Judge Approves $418 Million Settlement In NAR Lawsuit As HomeServices Makes A Deal – Forbes Advisor – Technologist

The final real estate brokerage involved in a major lawsuit over agent commissions has agreed to a settlement in the landmark case. HomeServices of America will pay $250 million to resolve a series of lawsuits that challenged how real estate agents are paid.

The agreement announced Friday comes just days after a federal judge in Missouri gave preliminary approval to a $418 million settlement between home sellers and the National Association of Realtors, or NAR. A final hearing on that settlement—largely seen as a formality—is set for November 26 in Kansas City, Missouri.

The NAR settlement releases a million of its members from liability. Several other major brokerages have also settled, bringing the total settlement amount to more than $943 million, according to Cohen Milstein Sellers & Toll, which represented some of the home sellers.

Some experts believe the settlements could dramatically change how homes are bought and sold in the U.S. and have the potential to save money for both buyers and sellers.

Under the agreements, home buyers will negotiate fees directly with their agents before the purchase process begins. And the commission structure for buyers and sellers will be negotiable, as the NAR contends it has always been.

What Were the Lawsuits About?

In 2019, several groups of home sellers filed antitrust lawsuits claiming they were forced to pay artificially high commissions when their homes were listed on the NAR’s multiple listing service.

At issue was a longstanding practice in which the commission for both the seller’s and the buyer’s broker—typically 6% combined—was paid by the seller. That commission was generally included in the sales price and, as a result, incorporated into the buyer’s mortgage.

In October 2023, a jury sided with the sellers and awarded damages of at least $1.8 billion, a figure that could have been tripled under antitrust law.

Last year, Anywhere Real Estate and RE/MAX Holdings settled for about $140 million total—$83.5 million and $55 million, respectively—and Keller Williams settled for $70 million in February 2024. After the NAR settlement was announced March 15, HomeServices was left as the only holdout.

If HomeServices had failed to reach a settlement, it might have had to pay out $4.7 billion—the amount remaining from the tripled jury award, minus the other settlements.

The real estate firms and the NAR admit no wrongdoing.

What Changes Can Home Buyers and Sellers Expect?

Although the settlements are not yet final, these changes to NAR rules begin in July 2024:

• Brokers cannot advertise compensation on the MLS. Commission agreements involving buyers, sellers and agents must be negotiated off the platform. Fees cannot be included in the listing price.
• MLS participants (typically real estate agents) must have written agreements with buyers. Before an agent shows homes, they must have a contract with the buyer spelling out how much they will be paid. The seller may or may not cover that fee.

Do Your Homework Before Entering the Home Market

While it’s not clear what impact the settlements will have on real estate commissions, home buyers and sellers should take these common-sense precautions when entering the market:

1. Find the best agent for you. Shop around and find a real estate agent who fits your needs. Buyers and sellers should carefully examine an agent’s experience, certifications and other skills before moving forward.
2. Prepare for fees when buying a home. Buyers may now have to pay their agent’s commission, adding to closing costs. For example, paying a 3% commission on a $400,000 property adds $12,000 to the cost of the home.
3. Consider going solo but be sure you know the law. You can buy or sell a home without the services of a real estate agent. That may save you money, but be aware that home sales have legal requirements, and a licensed agent can help you follow the rules and avoid a potential lawsuit.