NAR Receives Preliminary Court Approval of U.S. Buyer Broker Compensation Settlement

A U.S. federal court in Missouri grants its preliminary approval of the National Association of Realtors’ proposed settlement of multiple U.S. buyer broker compensation litigation cases.

On 23 April, Judge Stephen Bough of the U.S. Court of the Western District of Missouri granted a motion filed by the National Association of Realtors (NAR) requesting preliminary approval of its proposed settlement to multiple buyer broker compensation litigation cases. Judge Bough’s decision comes days after NAR’s filing of the preliminary motion on 19 April, which is the first in a series of legal steps that will occur related to the potential settlement announced last month. The proposed settlement still must be formally approved by the federal court before it can go into effect, and a hearing on final approval will occur in November.

With the filing of the motion for preliminary approval, the 60-day timeline starts on several key provisions within the proposed settlement allowing eligible brokerages and Multiple Listing Systems (MLS) networks to opt into the settlement. The following entities will have until 17 June to complete and submit required documentation to opt into the settlement:

• MLS networks wholly owned by state and local associations affiliated with NAR
• MLS networks not wholly owned by state and local associations affiliated with NAR
• Eligible brokerages with total 2022 residential home sale transaction volume of $2 billion-plus

Additionally, the filing starts the countdown by when proposed process changes related to buyer representation/agency agreements and MLS listings must occur. The proposed settlement stipulates that they must occur as soon as practicable but no later than 150 calendar days from the motion for preliminary approval, which would equate to 16 September. NAR has indicated that it will implement its process changes in late July and in its current settlement timeline NAR lists 16 September as the deadline for MLS systems to implement changes.

Considerations to Monitor

As the legal process and implementation planning for the proposed settlement moves forward, there are several key considerations to keep an eye on that could have an impact on the settlement:

• Response by the U.S. Department of Justice (DOJ): To date, the DOJ has not publicly weighed in on the NAR settlement, but with NAR’s formal filing, the DOJ could choose to do so prior to the court’s preliminary decision. The DOJ previously raised objections with settlements in the Nosalek case and filed an interest statement back in February, and a similar intervention related to the NAR settlement is possible.
  Separately, any potential DOJ response would coincide with renewed activity with its antitrust investigation of NAR. A U.S. Court of Appeals ruled earlier this month that the DOJ can proceed with its investigation, and in a statement released after the decision, Assistant U.S. Attorney General Jonathan Kanter said: “Real estate commissions in the United States greatly exceed those in any other developed economy, and this decision restores the Antitrust Division’s ability to investigate potentially unlawful conduct by NAR that may be contributing to this problem … [t]he Antitrust Division is committed to fighting to lower the cost of buying and selling a home.”
• Decisions by MLS networks regarding settlement opt-in: Thirty MLS networks across the United States are currently not wholly owned by a NAR-affiliated association, and these networks would have to decide by 17 June whether to opt into the settlement and its terms. These networks encompass millions of citizens in several of the largest real estate markets in the United States, and decisions by these MLSs will be critical in determine how consistently standards included in the settlement can be applied across the country.

WERC and the nearly 60 members of its volunteer-led buyer broker compensation ad hoc group will continue to monitor developments related to the NAR proposed settlement and its associated process changes and will provide additional updates as they are available.

Michael T. Jackson is the vice president of member engagement and public policy at WERC.