts if you want to get rid of the NAR. I sold my home in February of this year. Realtors bring together many potential buyers at a point in time when you want to sell. In this country we can turn bricks and mortar into cold hard cash in 30 days. It’s called liquidity. Investors would love to see the NAR gone because they can corner a seller, figuratively, being the only buyer around and scoop up lots of the sellers equity. It happens to the elderly all the time when a realtor isn’t involved.
This case deserves to go to the supreme court.
It has always seemed to be a broken system to me. What other industry requires someone to compete against them. If I hire an attorney in suit with my neighbor, my neighbor shouldn’t be forced to pay my attorney fees unless a court finds I filed the case without merit. Just because it’s been the commission structure has been done this way for 100 years doesn’t mean its fair or equitable to the seller.
Would you hire your neighbors attorney to represent you? That’s what real estate was prior to buyer-agency. In some states,dual-agency is outlawed. You want to go back to that system?
I hope this does not launch a bandwagon of law suits,! I have been a Realtor 50 years as of feb 2024. And I think this went too far. They don’t understand !
I have been a Real Estate Broker for over 40 years. Brokers and agents need to ask the Seller what he or she chooses to offer to a Selling Agent.
I fear you are right, Jayne. Can you imagine clients coming after REALTORS all the way back to 2015?
The sad thing is that seller and buyers are going to end up being unrepresented properly and/or only clients with money will be able to be represented. Just think about Real Estate transactions are going to be like our justice system that is better for the rich than the poor. Most just don’t even realize how much a Realtor knows and does for a sale and to make sure our client is properly represented and does not enter into a bad deal, etc. I know in TX we have so many representatives forms that explains it for both sides and how everyone gets paid, etc.
Gonna be a field day for attorneys! All FSBO don’t know the laws!
So the NAR has been complicit in fixing commissions for 100 years so that makes it right? With the technology available today, buyers and sellers have all the information that used to be privy to only the real estate agents. Home prices now, in my area, are above $400,000 for the most part. It takes similar effort to sell a $300,000 house that it does to sell a million dollar house…yet the commissions are $18,000 and $60,000 respectively…this system has been broken for a long time and needs to get fixed. The issue is that buyers and sellers do not want to pay hourly rates so they expect realtors to work for free when they don’t get a sale, yet they complain about the commission when the sale is closed…this is(was?) a free market society and everyone can sell their own homes for free if they choose. They can also negotiate the commission if they so choose. If buyers will be required to pay the buyers agent, the buyers will lose as the house prices won’t change, but there will be no commission split. So I can see the sellers and buyers actually ending up paying more! (yet another government attempt to “fix” the system…
I have bought and sold homes for 50 years; have been a broker for over 20 years, and I am a retired CPA so I fully understand the business and transactions. There is no money until a buyer steps up to complete the sale. The buyer pays both agents either in cash or through a mortgage. The amount of commissions has always been negotiable on both sides. This class action suit is based on greed and backed by law firms that stand to make a BUNCH of money. That is the nature of many class-action suits. (Did you every keep your grocery receipts so you could collect for all those loaves of bread or gallons of milk you bought? Only the law firms saw any real money.) If this suit is not overturned on appeal, buyers are in for a real surprise if their lender won’t pony up for the buyer agent commission and sellers won’t see buyer agents jumping to handle zero commission deals. It will not be pretty!
This sounds like all “Lawyer conspiracy”. First, look how much they get out of this settlement. Also, Remember not too long ago at least in Florida, lawyers had the law changed so that Realtors nor Brokers could charge to facilitate short sales, because we were getting the job done faster and much less costly than the lawyers could. Now they want all our commissions too, and more. Further more if the contracts im question were as clear as the FAR contracts. The Seller knew exactly what they were signing. This case should go to the Supreme Court. Oh did I really say that????
It’s people wanting something for nothing. Let them sell it themselves then and those that need professional help can sign a contract with the Agent , who by state law is a fiduciary with a duty to represent the client. ethically and truthfully and in the best interests OF the seller.
I can’t believe this has happened! The court system is completely broken. As usual the ignorant prevail, a Realtor’s creed is sworn to protect the public. If a Seller or Buyer do not want to pay a commission, they don’t have to. I have been an active broker since 1978 and I love helping folks find a home, if I don’t find them a home I don’t get paid even after weeks of work but I still love my profession. Our commissions are always negotiable I fear Sellers and Buyers will be taken advantage of if they don’t have someone assisting them in a transaction I have seen it happen over and over again. I can name some transactions where Buyers and Sellers lost title, money and were taken advantage of.
This is a shame. NAR should appeal this all the way to Supreme Court. I feel NAR does nothing to protect our industry. This lawsuit is a perfect example. Zillow, Redfin, among others use our MLS data for their benefit. I pay a lot of dues to the National, State & local associations. They aren’t protecting our profession. Not sure when everyone started hating realtors!!!
I really think there’s a lot of unneeded whining going on in regard to this. Simple solution..Have your buyers sign a Exclusive Buyer Agent Agreement…Not really an issue if your clients respect you and the work you do for them.
Takes 30 years to get the “gold watch.” NAR anoints you a “real estate expert” in 60 days.