A lawsuit brought against the National Association of Realtors was settled on Nov. 26. The settlement comes despite the Department of Justice’s last-minute filing denouncing the terms of the deal.
According to CNN, the filing—made two days before a federal judge approved changes to the National Association of Realtors practices—clearly states that the proposed changes do not exempt realtors from prosecution for antitrust violations.
As an outside party to the litigation, the DOJ recommended two provisions for the settlement. Neither was added to the final agreement. The DOJ does not believe the agreement’s terms provide adequate consumer protections. According to the filing, realtors acknowledge the potential for legal litigation without removing the “written buyer agreement” portion of the settlement.
“The proposed settlement includes a provision requiring buyers and their brokers enter “written agreement before the buyer tours any home.”
“This provision itself raises independent concerns under the antitrust laws, which could be addressed in multiple ways. The parties could (i) eliminate the provision or (ii) disclaim
that the settlement creates any immunity or defense under the antitrust laws. Alternatively, the Court could clarify that approval of the settlement affords no immunity or defense for the buyer-agreement provision.”The NAR maintains that the standard 6% commission on transactions has always been negotiable. However, the settlement acknowledges that commission sharing between home-selling agents and home-buying agents violates antitrust laws, artificially inflates commissions, and disadvantages sellers.
As a result, commission fees will no longer be advertised on specific listing sites. Also, home sellers and buyers must enter a written buyer agreement detailing the costs of commissions and their responsibility to pay if the seller refuses. This effectively
eliminates the previous shared compensation model, which left sellers on the hook for both buyer and selling agent fees.A federal judge was slated to approve the settlement and its terms on Nov. 26, but the DOJ filing halted the process on Nov. 24.
CNN reported that NAR President Kevin Sears discussed the settlement’s importance and the organization’s commitment to being “consumer champions
. ““This is an important moment for NAR members, home buyers and sellers, and the real estate industry.” He continues, “As consumer champions, NAR’s members have been working tirelessly to implement the practice changes required by the settlement and shepherd consumers through this period of transition.”
It is unclear how the DOJ proclamation will change the outcome of the settlement terms. The filing, however, has left many realtors wondering how to move forward.
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