NAR’s Landmark Sitzer Settlement Heads To Final Approval

The National Association of Realtors was expected to officially close the books on its antitrust fight over broker commissions this week, with a final hearing on its nine-figure settlement deal on Tuesday.

But the path to approval just got a bit bumpier. Two days before the hearing, the Department of Justice finally weighed in on the terms of the agreement with a Statement of Interest. The Sunday filing marks the agency’s first interference in the landmark case, known as Sitzer/Burnett, since the trade group settled the lawsuit in March.

Under the terms, NAR agreed to pay $418 million and change some of its policies, including prohibiting listing brokers from offering commissions to buyer’s agents on multiple listing services and requiring agents to secure signed contracts from buyers before taking them to tour homes. The agreement came after a federal jury issued a $1.8 billion judgment against NAR and some of the nation’s largest brokerages last year.

Though the DOJ didn’t take a stance on the settlement’s approval, the agency did raise concerns over NAR’s new rule mandating buyer’s agreements, which took effect on Aug. 17 along with its other policy changes. In the filing, the DOJ argued that the policy “may harm buyers and limit how brokers compete for clients.”

The department didn’t elaborate on how, but instead pointed to other cases where courts flagged contracts for antitrust violations, including an agreement at the center of a lawsuit against a multiple listing service, which barred certain information from distribution to public websites.

The agency also urged Judge Stephen R. Bough to make clear that an approval of the agreement doesn’t prevent the DOJ from taking action in the future, as the settlement applies only to private actors, not the government.

“Approval does not address whether the proposed settlement prevents and restrains current antitrust violations, remedies past violations, or contains revised policies and practices that comply with the antitrust law,” the filing states.

In response to the filing, a spokesperson for NAR told HousingWire that it would “continue to advocate for final approval of our settlement on November 26.”

It’s unclear whether the filing will affect the judge’s decision, which he’s expected to issue today. A ruling approving the settlement would mean that, according to the judge, the terms sufficiently addressed and satisfied claims brought in the lawsuit.

NAR’s deadline D-Day

The DOJ’s filing comes more than three months after NAR implemented the rule changes proposed under the terms of the agreement. Across the country, MLSs have already eliminated fields specifying buyer’s agent commissions, and many agents have exclusive buyers agreements in play.

Ahead of the deadline, speculation about the rules’ impact ranged from having little effect on daily business practices to causing a mass exodus of agents leaving the industry. Some predicted commissions would plummet, particularly on the buyer’s agent side, as inexperienced agents struggled to convince buyers of their value.

But in the months since, the worst-case scenarios don’t seem to be panning out. At least, not yet. Multiple reports have shown that commission rates have held relatively steady. Though many have predicted that agents would be forced to abandon the business, most of the data around this metric refers to agent sentiment, not the number of agents exiting the industry.

The settlement may not be taking a toll on brokerages’ revenue, but it did put a dent in some of their cash reserves. Douglas Elliman doubled its losses in the second quarter with the $17.75 million settlement charge on its books. Other brokerages, such as Compass, Anywhere Real Estate and Keller Williams, among others, shelled out eight-figure sums to resolve the claims. HomeServices of America agreed to pay $250 million, bringing the total settlements close to $1 billion.

What’s left for the DOJ?

NAR and the DOJ clashed last year over the agency’s attempts to reopen an investigation into the trade group, pulling out of a settlement agreement reached under Donald Trump’s administration. In April, a federal appellate court reversed a district court’s decision to uphold the settlement, allowing the department to renew its probe into the organization.

The DOJ’s comment on the NAR settlement could signal that the agency plans to leave its own mark on the industry’s commission practices, though a regime change headed for the White House next year could halt the department’s progress. It’s unclear whether the incoming Trump Administration plans to prioritize antitrust action in the industry.

Though the DOJ has remained relatively quiet on the Sitzer/Burnett case, it has interfered in similar lawsuits with smaller MLSs, which offers some insight into the agency’s potential involvement moving forward.

In May, during a hearing for a Massachusetts-based lawsuit known as Nosalek, an attorney for the department said it opposed agents offering commission to other agents on any website, not just the MLS. The attorney’s statement came roughly three months after the DOJ pushed back against a settlement agreement proposed in the same lawsuit.

The DOJ has also previously set its sights on NAR’s Clear Cooperation Policy, which took a backseat during the heat of the commission lawsuits but has since landed back in the national discourse. Brokerage heads and proptech executives have been weighing in on the rule in recent weeks, pushing the trade group to reconsider the 2020 policy requiring members to list homes on the MLS within one day of marketing the property.

Last month, Compass CEO Robert Reffkin came out swinging against the policy in an Instagram post, which has since drawn criticism from other brokerage leaders. In an internal email, Reffkin called the rule “forced cooperation.”

But executives at companies like Zillow and Redfin later offered up their support for the rule, including during third-quarter earnings calls, arguing it favored consumers.

“An open, free marketplace is good for sellers, good for buyers, good for agents, and makes for the robust industry we have here in the U.S.,” said Zillow CEO Jeremy Wacksman.