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The past year was a turning point for the real estate industry. The National Association of Realtors and major real estate franchisors and brokerages agreed to collectively hand over more than $1 billion to homesellers and their attorneys in order to make antitrust claims related to commission rules go away.
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The NAR settlement — and the business practice changes that came with it — ended up getting final approval from a federal district court. The deal resolves claims in bombshell cases known as Sitzer | Burnett and Moehrl and other, similar cases across the country.
But does that mean that the industry can finally turn the page on commission-related and other antitrust litigation in 2025?
Not by a long shot.
Kendall Bonner
“The biggest challenge to the final approval of the settlement is the perception that this is now ‘over,'” Kendall Bonner, a broker, attorney and vice president of industry relations at eXp Realty told Inman.
“Unfortunately, that is not true. Over time, the industry will work itself out, as it always does, but the messy middle is a likely consequence.”
Already, the stage is set to make 2025 an eventful year when it comes to real estate antitrust litigation. What ultimately happens will depend on the courts, the Department of Justice, the policies Realtor associations and multiple listing services choose to enforce, and the behavior of the brokers and agents on the ground, according to real estate experts Inman reached out to.
Appeals
Regarding the commission suit settlements, all are being appealed. Following its final approval at the end of November, challenges to the NAR settlement continue to come in. Whether the higher courts agree to let the deals stand is an open question and no monies will be distributed to any homesellers until the appeals have reached their conclusion.
But at least some experts believe the settlements will ultimately triumph.
James Dwiggins
“I’m not convinced [the appeals are] going to go anywhere in our current system,” James Dwiggins, CEO of real estate franchisor NextHome, told Inman.
“I think this [NAR] settlement will stand. The sell-side litigation is done.”
Stephen Brobeck, senior fellow at consumer watchdog the Consumer Federation of America (CFA), also believes the NAR deal will survive.
Stephen Brobeck
“I would guess that most of these challenges will be unsuccessful or achieve only marginal results,” Brobeck said in an Inman op-ed.
“The settlement represents, on the one hand, a serious five-year effort by the largest and most successful class-action law firms and, on the other, an attempt by most industry leaders to minimize potentially catastrophic damage to the industry.
“Moreover, there is every evidence that the Moehrl and Sitzer judges competently handled the two cases. I doubt that a serious legal challenge to the industry will emerge in the future unless many Realtors flout the terms of the agreement.”
Business practice changes and their risks
That may be the rub. According to NAR, in 2025, the final approval of the settlement means more “transparency, competition, and choice.”
“Realtors will continue to serve as trusted guides for clients through significant transactions,” a NAR spokesperson told Inman.
But how agents and brokers put the settlement changes into actual practice is what may determine how much future litigation the industry is in for.
The changes include a prohibition on sellers and listing brokers making offers of compensation to buyer agents through the MLS and a requirement that buyer agents sign written agreements with buyers they are working with before touring a home.
Even before the settlement was finalized, Dwiggins urged agents and brokers to let commission-sharing between listing brokers and buyer brokers die, including outside of the MLS.
“My concerns are that brokerages who don’t understand the risks of cooperative compensation are going to put themselves at risk for further litigation down the line, which is why a lot of companies no longer do it,” Dwiggins told Inman.
“There’s no need to do it because the seller can do a seller direct payment [to the buyer]. The faster people move to this more consumer-centric model, the smarter and the less risk they will have and liability they will have long term.”
Phillip Cantrell, founder of Benchmark Realty, noted that NAR President Kevin Sears had been urging the trade group’s 1.5 million members not to “do workarounds” to circumvent the settlement’s practice changes, but told Inman Sears’ remarks are “just noise” to local brokers.
“Too many of them are striving very hard to keep things the way they have always been,” Cantrell said.
Cantrell faulted Realtor associations’ lack of education on the new rules, saying that if a brokerage wants more than 5 percent of its agents to adopt a tool, “you can’t just send a bunch of emails from home office and hope adoption increases.”
“Instead, the home office must lean in with the local leader, get them behind it, give that local leader the tools and accountability to push it out, and the troops will follow her, resulting in a 30 [percent to] 50 percent adoption rate,” Cantrell said.
“None of that has been done, so in this case, adoption is low. My guess is that 75 of 100 brokers have never actually read the settlement agreement well enough to know the rules, so how can they train their agents?”
Cantrell said local Realtor associations should have reached out to every brokerage office in its membership to ensure the new rules were understood and should have offered practical training on scripts, buyer presentation structure, and how to talk to buyers about the changes.
“We are almost certainly going to end up in additional litigation once sufficient damages have piled up to attract some slick lawyer’s attention,” Cantrell said.
He anticipates the next round of litigation will be due to “uneducated agents trying individual workarounds and violating the intent of the rule changes.”
He pointed out, for example, that in his local market, “multiple brokers are even insisting that their agents get a [compensation] agreement [from the listing broker] signed before showing a house,” which he called “ludicrous.”
“It is happening because NAR threw a bunch of rules at them but failed miserably in helping local leadership understand what that means,” Cantrell said.
Buy-side commission litigation
Even if the homeseller suit settlements stick, the industry still has multiple homebuyer commission suits to contend with. The cases, known as Batton 1, Batton 2, Lutz and Davis, allege NAR and major real estate franchisors and brokerages violated antitrust laws by enforcing several NAR rules that they say inflated homebuyer transaction costs.
These include the same rules the homeseller cases challenged, including the trade group’s now-defunct cooperative compensation rule, also known as the Participation Rule, which required listing brokers to make an offer of compensation to buyer brokers in order to submit a listing to a Realtor-affiliated MLS.
The courts have substantially blunted the buyer commission cases in two ways:
1. As indirect purchasers of buyer brokerage services, buyers are not allowed to sue under federal antitrust laws, but may sue under state antitrust laws; and,
2. The seller-side litigation settlements prevent sellers who also bought homes from suing as buyers over the same challenged rules, drastically cutting down the number of class members should any of the buyer commission suits receive class-action status.
“Settling the seller-side suits should take some wind out of [the buy-side] claims,” Cantrell said.
Dwiggins agreed. “Now those cases are literally only first-time homebuyers.”
“The fact that anybody who sold a house who bought can’t be part of that class is a big move, obviously, and so that’s going to make those cases a lot weaker and a lot less monetary benefit to the lawyers who are behind all of those cases,” Dwiggins added.
Dwiggins said he didn’t think there was much merit to the buyer commission suits, which argue that because NAR’s rules inflated commissions, they also inflated home prices.
“I think those cases are incredibly weak,” he said. “I think they know it. This idea that the purchase price was increased by the commission amount is complete, utter nonsense. I’ve been doing this a long time. It’s not how pricing a property works.”
The legal risk of current policies
In addition to the buyer commission litigation, NAR and other industry entities will be dealing with ongoing litigation having to do with other Realtor rules in 2025. Lawsuits have been filed challenging:
- NAR’s Clear Cooperation Policy, which requires listing brokers to submit listings to Realtor-affiliated MLSs within one business day of publicly marketing them;
- NAR’s three-way agreement, which requires anyone who wants to be a Realtor to purchase memberships to their local, state and national Realtor association if they want to belong to either;
- The tying of MLS services to Realtor membership, which is not a NAR rule, but is a rule of many, if not most, Realtor-affiliated MLSs.
- NAR’s optional no-commingling rule, which allows MLSs to prohibit brokerages from displaying listings sourced from MLSs together with listings from other sources.
Bonner told Inman that her concern regarding ongoing litigation is that it “creates uncertainty and distrust,” both with NAR members and consumers.
“Membership knowledge and opinions on the Clear Cooperation Policy, the No-Commingling Rule, the Three-Way Agreement and the tying of MLS services to NAR membership is vast and divisive, primarily because most agents do not have a clear understanding of these rules and their individual impact on their business or the industry,” Bonner said.
NAR has vowed to assess the legal risk of its current policies. Bonner predicted that this review would lead to policy changes around commissions and MLSs focused on reducing the trade group’s legal and antitrust risks.
“These changes may disrupt traditional business models, such as commission-sharing, leading to mixed reactions among members,” Bonner said.
“For example, a policy prohibiting mandatory commission-sharing could prompt agents to adjust their pricing strategies, which some might see as a challenge, while others may view it as an opportunity to modernize their practices.”
Brobeck predicted that 2025 will see more business model innovation as well as more disruption of organized real estate.
“The litigation and settlement has opened a Pandora’s Box of challenges to the industry that also affect consumers,” Brobeck said.
“These issues, which always existed but were never fully unleashed, include fundamental challenges to the role of NAR, the MLSs, and the portals.
“They include greater opportunity to sellers who wish to sell on their own or purchase limited broker services. And they include emboldened government regulators and private litigators.”
The specter of the DOJ
The DOJ has reopened an investigation into NAR’s Clear Cooperation Policy and is also investigating NAR’s no-commingling rule. In addition, the DOJ has made clear that it does not want listing brokers and sellers to make offers of compensation to buyer brokers, even outside of the MLS.
The federal agency also recently brought up concerns around the timing of the NAR settlement’s requirement that buyer brokers sign written agreements with buyers they are working with before touring a home.
In short, the antitrust enforcer may choose to bring its own lawsuit against NAR in 2025, as it has in the past.
“DOJ was encouraged by the [commission] litigation and jury decision to be more aggressive and publicly critical,” Brobeck said.
“In their recent refusal to approve the settlement, it was obvious that DOJ believes that the new industry rules may be necessary but not sufficient conditions for adequate price competition.”
He suggested the DOJ’s “aggressiveness” could be “muted” by the change in presidential administrations in the new year, but said the federal agency’s “80-plus year commitment to a more competitive industry is unlikely to disappear.”
Dwiggins was skeptical that the new administration would “just dismantle the DOJ” as some are predicting.
“It’s important to remind everybody that these investigations originally started during the Trump administration and not during the Biden administration, so we don’t have clarity on what the administration will do or not,” Dwiggins said.
Still, he thought the new administration would “be about a lot less government” and would not end up filing a lawsuit against NAR. However, he left open the possibility that the DOJ would file a suit before Trump takes office “as their parting gift.”
NAR’s approach
NAR declined to comment on its concerns going into 2025 regarding further commission or antitrust litigation, on its plan for handling such litigation, on the consequences of its review of current policies’ legal risk, or on whether its handling would be different from the past.
“[W]e do not comment on future outcomes of legal issues,” a NAR spokesperson told Inman.
Bonner suggested NAR should be more proactive and transparent in how it handles litigation.
“The industry cannot just rely on legal strategy but must apply a more innovative approach based on the current and future needs of its membership and the consumer,” Bonner said.
“Relying on external pressures to alter entrenched policies and practices is the least innovative and most reactive approach NAR could take. It’s time to remove barriers to change, when change is needed.”
