The US Supreme Court has declined without comment to consider an appeal by the National Association of Realtors (NAR) to stop the US Department of Justice (DOJ) from reopening an investigation into NAR’s Participation Rule and Clear Cooperation Policy that was resolved in a December 2020 settlement.
Last April, the US Circuit Court of Appeals ruled the DOJ could reopen its investigation NAR, reversing a January 2023 appeals court decision that said the terms of the earlier settlement were still valid and allowing the investigation to resume would take away the benefits NAR had negotiated in the original settlement.
In a filing before the Supreme Court last month, the DOJ argued, “The disputed question is whether, in addition to agreeing to close the investigation, the division agreed not to reopen it. As the court explained, no such commitment appears in ‘the plain language’ of the parties’ agreement … Although the division agreed to close its investigation, the words ‘close’ and ‘reopen’ are not mutually exclusive.”
As a result of the Supreme Court’s action, last April’s appeals court ruling will stand. However, it is unclear if the incoming Trump administration will drop the DOJ’s case against NAR – neither the President-elect Trump nor his choice for Attorney General, Pam Bondi, have publicly commented on the issue.
Such BS. Lawyers making more money on our backs.
This is only making it harder on buyer’s. Never met a FSBO who discounted his home because he FSBO’ed it.
I believe the doj will find that forcing buyers to sign a contract to only work with one agent is not in the interest of the buyer (consumer) and buyer agent contracts will not be allowed. Duh
Actually it is in the interest of a buyer to use one agent – as long as that agent is competent and honest and from my experience most are. The good, competent, experienced agents will work ONLY with buyers who sign an agreement with them – these agreements can be terminated by either party if there is a problem or the buyer feels that he is not being well served. Why would a great agent waste their time without an agreement? New agents will as they are learning the business and do not have a treasure trove of past clients and prospects. New agents are fun and excited and usually try their best but they do not have the experience of the seasoned realtors.
NAR “Settlement” was made with no Member discussion, input or VOTE BY IT’s MEMBERS! It does NOT represent Members and should be shut down for good, replacement by a Clean Sheet entity voted by Real Estate Agents. No lawyer or accountant is limited to a 90 day contract or restrictions that the farce of the Settlement forced upon licensed, working real estate agents! Buyers are suffering, Buyer’s Agents are hurt, never forget what President Reagan said to be concerned with the most terrible 7 words: “We from the government here to help you!”
Brian Doc Burry, yours is the best REPLY and Reagan’s words are the ones that most APPLY. Great input, really. Thank you 🙏
I agree! These fees I just had to pay are SKY HIGH and it is going TO that greedy NAR. I PRAY THEY ARE SHUT DOWN PERIOD
Fellow Realtors- OK, NAR’s lawyers screwed the pooch. Period. Where were our vaunted lobbyists?? NAR should let DOJ nullify that horrible settlement; get a good law firm like Jones Day or Dentons; fight this BS to the moon. Been a Realtor since 1984 and have never had a commission dispute because I simply review and fully explain the listing agreement with my client before it gets signed. I’ll bet 99.9% of Realtors do the same. DOJ wants a fight? Let’s claw back that horrible settlement money and bring the fight to DOJ’s doorstep. I can’t believe the Trump administration will put up with this nonsense. Trump is pro-Realtor and pro-business.
I like the old days where a handshake was enough; where trust was “earned” not demanded; where things were out in the open, not “oh my gosh, hide that commission!”–why? Who knows.
So not only did NAR negotiate a settlement I never agreed to, but they did such a bad job with it, they’ve left the door open for the DOJ to reopen the investigation because the wording wasn’t adequate? Maybe NAR members should sue NAR and NAR’s attorney’s for negligent incompetence.
Very good point. This is unbelievable.
Absolutely. After all, we pay premium dues for the “R”
“and code of ethics”, but one lawsuit just broke the whole nation of realtors?? are we the E&O for that…Check-please…
Agreed
I have had a license since 1989 and I never work less that 100 hours per week, including evenings, weekends, and holidays. I have NEVER had a week off. I started before cell phones, fax machines, or the internet. We were all working for the Seller because he was the one paying our commission. Then, someone figured out that he was paying us with the Buyer’s money, right? There is no closing without the Buyer’s money. So then, they had a massive big deal about Buyer representation. So, they set it up the way Attorneys operate, and the polarization began! Now we have all these “Attorney wanna-be’s.” They start a conversation with, “Well, MY Client….” Folks, it did not used to be like this. We were all on the same team working to put something together with the least strife. We all got along well and got a lot done. It seems like there is so much strife now, deals fail often and are way more litigious. As far as our fees go, Lenders still get 3% and get to sit in a temperature controlled office all day. Nobody questions their fees and I have only seen 1 Loan Officer cut her rate to make a deal work in my 35 years. Also, MANY ATTORNEYS WORK ON 50% OR MORE. NOBODY QUESTIONS THEIR FEES EITHER! If we are going to talk about Anti-Trust, it seems that Attorneys have covered themselves very well!!!! Call me old fashioned, but we all need to work together more as friends and colleagues, and quit giving attorneys all the power to make these decisions for us. It would be great if Brokers and Agents had some input, instead of the attorneys who supposedly “represent” us. Can we get in touch with any of them, or are they “untouchable” like our elected officials?
I’ve been licensed since 1986 and totally agree and understand your view points.
I have had sales license for two states since the early nineties and Brokers License for two states for the twenty or more years. I think this is BS. Why have I given NAR all this money for all these years and not being able to have any input on this mater. They gave up without a fight. Totally agree with your coment Susan.
Agree with your statement Susan VERY well said 🙂
totally agree and well put.
Why do we need the NAR in today’s world? We can find ways to work together as we do now. They sold the mls on us. They are not our friend
I would agree with this for certain. Only the fact that they sold the MLS means they lost relevance to me. I work in an area with too many small MLS associations that do not cooperate. So instead of an electronic SUPRA key, I always use a combination lock. I can give access to anyone who calls for an appointment. No one goes in without talking to me. And I can access others listings because they also know agents show and sell across the boundary lines in this area. With Zillow, and others, I can see everything listed in any MLS instead of being restricted to my own membership. So tell me, why do I need MLS membership now? I am still a member, but question why their dues are so high? Why do they not cooperate across associations? Why do they sell my contact info to anyone who wants to target market to us? Why? If enough of us exit, then what?
Maybe I am missing something, but there seems to be some incomptence bordering on malpractice on the part of NAR’s lawyers if they did bullet-proof the agreement to pay millions of dollars in such fashion that the case is done and dusted forever without any possibility of “re-opening”. Elementary, my dear Watsons…
Meant to write “did NOT bullet-proof”..*
Here in TX so far not an issue on higher end homes cuz sellers are desperate to sell & (still) willing to pay 6%, (3% to the buyers agent). But it sure has complicated the paperwork, inserting new language, eliminating/introducing new addendums when most agents can barely fill out a contract properly or articulate an email message. Sellers dont give a ratz azz they just need to sell & buyers are like WTF? Im not paying for sh!t. Not good.
In my opinion, NAR is like a bunch of fat bureaucrats wallowing in our money with no concern for the man and woman in the field. Cronyism using lawyers not up to the task of fending off weak case brought by DOJ, where (with all our money) are the big time name brand federal system lawyers. Certainly don’t want same lawyers who lost so much on our behalf to remain on the “reopening” of the case. It’s a chance to turn around what happened in round one, but only with legal representation up to the challenge.
I never understood how the Sellers who initiated the lawsuit against NAR ever got standing to sue! Sellers claimed that they paid too much in commissions and that commissions were often “fixed” (not negotiable).
But the Sellers do NOT pay anything when a home is bought.
Think about it.
ONLY BUYERS bring money to buy a home, either all cash or cash + a loan. But that is ALL a cost to the buyer, not to the seller.
The final sale price (paid fully by the Buyer) is actually composed of several costs that add up to the final sale price. Those costs are:
1) The commissions, typically of both agents.
2) The escrow fees of the Seller side.
3) The title fees of the Seller side.
4) Seller Disclosure fees (like the NHD report)
5) Any Seller credits paid back to the buyer (for buyer’s loan costs or repairs, but even a seller credit originates from funds the Buyer pays)
and
6) The actual value of the home (building+land).
The buyer pays all the above costs and also pays more costs on top of that in terms of loan fees, inspections, lender’s title and buyer’s escrow fees, etc.
So, the Buyer pays all the total Seller side costs plus has to come up with more closing costs on top of that. All the money is coming ONLY from the buyer!
If any plaintiff had standing to sue NAR, it should have been buyers who (prior to the settlement) paid both sides of the commission, but the Buyer was NEVER allowed to negotiate with the listing agent nor the buyer agent, and the buyer never got to see the listing agreement.
That’s a big nutty. The Buyer was never privy to a listing contract in which the Buyer pays all the commissions on both sides.
Before this settlement,
Sellers had been deluded into thinking that they paid the commissions, and the Buyer was led to believe that too. But the Seller brings NO money to anything (only the buyer does). The Seller simply receives money from the Buyer (and lender), and escrow then doles out parts of those funds for Seller side costs, with the balance of the buyer’s funds being the actual cost of home (and land), which is the net that the Seller receives.
To me, this issue still is not settled because the Seller is still the entity that negotiates the listing side commission, without any input from the Buyer, despite the fact that (even after this settlement) the Buyer will still be paying for the Seller side commission because it is still part of the total sale price.
I think the confusion could be avoided if the listing price clearly showed the asking price for the home (and land) and showed the additional seller costs that the seller is asking the buyer to pay. In that way, the Buyer could negotiate various parts of those costs during the offer and counter offer process. And, if this method could be used, then the Seller could show a recommended Buyer’s agent commission that could be rolled into the total purchase price, and, again, the Buyer could negotiate the Buyer’s agent’s commission too during the Offer/CO process.
Most buyers struggle to pay the down payment, let alone the Buyer side commission, so it is advantageous to most buyers to roll the Buyer side commission cost into the purchase price, like it was done prior to the settlement.
The method I suggest here allows transparency of commissions and other costs, and the Buyer can then negotiate any of the those costs as separate line items, while also preserving the advantage of financing those costs thru a purchase loan, which most buyers need.
For property taxes, it would be a better way for the Tax Assessor to see the actual value of the home (and land) because the final sale price would post that cost as a separate line item. By doing that, buyers would pay lower property taxes in California because the property tax is, typically, the final sale price, which is currently artificially inflated because other costs are rolled into that final purchase price (like commissions), so Buyers are paying higher property taxes than they should
Just a thought that could have been discussed for its merits for this strange case that still seems in limbo.
RE: My post, Jan. 14, 6:34 pm
I will play my own devil’s advocate on my suggestion in my prior post.
There were (and are) other legal arguments that could be made in the NAR case, but I did not hear that they were presented to the courts (though I have not read the cases, so perhaps they were presented).
I agree that Sellers did have one good argument to sue, though I feel those lawsuits should have been targeted against Brokers, not NAR and not the MLS.
Sellers were rightfully angry that, in some cases, with some brokers, in some regions, and even is some states, the Brokers have made negotiating the listing commission a near impossibility.
I’ve heard this complaint from many friends in other states who say agents told them that their Brokers flatly refused to allow individual agents to list below 6%, and that same problem occurred with different Brokers, not just one.
In my view, that is a sign of price fixing between different Brokers and/or a monopoly problem where there are not enough different Brokers (totally different ownerships) to inspire price competition.
We are seeing a similar problem in the Food system with large segments of that industry (producers and grocery stores) being controlled by 3 to 5 mega corporations, many of them now on international scale.
So, in some situations and places, Sellers were being limited or blocked
from having access to Brokers who would negotiate on commissions.
However, for over 20 years, the expanding number of internet real estate websites, including various For Sale by Owner platforms, and other platforms (such as Social Media sites) have allowed Sellers many other options to list their homes, sometimes for a flat fee to post on those platforms or for a percentage rather than a fixed fee.
The old print newspaper ads have faded, but their on-line digital versions have risen, thus allowing sellers to post a home for sale for a fee.
Also, many real estate agents will agree to post a listing for a flat fee, often a very small fee just to input the listing onto the MLS, but the Seller often is to handle any calls, showings, negotiations, and the contracts, more like a for sale by owner situation. Nevertheless, this MLS posting option gives Sellers the full MLS platform that goes out to hundreds of real estate websites, rather than the Seller having to pay to post to individual real estate websites.
Thus, my opinion is this. Even IF Sellers were blocked from negotiating commission rates with Brokers in certain areas, the Sellers still had (and still have) many other options where they can post their listing for a wide variety of fees. Sellers can pick and choose which platforms they want, and they might even be able to locate an agent who will post onto the MLS for a low fee.
So, I do not feel that Sellers were denied access to a pretty wide market where they could expose their homes for sale. So, I would say that they were not directly harmed; however, I do think that some Brokers in some regions have engaged in price fixing, and the growing monopolies are reducing competition. But I do not see what that has to do with NAR and the MLS.
For a deep dive into real monopolies, do yourself a favor and
watch Food Inc. 1 and Food Inc. 2 (Prime and Hulu) for a fascinating insight that weaves together many topics and reveals a practices hidden from consumers. It explains a lot about so many problems that continue to go unresolved.
Since I have not had time to read the NAR settlement or court cases, I am wondering if NAR argued the case through comparisons to other businesses.
I might agree that Buyers should have some say in their own agent’s commission, but I would prefer that listings on the MLS stay as they once were, or that the listing display shows a “suggested” Buyer’s Agent commission, which the buyer can negotiate, but otherwise can roll that cost into the offer price so that the Buyer side commission can be financed, which is important in loan purchases.
The fact that it is the Buyer’s money that pays all the costs of the purchase, which, ultimately includes both commissions (see my Jan 14 post), I still do not see that as a problem (with the prior MLS system rules).
Why?
Because buying a home is a bit like opting to go to a restaurant.
No one sits down with the restaurant owner and asks for a spread sheet of how much the owner is paying their workers or their food suppliers or their landlord, and then demands to negotiate a reduced price for the meal because the buyer thinks the owner is paying too much for all those restaurants costs. That’s not how it works. You either agree to the cost of the meal, or you simply leave and go elsewhere or go home and cook your own meal.
By comparison to other businesses, a buyer has a lot of power in the real estate world to negotiate a purchase price, even if that buyer does not have full knowledge of the listing agreement and commission rates.
That is far more power on the buyer’s side than in other business situations where prices are never negotiated.
I don’t know anyone who can negotiate the price of milk and eggs at the check out stand, but a buyer can negotiate a sale price of a home, or a car, and other such items.
What the Seller pays in commissions (pre-settlement situation) is, in my view, totally irrelevant because it is not really the Seller who pays for the commissions at all. It is the buyer who pays those commissions as part of the total sale price, but the buyer also has power to negotiate that total sale price, so, really, both sides were doing well under the prior system, and Sellers, in my view, had no standing to sue due to the fact that buyers are the only ones who pay for anything in a sale, including both commissions.
Julie,
Three very long posts – each one pointing out that the BUYERS provide the funds to pay ALL the fees.
But – as you also pointed out – the BUYER never had the opportunity to set the fee their own agent was to be paid.
Listing agents hold sellers hostage with “You have to agree to offer a high cooperative compensation to the buyers agent or NO ONE (agent) will bring a potential buyer to view your property”.
Sellers got their day in court and now with a 418m settlement (which started in 2019 – this is not a new case…) to force the realtor community to make things fully transparent.
I believe buyers will be the next class to get their day in court for all the reasons you listed in your posts.
Decoupling the cooperative Commision sharing structure is the path forward.
Sellers negotiating the rate with their own selling agent – and – buyers negotiating the rate with their own buyers agents is the path forward.
Full transparency.
No steering.
Stop hiding behind the listing agent to require the seller set your fee as a buyers agent.
Explain your value to your buyer and set your fee with them.
Place it ALL in an offer to purchase – full transparency!
Giving the buyer the power to negotiate their own agents fee is the goal. As a buyers agent this should be your goal. With a written agreement with your buyer – EVERY property out there is available to you and your buyer!
I always thought that the seller agrees to pay a percentage to his listing realtor, which was negotiable, usually 5 or 6 %, then the realtor agrees to share his commission to a Realtor bringing a buyer…
And there is the problem….
The seller should be able to agree to allow their agent to “share” / “split” the commission to a buyers agent. If the seller doesn’t agree, the sellers agent informs the seller – “you HAVE to offer an appropriately high amount, or NO buyers agents will bring their clients to your property”!
As a seller, why would I want to allow my agent to offer a properly “high” commission split to “incentivize” a buyers agent to negotiate against me?
There is only one reason – so the realtor community will STEER clients to my property because they as an agent stand to gain.
That is not a marketing plan. That is blackmail.
As a buyer, why would I allow the seller and their agent to set “a properly high” fee to incentives MY buyers agent that I ultimately have to pay for thru the increased purchase price of what may NOT be the best property for me? (Because my own agent didn’t present me with properties that didn’t offer properly high compensation for them).
If we as realtors want to improve our reputation, this change of decoupling the commission split needs to be made.
There IS a way for buyers agents get paid. Explain your value to your clients. Agree on a fee for what service they want you to provide. Write it down. Present your offers disclosing that the fee is paid at closing.
Set your fee with your seller to only provide the service of helping them sell their home.
Set your fee with your buyers to provide the service of helping them buy their homes.
Full disclosure.
Full transparency.
As a seller, they don’t care how high the fee is. They don’t care if they have to pay it. They only care about the net in their pocket after transaction is completed.
Buyer wants $15k of new appliances in the deal – fine!
Buyer wants seller to pay $15k commission to their agent – fine.
Present an offer that reflects the buyers wants – and negotiate it out to make it all happen!
There are huge constitutional issues on both sides of this DOJ/NAR Settlement. The biggest being against sellers being able to communicate freely (via the MLS) ALL the terms and conditions under which they are willing to sell their home, i.e. buyer broker compensation offered.