NAR warns of “Wild West” if plaintiffs win broker commission lawsuit

The National Association of Realtors laid out a doomsday scenario for the industry in the case home sellers prevail in two landmark antitrust cases.

The group warned that a ruling in the plaintiff’s favor could render buyer’s agents unaffordable, block equal access to listings and restrict buyer choice. NAR’s general counsel Lesley Muchow said in an online webinar five days before Sitzer/Burnett, the first of the two closely watched suits, is slated to start trial in Kansas City.

“This would be bad news for consumers,” Muchow said. She added that if NAR isn’t allowed to continue with some of its practices, “we would be forced back into the 19th Century or what we see as the Wild West, where unscrupulous people could regularly defraud clients.”

Muchow argued that if the lawsuits’ results upset local MLS systems, buyers would have fewer homes to choose from and sellers would lose exposure to their properties.  

“Buyers would have to visit every single broker in town in order to see all of the available inventory that is out there for them,” Muchow said.

This scenario would likely lead to outdated and inaccurate listing information, she said, and would cost brokers more money if they have to pay to feature their listings on third-party platforms. 

Jury selection will begin on Friday. 

Both of the landmark lawsuits center on NAR’s “participation rule,” which critics claim violates antitrust laws by inflating commissions charged to home sellers. 

The rule’s interpretation was largely understood as requiring listing brokers to offer compensation to buyer’s agents, but a spokesperson for NAR told Inman earlier this week that it only “requires participants to communicate an offer of compensation to other MLS participants and that offer can be any amount, including $0.”

Anywhere — the parent company of Century 21, Sotheby’s International and Coldwell Banker —  and RE/MAX agreed last month to settle the lawsuits for $83.5 million and $55 million, respectively. 

Both companies also agreed to change some policies, including enhancing transparency around commission requirements, and will no longer require their agents to belong to NAR. 

The firms filed the agreements with the courts last week and are awaiting a judge’s approval before doling out payments or implementing any changes. 

Muchow said the settlements won’t change NAR’s approach to the case.

She also noted that several of Anywhere and RE/MAX’s proposed rule changes are already encouraged or required by local MLSs. 

Muchow said the association respects the brands’ decision to make NAR membership optional, though she reiterated that the organization provides “incredible value” on a national, state and local level, including advocacy, marketing and legal resources, among others. 

Anywhere and RE/MAX aren’t the only two firms bowing out of NAR. Redfin announced last week that it would require its agents to cancel their membership, as the group faces the lawsuits and allegations of sexual harassment and a hostile work environment. 

Keller Williams and HomeServices of America remain with NAR as defendants in both lawsuits. Barring settlement agreements before the trial, the firms and the trade group could be on the hook for potentially $4 billion in damages if the jury sides with the plaintiffs. 

Muchow said the group expects the jury to reach a verdict by Nov. 10 with any appeals to start in 2024. 

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