NAR Lawsuit: How the $5 Billion Verdict Reshapes Real Estate

Background

A Coldwell Banker “For Sale” sign stands along a Washington, D.C. street. The commissions paid to buyer and seller agents—often around 5%–6% of a home’s price—have come under legal fire. A high-stakes antitrust lawsuit involving the National Association of Realtors (NAR) has rocked the real estate industry. Initially filed in 2019 on behalf of home sellers, the case alleges that NAR and several major brokerages conspired to inflate residential real estate commissions through restrictive rules.

A longstanding NAR policy is at the heart of the dispute: to list a home on a Realtor-affiliated Multiple Listing Service (MLS), a seller’s agent must offer a commission to any broker representing the buyer. The plaintiffs argue this “buyer broker commission rule” forces sellers to pay buyer agents’ fees and stifles regular price competition, effectively fixing total commissions at a high level.

Lawsuit Origins and Claims

The lawsuit’s background traces back to early 2019, when home sellers in several states—later joined by hundreds of thousands more in class actions—challenged NAR’s cooperative commission policies. They contended that automatically sharing a sale cut with buyer brokers violates antitrust laws (such as the Sherman Act) by inflating seller costs. In their view, homeowners were locked into paying around half the typical 5–6% agent fee to buyer agents who, in many cases, the sellers never met.

Evidence presented at trial showed that this system kept buyer-side commissions remarkably steady (often 2.5%–3%), even as home prices rose and online search made it easier for buyers to find properties independently. The plaintiffs pointed to situations where sellers were told a “standard” 6% rate was non-negotiable, suggesting an industry norm that few consumers felt empowered to question.

Defendants’ Response

NAR and the brokerages denied any wrongdoing. They maintained that all commissions are always set by agreement with clients, not by NAR rules, and that sellers have never been required to offer any particular amount—if they provide it—to cooperating buyer agents. Throughout the case, NAR argued that its policies are pro-consumer and pro-competition, noting that commission rates are negotiable and that having sellers pay buyer agents can simplify transactions for homebuyers.

These clashing perspectives set the stage for a landmark legal battle over how Americans buy and sell homes. After years of litigation, the case culminated in a dramatic jury trial in Kansas City, Missouri, in October 2023.

The Trial and Verdict

NAR and several large real estate companies, including Keller Williams and HomeServices of America (a Berkshire Hathaway affiliate), stood as defendants. At the same time, other firms like RE/MAX and Anywhere Real Estate (formerly Realogy, parent of Coldwell Banker, Century 21, and others) had settled before trial.

Over two weeks of testimony, jurors heard how sellers felt pressured to pay buyer broker fees and how NAR’s rules reinforced this practice. On October 31, 2023, the jury rendered a verdict against NAR and its co-defendants, finding them liable for an unlawful conspiracy to inflate commissions. They awarded roughly $1.78 billion in damages to the plaintiff class of home sellers. Under antitrust law, that amount could be trebled to over $5 billion, which sent shockwaves through the industry. One plaintiff attorney called it “a day of accountability,” while the verdict immediately raised questions about the future of traditional agent commissions.

Post-Verdict Reactions and Appeals

In the wake of the jury’s decision, NAR and the brokers publicly disagreed with the outcome and signaled plans to fight it. A NAR spokesperson asserted that the group would appeal and seek to reduce the damages, maintaining that the verdict was not supported by the evidence of how commissions are actually set. HomeServices of America said it was disappointed and prepared to appeal, and Keller Williams stated it was considering “all options,” indicating the legal battle was not over.

Behind the scenes, however, the enormous judgment added urgency for the defendants to mitigate the risks. Even as NAR insisted that its policies had always allowed negotiation, the prospect of a multibillion-dollar liability and other pending class-action cases put intense pressure on the organization. By late 2023 and early 2024, attention shifted from the courtroom to the negotiating table, as NAR and the remaining defendants explored settlements to avoid protracted appeals and additional trials.

Settlement Agreement and Industry Reforms

In March 2024, NAR announced a sweeping settlement framework to resolve the outstanding lawsuits nationwide. Under the proposed deal—subject to court approval—NAR agreed to pay $418 million in damages and, more importantly, to institute significant changes to its rules and practices. This settlement was designed to cover claims by home sellers across numerous states (beyond those in the Missouri case), effectively ending the major commission lawsuits against NAR and over a million Realtor members.

NAR did not admit wrongdoing, but the agreement committed the association to reforms to increase transparency and competition in how brokers are compensated. Industry observers noted that several real estate franchisors had already struck their own settlements: for example, RE/MAX had paid $55 million and Anywhere Real Estate $83.5 million to settle their portions of the claims without admitting liability. Keller Williams also reached a settlement to exit the litigation, reportedly for around $70 million, leaving HomeServices of America as the last major brokerage holdout until it, too, agreed to a hefty $250 million settlement by late 2024. By November 2024, federal judges had given final approval to NAR’s settlement (and others), clearing the way to implement the promised industry changes.

Impact on Real Estate Commission Practices

The agreed-upon reforms mark a turning point for real estate brokers’ commission practices. NAR’s settlement requires that the association repeal or modify the rules central to the case. No longer will sellers be obligated by MLS policy to offer compensation to buyer agents as a condition for listing a property. Instead, brokers and their clients must determine commission terms through open negotiation.

The settlement emphasizes that there is no “standard” 6% commission—agent fees have always been negotiable and now must be clearly presented to consumers as such. Concretely, NAR agreed to mandate new consumer disclosures explaining that brokerage fees are not set by law and can be negotiated in every transaction. Buyers’ agents must also secure written agreements with their clients before showing homes. This change formalizes the buyer-agent relationship and ensures buyers understand how their agent will be paid.

These measures aim to inject more transparency into the home purchase process and prevent the hidden-fee dynamics plaintiffs said were harming sellers. Real estate professionals are now adapting to a world where commission splits are not pre-ordained by MLS policy but decided deal by deal, out in the open.

Broader Implications for the Industry

The implications for the industry are profound. If buyer-broker commissions are no longer guaranteed through MLS offers, agents and consumers must adjust to negotiating fees on a case-by-case basis. Many experts predict downward pressure on the total commissions paid in a typical sale, which could save consumers billions of dollars over time.

Home sellers may attempt to pay less than before, and competition could drive listing agents to reduce rates or offer more flexible service models. Indeed, some analysts foresee commission rates dropping significantly for higher-priced homes and repeat clients with more leverage to bargain.

One veteran consumer advocate noted that uncoupling the traditional 50/50 commission split should “eventually lower agent commissions by tens of billions of dollars a year” and better align an agent’s pay with their actual skill and effort. More transparent pricing will reward the most effective agents and pressure others to justify their fees. At the same time, there is acknowledgment that real estate is a complex, interdependent marketplace. Changing how one piece—buyer agent compensation—is handled could ripple through other aspects, from home prices to mortgage lending practices.

The consensus is that the traditional agent commission model is poised for its biggest shake-up in decades, even if the full impact will play out gradually as the new rules take hold.

Challenges and Concerns

Not everyone is confident that these changes will be painless. Some in the industry worry about unintended consequences, particularly for first-time buyers and those with limited means. Under the old system, a buyer’s broker was typically paid from the seller’s closing proceeds, meaning buyers didn’t need extra cash to cover their agent. If more of the burden shifts directly to buyers, it could put added strain on those already struggling to afford a down payment.

“Today’s NAR settlement spells disaster for first-time homebuyers… expecting them to come up with an extra $12,000 at closing is just plain unrealistic,” warned one mortgage company CEO, voicing a fear that buyer agents might become a luxury service for the well-off.

Consumer advocates acknowledge this concern but suggest there are solutions. Buyers could ask sellers to credit some of the buyer-agent fee as part of the deal (essentially negotiating it into the purchase price), and regulators could consider allowing broker commissions to be financed within mortgages so buyers aren’t shut out by upfront costs.

NAR’s leadership, for its part, has stressed that preserving “consumer choice” remains a priority and that cooperative compensation can still occur voluntarily, just handled outside the MLS listing if the parties so choose. The actual test will be how the market adjusts in practice: whether sellers continue to offer competitive commission incentives to attract buyer agents, or if new models emerge for buyers to obtain representation on different terms.

Reactions from the Real Estate Community

Reactions to the lawsuit and its outcome have been intense and varied across the real estate community. Home sellers and consumer advocates have generally hailed the developments as a long-overdue win for transparency and fair pricing. They argue that breaking the old commission structure will empower consumers to negotiate better deals and potentially reduce the cost of selling a home.

“Today, the door opens even wider for greater access to homeownership,” said the CEO of one real estate tech company, praising the increased competition and choice the settlement could foster. Likewise, the Consumer Federation of America lauded the settlement, predicting it will “benefit home sellers and buyers greatly” in the long run.

On the other hand, many real estate agents and brokers have expressed anxiety. For agents, the prospect of lower commissions raises concerns about their livelihood and the viability of serving specific clients. One broker lamented that if buyers and sellers start haggling over agent fees during offer negotiations, “they’ll tend to sell out their agents” to save money, potentially squeezing agent income. Some REALTORS® worry that top agents might avoid working with lower-income buyers or VA loan clients if those transactions become less profitable, which could hurt vulnerable groups.

Industry leaders are urging their peers to adapt. “This move means an agent’s skill is more important than ever,” observed an executive at a nationwide brokerage, noting that buyer agents must clearly demonstrate their value to justify their fees in the new environment.

After initially fighting the case, NAR has shifted to a tone of reassurance and resolve. “While there could be no perfect outcome, this agreement is the best outcome we could achieve under the circumstances,” NAR’s interim CEO said in 2024, emphasizing that the settlement provides a path forward and allows brokers to refocus on serving clients rather than courtroom battles.

The Road Ahead

As of the latest updates, the legal saga is entering its final chapters, but its ripple effects are just beginning. Courts have approved major settlements that collectively approach $1 billion, including NAR’s $418 million fund for home sellers and sizable payouts by multiple real estate franchisors. The implementation of NAR’s promised rule changes began in late 2024, and the industry is now navigating compliance with the new standards (such as ensuring every MLS no longer mandates offer of compensation).

It will take time to see how these reforms influence real-world commission levels and brokerage practices. Government regulators are also keeping a close eye on the situation. The U.S. Department of Justice signaled that the private settlements do not preclude further antitrust scrutiny of real estate practices, and it has suggested it may pursue additional measures to promote competition in home sales.

In other words, even though NAR’s courtroom reckoning is largely resolved, the broader push for a more consumer-friendly and competitive market is ongoing. The lawsuit involving NAR has not only yielded monetary compensation for sellers, but also catalyzed a reexamination of how Realtors do business. It is a watershed moment that could reshape the economics of buying and selling homes in the United States for years.

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