NAR’s commission lawsuit settlement receives final approval

The National Association of Realtors (NAR) and the real estate industry at large have something to be thankful for this Thanksgiving. Judge Stephen Bough of the U.S. District Court in Kansas City, Missouri, on Tuesday granted final approval to NAR’s commission lawsuit settlement agreement, as well as the settlements reached by HomeServices of America and the numerous MLSs and brokerages that chose to opt into NAR’s settlement.

The approval comes despite a last-minute filing from the Department of Justice, in which the DOJ took issue with the settlement provision that requires buyers to sign a buyer broker representation agreement prior to touring a house with an agent. The DOJ believes the buyer broker agreements have the potential to “limit how brokers compete for clients.”

“It bears a close resemblance to prior restrictions among competitors that courts have found to violate the antitrust laws in other proceedings and could limit — rather than enhance — competition for buyers among buyer brokers,” the DOJ wrote in its statement of interest filed on Sunday.

The DOJ also noted in its filing that the approval of the settlement “does not preclude any future enforcement actions by the United States, and compliance with the proposed settlement or new NAR rules implementing that settlement affords no defense to any such enforcement actions.”

Despite these concerns, as well as the objections filed by eight individuals and five attorneys who previously filed copycat commission lawsuits, Bough granted final approval to the settlement.

Although it is clear based on the DOJ’s statement of interest that this saga may not be over, Bough’s ruling marks an end to this chapter that began March 15, 2024, when news of NAR’s settlement broke.

The settlement, which requires NAR to pay $418 million and agree to business practice changes such as the removal of offers of compensation from the MLS, received preliminary approval in late April. Due to the timeline surrounding class notifications, the business practice changes — including the mandatory buyer representation agreements — went into effect nationwide on Aug. 17.

“This is an important moment for NAR members, home buyers and sellers, and the real estate industry,” Kevin Sears, the president of NAR, said in a statement. “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. The principles of transparency, competition and choice are core to the settlement agreement and empower real estate professionals and consumers to negotiate the services and compensation that work for them.”

According to the plaintiffs’ motion for final approval of the settlement, 15 million postcards and 24 million emails were sent to members of the class. Using several notification mechanisms, attorneys believe they were able to reach 99% of settlement class members.

As of last week, nearly 500,000 people had submitted claims to be part of the settlement, but eligible home sellers have until May 2025 to file a claim. By contrast, 39 class members have opted out of the settlement.

In addition to covering the organization itself, NAR’s settlement also protects all brokerages that recorded less than $2 billion in sales volume in 2022 and all Realtor-affiliated MLSs. For firms that fell outside of this range, the settlement included an opt-in mechanism allowing them to be protected under the agreement. According to the filing, 13 brokerages and 15 non-Realtor-affiliated MLSs have opted into the settlement. These parties will pay an additional sum of about $30.6 million into the settlement fund.

For its part, HomeServices of America will pay $250 million into the settlement fund, as defined by the settlement it negotiated in late April.

In a statement sent to HousingWire on Tuesday, HomeServices of America said it was “pleased” that the settlement has received final court approval.

“We remain committed to supporting our people as they continue to deliver exceptional service to clients and communities nationwide,” said Chris Kelly, HSA executive vice president. “Our local company leaders, agents, and employees deserve tremendous credit for their exceptional ability to navigate the challenges of the past year.”

He continued: “Beyond the legal and regulatory pressures, ongoing market dynamics continue to impact buyers and sellers, requiring innovative solutions. As we look ahead, HomeServices’ full-service model uniquely positions us to meet the needs of today’s consumers, who see homeownership as the most tested and reliable path to wealth creation. By staying focused on solving these challenges, we aim to deliver unmatched value and opportunities for our clients and communities.”

This is the third round of commission lawsuit settlements that Bough has issued final approvals for.

In May, he granted final approval to the settlements reached by Anywhere, RE/MAX and Keller Williams. In October, he issued approvals for the settlements reached by Compass ($57.5 million), The Real Brokerage ($9.25 million), At World Properties ($6.5 million), Douglas Elliman ($7.75 million, but may pay up to an additional $10 million), Redfin ($9.25 million), Engel & Völkers ($6.9 million), Realty ONE Group ($5 million), HomeSmart Holdings ($4.7 million) and United Real Estate ($3.75 million) in the combined Gibson and Umpa lawsuits.

This story will be updated with more information and commentary as it becomes available.