Today’s final hearing on the class-action settlement of Sitzer/Burnett vs. National Association of Realtors (NAR) at the U.S. District Court for the Western District of Missouri will put a lid on the five-year debacle of Realtor and real estate agent commissions. Only two days earlier, the Department of Justice (DOJ) threw in their last two cents in a final statement which took issue with buyer-broker agreements.
Last August, NAR reached a settlement in a class action lawsuit that resulted in changes to buyer-broker fees in real estate transactions. Though the class action has existed on the periphery of the mortgage industry, its effects may soon unfold as new policies are put into practice. Experts from Mitchell Sandler’s mortgage regulatory group have shared their thoughts as well as what they've been hearing from mortgage lenders on the topic.
NAR’s cooperative compensation rules and other rules restricting the negotiation of commissions incentivized buyers’ agents to steer clients toward homes with higher commissions and resulted in home sellers paying inflated buyer-broker fees. Although the DOJ has not taken an official stance on the overall settlement, it acknowledges that the class actions challenge “blanket unilateral offers of compensation” to buyer agents, stating, “This pervasive industry practice harms both sellers and buyers.”
In the DOJ’s final statement, rather than focus on cooperative compensation, brought up a settlement clause requiring buyers and their agents to enter into written agreements before touring homes. NAR has advocated for the use of written agreements between buyers and their agents (MLS participants) and since August 17, 2024, the settlement currently mandates that buyers and agents enter into the agreement before touring any homes. Yet, the DOJ shared concerns stating how that could stifle competition in the marketplace and limit the amount of clients brokers can attract.
“The new provision that requires buyers and brokers to make written agreements before home tours may harm buyers and 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 statement reads.
Addressing these concerns, the DOJ suggested eliminating the buyer-broker agreement requirement or clarifying that the settlement does not provide immunity under antitrust laws. It also proposed that the court specify that approval of the settlement does not shield the buyer agreement provision from future antitrust scrutiny.
Also, to prevent future antitrust complications, the DOJ requested that Judge Stephen Bough clarify, if the settlement is approved, that such approval does not confirm the settlement prevents current violations, remedies past ones, or ensures compliance with antitrust laws.
The DOJ's filing further asserted that any brokers, agents, or NAR entities facing antitrust claims in the future might attempt to use the court’s decision as a defense.
