Achi news desk-
A settlement that will rewrite the way many real estate agents are paid in the United States has received preliminary approval from a federal judge.
On Tuesday morning, Judge Stephen R. Bough, a US district judge, signed off on an agreement between the National Association of Realtors and real estate agents who sued the real estate trade group over its longstanding rules on agent commissions that they say are enforced. to pay excessive fees.
The deal is still subject to a hearing for final court approval, which is expected to take place on November 22. But that hearing is largely a formality, and Judge Bough’s action in the US District Court for the Western District of Missouri now paves the way for NAR to begin implementing the sweeping rule changes required by the deal. It is likely that the changes will come into full effect among brokers across the country by September 16.
NAR, in a statement from spokesperson Mantill Williams, welcomed the preliminary approval of the settlement.
“It has always been NAR’s goal to resolve this litigation in a way that preserves consumer choice and protects our members to the greatest extent possible,” he said in an email. “There are strong grounds for the court to approve this settlement because it is in the best interests of all parties and class members.”
NAR reached an agreement in March to settle the lawsuit, and a series of similar claims, by making the changes and paying $418 million in damages. Months earlier, in October, a jury had reached a verdict that would have required the organization to pay at least $1.8 billion in damages, agreeing with homeowners who argued that NAR’s rules on agent commissions in their forced to pay excessive fees when they sell their property.
The group, which is based in Chicago and has 1.5 million members, has had a tremendous influence over the real estate industry for over a century. But Missouri home sellers, whose cases against NAR and several brokerages were followed by multiple copying claims, 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 a rule another requires it. agents to list homes on databases managed by NAR affiliates stifled competition.
By mandating that commission be split between agents for the seller and the buyer, NAR, and brokers who claimed their agents were members of NAR, violated antitrust laws, according to the lawsuits. Such rules resulted in an industry-wide standard commission that hovers near 6 percent, the lawsuits said. Now, agents will essentially be barred from making those commission offers, a change that some industry analysts say will lower commissions across the board and ultimately force house prices down as a result.
Real estate agents are preparing for pain.
“We are concerned about buyers and possibly how we will be paid for working with buyers moving forward,” said Karen Pagel Guerndt, a Realtor in Duluth, Minn. “There’s a lot of ambiguity.”
Preliminary approval of the settlement comes as the Justice Department reopens its own investigation into the trade group. Earlier this month, the U.S. Court of Appeals for the District of Columbia overturned a 2023 lower court ruling that had struck down the Justice Department’s request for information from NAR about brokers’ commissions and how real estate listings are marketed. They now have the green light to scrutinize those fees and other NAR rules that have long confused consumers.
“This is the first step to bring about the long-awaited change,” said Michael Ketchmark, the lawyer who represented the estate agents in the main lawsuit. “Later this summer, NAR will begin to change the way homes are bought and sold in our country and this will ultimately lead to billions of dollars in savings for homeowners.”
Under the settlement, homeowners who sold homes in the past seven years could be eligible for a small piece of a consolidated class action payment. Depending on how many homeowners file claims by the May 9, 2025 deadline, that could mean tens of millions of Americans.
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