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“Ultimately, continuing to litigate will harm our members and their small businesses,” said Nikia Wright, NAR’s interim CEO. “No outcome is perfect, but this agreement is the best we can achieve under the circumstances.”
If a federal court approves the settlement, the new rules would go into effect in July, said a person close to the settlement negotiations, speaking on condition of anonymity.
Plaintiff attorney Michael Ketchmark, who represents Missouri home sellers in one of the lawsuits, said he believes the agreement will fundamentally change the real estate market and reduce the cost of homes and home sales. He said that
“There is no doubt in my mind that this will result in significant savings for homeowners,” he says.
The Association of Realtors’ 100-year-old commission structure required seller and buyer agents to split an amount, typically between 5 and 6 percent of a home’s sale price. In two class action lawsuits, home sellers in Illinois and Missouri are challenging the NAR by requiring sellers’ agents to offer non-negotiable compensation in order to be listed on the Multiple Listing Service, a home sales database. They argued that the rules artificially inflate fees.
In October, a jury ruled in favor of the Missouri plaintiffs, awarding them $1.8 billion in damages. The Illinois case was heading to trial. Ketchmark, who represents the Missouri plaintiffs, said the agreement announced Friday, if approved by a judge, would resolve those cases and end the long-standing commission structure. He said it would be.
Since the October ruling, experts had predicted that the commission system was poised for change. In addition to being threatened with a class action lawsuit, the Department of Justice had asked the District of Columbia Circuit Court of Appeals to reopen an antitrust investigation into NAR’s commission rules that were settled in 2020.
Aaron Gregg contributed to this report.
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