NAR President: Commissions Settlement Staved Off Bankruptcy

National Association of Realtors president Kevin Sears opened up on how close the trade group came to bankruptcy in light of the Sitzer/Burnett ruling.

Sears said the settlement in the landmark commission lawsuit helped NAR dodge bankruptcy, according to remarks on the “Crush It in Real Estate” podcast reported by Crain’s. The episode was published days after the judge approved the settlement in the case.

“We would have had to post a bond of up to almost $1.8 billion,” Sears said on the podcast. “We don’t have $1.8 billion. In order to file an appeal, we would have had to declare bankruptcy.”

NAR previously disclosed the possibility of bankruptcy in a fact sheet outlining the settlement terms. The organization said it decided to forego Chapter 11 because it would’ve left its members exposed in other lawsuits.

On the podcast, Sears described bankruptcy as a “non-starter” because of the potential impact on NAR’s advocacy efforts in Washington, D.C. A spokesperson for the trade group declined to provide further comment on Sears’ remarks.

Damages in the October 2023 Sitzer/Burnett decision were set at nearly $1.8 billion. After NAR failed to have the verdict overturned, it agreed to a $418 million deal to settle all of the commission lawsuits it was facing, as well as to overhaul its policies regarding commissions.

Those changes included prohibiting listing brokers from offering commissions to buyer’s agents on multiple listing services and requiring agents to secure signed contracts from buyers before home tours.

A majority of real estate agents opposed NAR’s settlement terms, according to an industry survey in September, and the changes set off conversations across brokerages on the role of the longtime industry authority.

Before the settlement’s approval, the Department of Justice poked its head in with a Statement of Interest, noting concern about the NAR rule mandating buyer’s agreements, which took effect over the summer. The DOJ also clarified that the settlement doesn’t mean NAR is immune from future action from the agency.

— Holden Walter-Warner