Judge approves settlement that changes rules for real estate agents
It’s official: A legal settlement that will rewrite the way many real estate agents are paid in the United States has received its final approval from a federal judge.
Judge Stephen R. Bough of the Western District of Missouri on Tuesday approved an agreement between the National Association of Realtors and a group of home sellers who sued the real estate trade group over its long-standing rules on agents’ commissions, which they say forced them to pay excessive fees.
It was the last step in an eight-month process that was set in motion when NAR, the nation’s largest trade association, agreed to the landmark deal on March 15. It was also largely a formality — Bough gave preliminary approval to the agreement on April 23, and the rule changes detailed in the settlement took effect on Aug. 17, forcing agents across the country to begin adjusting how they do their jobs.
NAR reached the agreement in March to settle the lawsuit, as well as a series of similar claims, by committing to make the changes and to pay $418 million in damages to a settlement fund.
The trade group, which is based in Chicago and has 1.5 million members, has wielded immense influence over the real estate industry. But home sellers in Missouri, whose lawsuit against NAR and several brokerages was followed by multiple copycat claims, successfully argued that requiring a seller’s agent to make an offer of commission to a buyer’s agent led to inflated fees, and that another rule requiring agents to list homes on databases controlled by NAR affiliates stifled competition.
The settlement makes clear that agents can no longer discuss splitting compensation on the online databases, called the multiple listing service or the MLS, that they use to list homes.
Michael Ketchmark, the Kansas City attorney who served as lead lawyer in the lawsuit, cautioned that agents who seek to move the commission conversation to other venues may be opening themselves to new legal fights. “Anyone who thinks they can continue to fix commissions on new websites or side deals is foolish and wrong,” he said.
This article originally appeared in The New York Times.
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