The NAR commissions lawsuits: Where things stand
Multiple ongoing lawsuits challenge NAR policies and longstanding real estate agent commission practices.
- Plaintiffs seek to prohibit the National Association of Realtors from having home sellers pay buyer’s broker fees at closing.
- The complaints allege that commission rates are artificially inflated and violate antitrust laws.
- NAR contends that the existing commission structure provides economic benefits for buyers and sellers alike and allows smaller brokerages to remain competitive.
Real estate commissions are at the center of multiple federal lawsuits and an investigation by the U.S. Department of Justice. The litigation brought by home sellers against the National Association of Realtors and several real estate companies has the potential to fundamentally change industry practices and the commissions that agents receive.
At issue is the sharing of commissions between listing and buyer's agents, as well as other practices, rules and procedures by NAR.
What is the litigation about?
There are several pending lawsuits, but the major ones — Moehrl and Sitzer/Burnett — address alleged anti-competitive practices and payment structures.
Moehrl suit: Plaintiffs in Moehrl seek to prohibit NAR from "conspiring to require home sellers to pay the broker representing the buyer of their homes, and to pay at an inflated amount, in violation of federal antitrust law," according to the lead counsel in the case. They assert that buyer's agent commissions should be paid directly by the buyers.
The Moehrl suit lists NAR, Realogy (now Anywhere), HomeServices of America, RE/MAX and Keller Williams as defendants. Twenty MLSs are identified as alleged "co-conspirators" in the case. Moehrl and other sellers who joined as plaintiffs argue they were damaged because they paid a cost — the buyer's agent commission — that would be paid by homebuyers in a competitive market.
Plaintiffs also allege that NAR policies artificially inflate commissions and violate antitrust laws. The lawsuit alleges that NAR practices discourage competition and hurt the American consumer, the Wall Street Journal reported in September 2021.
The complaint was filed in March 2019, and in October of that year, the U.S. Department of Justice filed a statement of interest in the lawsuit. In February 2022, plaintiffs filed for class certification to open the door for a class action lawsuit.
Sitzer/Burnett suit: The allegations in Burnett v. The National Association of Realtors (formerly Sitzer v. NAR) are very similar to those in the Moehrl suit, but Burnett is limited to Missouri, while Moehrl would affect commissions in many states. The defendant list is the same — NAR and the four largest real estate enterprises — and the suit also calls out several Missouri-based MLSs.
Sitzer v. NAR was originally filed in 2019, and the suit (as Burnett v. NAR) was granted class action status in April 2022.
What are the specific allegations against NAR?
In addition to the plaintiffs' assertion that sellers are obligated to pay an "unfair amount" in commissions, the civil lawsuits and the U.S. Department of Justice investigation put forth a variety of allegations, including:
NAR rules keep prospective buyers from knowing how much commission a listings agent will receive on properties listed on the MLS.
Buyer brokers "mislead buyers" into believing that buyer broker services are free.
NAR policies allow agents to filter properties by the amount of commission offered, which could result in agents "steering" buyers toward properties with higher commissions.
The Department of Justice, which filed a complaint against NAR in November 2020, initially reached a settlement agreement with the association, but in July 2021 the DOJ announced it was withdrawing from the proposed settlement to focus on a broader investigation into NAR practices.
What is NAR's response?
The National Association of Realtors stated that the longstanding practice of commission sharing "provides the greatest economic benefit for both buyers and sellers," noting that existing practices and payment policies enabled more than six million people to buy homes from 2010 to 2020. The association said that the payment structure is equitable for both small agencies and large brokerages and franchises.
In their unsuccessful filing to dismiss the Moehrl suit, NAR stated that their members and MLSs "promote a pro-consumer, pro-competitive market for home buyers and sellers," and argued that "the lawsuit is wrong on the facts, wrong on the economics and wrong on the law." They have consistently asserted that the plaintiffs have fundamentally mischaracterized NAR's rules and policies.
What is the status of the litigation?
In the Moehrl case, a judge has yet to decide whether to grant class certification. Whatever the outcome of the certification request, the Moehrl suit and those that followed may take years to resolve.
The Burnett case was granted class action status in April 2022, a setback for the defendants. NAR filed a petition to appeal the class certification, which was rejected by the U.S. Court of Appeals in June 2022.
Correction: An earlier version of this article mischaracterized the role of MLSs. They are alleged "co-conspirators," not defendants.