Trouble looms for National Association of Realtors even after Aug. 17 deadline

On Aug. 17, policy changes for the National Association of Realtors will take effect. 

Since the trade group proposed its landmark settlement, residential players have cast their predictions for the fallout once its deadline came and passed. Some dismissed the idea that it would trigger an industry-wide shift, while others predicted the new rules around commission sharing could thin residential broker earnings and agent ranks. 

The post-deadline reality remains to be seen, but groups big and small are rolling out changes to get in line with the settlement, providing the first hints of how platforms and brokerages will build the road ahead for agents. 

Zillow in May rolled out an agreement in line with NAR’s requirement for buyers to sign contracts with brokers before even touring a property. eXp Realty unveiled a new listing agreement that scraps commission sharing with buyers’ brokers in what CEO Leo Pareja called the company’s “best interpretation of the rule changes.”

The California Association of Realtors ran into an early roadblock when its own stab at getting its forms in line ran afoul of the Consumer Federation of America, which said the group spent too much time on “grammar, formatting and design” in an early draft — showing how tedious the new future of forms could be. 

But even as the 1.5 million-member NAR looks to respond to allegations from home sellers, homebuyers and the federal government with some key rule changes, the group is far from being in the clear. 

The trade group secured a pass in 2020, when it entered into an agreement with the Department of Justice under President Donald Trump’s administration to settle its investigation. But the DOJ withdrew in 2021, under President Joe Biden, and the two institutions spent the next two years in a back-and-forth over the government’s push for information.

A swell of class-action lawsuits tipped the legal balance. Home sellers and buyers claimed that baking in commissions had inflated prices and unfairly enriched residential brokers and firms.

In early October, days before the landmark Sitzer/Burnett case was scheduled to start trial, NAR made a last-minute bid to win favor among plaintiffs and federal prosecutors with an adjustment to the language that was at the heart of the lawsuit. 

But it wasn’t enough for the DOJ, which wrote in response “that merely tweaking a buyer-broker commission rule to allow zero-percent commissions does little to ‘unfetter a market from anti-competitive conduct.’”

The DOJ remained in the background through the Sitzer/Burnett trial, guilty verdict and proposed $418 million settlement — before it secured a key green light this past April in the form of a ruling by a federal appeals court allowing it to reopen its antitrust investigation.

Among the rule changes included in its settlement, NAR promised to scrub offers of compensation from multiple listing services in the hopes of quelling the DOJ’s previously aired concerns about its policies. 

The group would have to hold on until May for a look into the department’s thinking, when the DOJ weighed in on a case out of Massachusetts known as Nosalek. It was the first public comment on the commission issue since NAR reached its agreement, and the prognosis was less than solid. 

“We believe offers of compensation should not be made anywhere, but certainly not on the MLS,” said Jessica Leal, an attorney for the department, without commenting directly on the settlement agreement.

All of this built up to a meeting in late June where NAR and DOJ leaders met face to face for likely the first time since the legal meltdown. It triggered residential leadership to warn its members against pursuing any “loopholes” under the new rules and to confirm that they expected the DOJ to “continue making inquiries into industry practices.”

And continue it did. From pushing for another shot in the Seattle-based lawsuit by discount brokerage REX Real Estate alleging unfair MLS practices to announcing a formal inquiry into the language on forms released by the CAR, the DOJ has thrown its authority into several fights around the national trade group.  

The full settlement is not scheduled to receive final approval from a federal judge until November, leaving the DOJ months to interject on the issue. 

The August deadline could be a sea change. But it won’t be the only one for the industry.