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The day has finally come. This afternoon, a Missouri judge will decide whether the National Association of Realtors’ landmark commission settlement will receive final approval.
This moment comes after years of litigation and represents the culmination of a story that fundamentally changed the way agencies do business and collect fees. That’s a big deal.
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That said, industry insiders who spoke with Inman for this article said much of the industry’s general public has left. The NAR settlement was announced in March, and the resulting rules went into effect in August. Many agents are clearly ready for a new chapter as a result.
But the case is not over yet, and the saga of the Commission case is not over. In fact, there are still legal issues to resolve, and further legal battles await. Needless to say, the period of turmoil that began with the settlement continues.
In other words, this saga of Commission litigation will continue to resonate in the industry for some time to come, even though final approval of the NAR settlement is likely imminent. Therefore, real estate professionals have a duty to stay tuned.
So what is actually happening?
Early this afternoon, U.S. District Judge Stephen Baugh will preside over a hearing in which he is expected to give final approval to NAR’s proposed settlement, which was first announced in March. The settlement received preliminary approval in April, but will require a two-step process to cross the finish line.
As a reminder, the NAR settlement covers lawsuits brought by home sellers. As part of the settlement, NAR agreed to pay $418 million and make various rule changes. For example, a real estate agent showing a property must sign a contract with the consumer before the viewing takes place. NAR-affiliated multiple listing services have also had to change their platforms so that seller’s agents cannot use these platforms to pre-emptively indemnify buyer’s agents.
The NAR settlement does not include large brokerage firms that had more than $2 billion in trading volume in 2022. Many of these companies have since entered into their own agreements to resolve home sale lawsuits. The settlement finalized today totals approximately $700 million, with the majority coming from NAR and HomeServices of America, according to a court filing last week.
It is noteworthy that a lawsuit brought by homebuyers, raising similar antitrust claims, has not yet been resolved.
Affected consumers have already begun receiving notice that they may be able to recover settlement funds. A court filing last week said 14 million postcards and 25 million emails were sent to potentially affected consumers. Consumers are also being informed through other digital campaigns run on platforms such as Google and Facebook. “The notification program reached 99 percent of the class,” according to the filing.
As of Nov. 14, the company that oversees notification efforts had received 491,490 requests, the majority of which were submitted online, according to the filing memo.
Currently, if the available settlement money (after plaintiff’s attorneys receive their share) was divided equally among the consumers who filed claims, everyone would receive just over $900. But that number is sure to decline as more and more consumers sign up to collect a piece of the payments pie.
It all seems very final. In other words, does that mean the case is settled at this point?
It’s not a far off story.
There are some questions currently pending. One is simply whether Judge Baugh will actually give final approval to the settlement. In this regard, Marty Green, president of the mortgage law firm Polunsky Beitel Green, told Inman last week that he believed the settlement would ultimately be approved.
“I think the momentum in this case is going to continue for some time toward a global resolution,” Green said.
james dwiggins
Industry officials who spoke with Inman agreed. For example, NextHome CEO James Dwiggins, one of the industry’s most vocal commentators on the issue, told Inman last week that the deal was “done.”
“It’s not just over, the judge has decided it’s over,” Dwiggins said by phone, expressing disappointment that some of the challenges in the case didn’t carry more weight with the judge. “I literally rubber stamp everything I see.”
However, not all problems have been resolved. Notably, Tanya Monestier, a contract law professor at the University at Buffalo, filed a lengthy challenge to the settlement last month. Mr. Monestier’s argument boils down to the idea that consumers are not getting full value from the settlement, either financially or through the required changes in business practices. She ultimately described the deal as “the worst possible world.”
Mr. Green said he was hopeful that the settlement would ultimately be approved despite such objections, but said Mr. Monestier “makes some interesting arguments, especially regarding attorney fees.”
marty green
“I think the court is looking at attorney fees overall as part of its discretion and perhaps making some adjustments there,” Green said. “This is one area where we think we can do a little bit of work without necessarily jeopardizing the overall resolution.”
Mr. Green added that the amount that individual consumers are seeking to collect has “a very slim chance of recovery,” which could increase pressure to adjust the distribution of settlement funds.
In addition to Mr. Monestier, a number of other parties, most of them plaintiffs in other Commission-related cases, have filed similar objections. These objections range from the amount to the scope of the settlement and are aimed at blocking final approval of the settlement.
But lawyers for the plaintiffs argued in a filing last week that the objections were unpersuasive and the settlement was factually fair.
It is also worth noting that Judge Baugh gave final approval to a settlement involving Keller Williams, Anywhere, and RE/MAX in May. This could be a harbinger of how Judge Baugh thinks about similar settlements involving NAR and other companies.
Additionally, the U.S. Department of Justice filed a five-page statement of interest over the weekend with Sitzer | Barnett incident. Although the document does not consider final approval of settlements, it does take issue with rules requiring buyers and agents to have written contracts before viewing homes, one of the practices that This has caused changes. The Justice Department’s filing also states that, if the deal is approved, the court would require that “such approval would ensure that the proposed settlement would prevent and retrain current antitrust violations, remediate past violations, It should also be made clear that it does not address whether or not it includes amended policies and practices that comply with antitrust laws.” ”
The filing, along with objections such as those raised by Monestier and others, highlight the fact that even as the finish line approaches, debate over the funding and content of the settlement looms. And it all comes on top of homebuyer litigation and the Justice Department’s broader and more pressing concerns about the industry.
Additionally, the legal wrangling surrounding the Antitrust Commission’s case appears to have burst the dam, and a number of other challenges to the status quo of the real estate industry have continued in recent months. These include a sudden and heated debate over the NAR’s clear cooperation policy and objections to the industry association’s tripartite membership agreement.
So there are basically two main reasons why industry professionals need to be aware of what’s going on. The first is that the settlement itself is important and continues to face challenges, impacting the consumers with whom real estate agents do business. Second, it is a kind of inciting incident in a period of turmoil that shows no signs of stopping. For example, this settlement is at the heart of the questions surrounding the future of the NAR.
How much attention do agents pay to this?
Simply put, there aren’t that many.
Anthony Lamacchia
“Honestly, I think most real estate agents think it’s over,” real estate podcaster and CEO of LaMacchia Companies Anthony LaMacchia told Inman last week. “I don’t think the public realizes it hasn’t been approved yet.”
Industry players had differing opinions on what would happen next, or the degree of change that awaits the home sales business. But generally speaking, those who spoke with Inman for this story tend to agree with LaMacchia that the final stages of the court settlement journey are not on the radar of many investigators. Ta.
“Most agents are just focused on what they have to do to be efficient and make a living,” OJO President Chris Heller told Inman last week. He added that the NAR settlement is likely to be more of a concern to leaders of large brokerages and tech companies who are still working to adapt to the new rules.
Heller also said there remains some confusion among the agent ranks about what exactly constitutes best practices in a post-settlement world.
Chris Heller, OJO
“Not everyone is 100 percent clear on what they should and should not do,” he pointed out. “But they are rapidly gaining popularity because every transaction involves another agent.”
The idea that adapting to a post-colonial world is a work in progress was a recurring theme in this narrative conversation. For example, Dwiggins argued that there is a lot of confusion for agents and conflicting information depending on which brokerage firm or state they work for.
“The industry is trying, but we’re not getting clear guidance from one place,” Dwiggins said. “And everyone is trying to interpret these things the best they can. Some in a good way, some not so much.”
These comments underscore the fact that the Commission litigation story is ongoing and that Tuesday’s hearing is not the end, at least for real estate stakeholders.
But what happens next is up for debate. For Lamacchia, he suggested, the future may resemble the past.
“These plaintiffs’ lawyers are basically working for industry disruptors who dream of destroying our industry, and if you may take my word for it, they are You will be disappointed,” Lamacchia said. “They’ll be disappointed because it won’t break.”
Still, the changes, and the final chapter of the commission’s case, may take some time to ultimately fully materialize. This is partly because the wheels of justice turn slowly. But there are also practical elements. Dwiggins noted that many deals that are closing now were already in the works before NAR’s new rules took effect in August. And that means a real moment of truth may come in the coming months or years.
“So some of the impacts that we’re going to see are starting now,” Dwiggins said. “But the market is really depressed. I mean, you haven’t seen a ton of this stuff. That’s a problem.”
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