Boston condos for sale and the fallout of the NAR verdict
Boston Condos for Sale and Apartments for Rent
Boston condos for sale and the fallout of the NAR verdict
On Aug. 17, policy changes for the National Association of Realtors will take effect.
Since the trade group proposed its landmark settlement, residential players have cast their predictions for the fallout once its deadline came and passed. Some dismissed the idea that it would trigger an industry-wide shift, while others predicted the new rules around commission sharing could thin residential broker earnings and agent ranks.
The post-deadline reality remains to be seen, but groups big and small are rolling out changes to get in line with the settlement, providing the first hints of how platforms and brokerages will build the road ahead for agents.
Zillow in May rolled out an agreement in line with NAR’s requirement for buyers to sign contracts with brokers before even touring a property. eXp Realty unveiled a new listing agreement that scraps commission sharing with buyers’ brokers in what CEO Leo Pareja called the company’s “best interpretation of the rule changes.”
Even as the 1.5 million-member NAR looks to respond to allegations from home sellers, homebuyers and the federal government with some key rule changes, the group is far from being in the clear.
A swell of class-action lawsuits tipped the legal balance. Home sellers and buyers claimed that baking in commissions had inflated prices and unfairly enriched residential brokers and firms.
In early October, days before the landmark Sitzer/Burnett case was scheduled to start trial, NAR made a last-minute bid to win favor among plaintiffs and federal prosecutors with an adjustment to the language that was at the heart of the lawsuit.
The DOJ remained in the background through the Sitzer/Burnett trial, guilty verdict and proposed $418 million settlement — before it secured a key green light this past April in the form of a ruling by a federal appeals court allowing it to reopen its antitrust investigation.
Among the rule changes included in its settlement, NAR promised to scrub offers of compensation from multiple listing services in the hopes of quelling the DOJ’s previously aired concerns about its policies.
The group would have to hold on until May for a look into the department’s thinking, when the DOJ weighed in on a case out of Massachusetts known as Nosalek. It was the first public comment on the commission issue since NAR reached its agreement, and the prognosis was less than solid.
“We believe offers of compensation should not be made anywhere, but certainly not on the MLS,” said Jessica Leal, an attorney for the department, without commenting directly on the settlement agreement.
All of this built up to a meeting in late June where NAR and DOJ leaders met face to face for likely the first time since the legal meltdown. It triggered residential leadership to warn its members against pursuing any “loopholes” under the new rules and to confirm that they expected the DOJ to “continue making inquiries into industry practices.”
The full settlement is not scheduled to receive final approval from a federal judge until November, leaving the DOJ months to interject on the issue.
The August deadline could be a sea change. But it won’t be the only one for the industry.
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Boston condos for sale and the fallout of the NAR verdict
After the National Association of Realtors and real estate brokerages reached massive settlements with home sellers regarding agent commissions, those on the buyers’ side are continuing their fight for an equally sized bite of the apple.
Buyers have filed their second appeal in less than a month to challenge the $626 million settlement, arguing that its approval could negatively impact their separate claims, Crain’s reported.
The contention revolves around a settlement that, if approved, might also be interpreted to dismiss buyers’ claims in their own lawsuits. Attorneys representing homebuyers made a similar claim in early May when they sought an injunction against the settlement, which a judge subsequently denied.
Both buyers and sellers have sued prominent brokerages and the NAR over longstanding commission standards in which sellers pay a commission to their agent, who then shares it with the buyers’ agent. Typically, each agent receives 2.5 percent to 3 percent of the sale price. Opponents of this commission structure argue that it stifles competition and inflates home prices.
The sellers’ settlement came months after a Kansas City jury in October found major brokerages and the NAR guilty of conspiring to maintain this commission structure. On May 31, lawyers from Korein Tillery, representing buyers, filed a motion in the U.S. Court of Appeals in the Eighth Circuit to prevent the settlement’s final approval.
If the court sides with the buyers, it could delay the settlement’s approval. The $626 million settlement involves significant payments from the NAR ($418 million), Coldwell Banker’s parent company Anywhere ($83 million), Keller Williams ($70 million) and Re/Max ($55 million).
In their previous filings, buyers’ attorneys have claimed that the settlement should explicitly state it only applies to sellers, to no avail. They argue that buyers have distinct claims, as their agents could compete by lowering commissions, unlike sellers’ agents who incur additional costs like photography and advertising.
The judge overseeing the settlement now faces a decision: to hold off on approving the settlement until the appeals court rules on the motion, or to proceed with approval at the risk of a successful appeal reversing the settlement. The more common practice would be to wait for the appeal’s resolution, a legal expert who wasn’t identified told the outlet.
—Quinn Donoghue
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Boston condos for sale and the fallout of the NAR verdict
Boston condos for sale and the fallout of the NAR verdict. The membership count of the National Association of Realtors experienced a decline in the final month of the year, with a total of 17,489 individuals deciding to not renew their membership. When compared to the previous year’s December figures, this indicates a decrease in membership. According to the monthly membership report from NAR, between December 31, 2022, and December 31, 2023, the National Association of Realtors experienced a reduction of 26,367 members, representing an annual decrease of 1.67%.
Massachusetts National Association of Relators membership dropped by slightly over 4%
By the end of 2023, the trade association concluded with a total membership count of 1,554,604. When examined on a state-by-state basis, Washington state experienced the most significant reduction in membership percentages, with NAR’s presence within the state declining by 9.5%. This resulted in a loss of nearly 2,200 members for the trade group in Washington. One possible reason for this decrease in membership can be attributed, at least in part, to the fact that the largest MLS in the state, Northwest MLS, is not affiliated with NAR. Additionally, the presence of Redfin in the state has contributed to this decline. In fact, Redfin made an announcement in October urging agents to let their NAR memberships expire whenever feasible.
After just two and a half hours of deliberation, the jury in a landmark lawsuit over broker commissions released a verdict that could upend the nation’s home buying process.
The eight-member panel on Tuesday found the National Association of Realtors, Keller Williams and HomeServices of America guilty of conspiring to inflate commissions charged to home sellers and ordered them to pay $1.8 billion in damages.
The two-and-a-half-week trial landed some of the industry’s biggest names in a Kansas City courtroom, where both sides picked apart the finer points of the trade group’s influence and rules requiring brokers using Realtor-controlled MLSs to offer compensation to buyer’s agents.
Residential players like Keller Williams founder Gary Keller and NAR CEO Bob Goldberg testified as part of a bid to defend NAR’s Clear Cooperation Policy. The plaintiffs — more than 500,000 Missouri homesellers — alleged the rule is a vehicle for conspiracy to raise costs for home sellers.
Breaking down the verdict
The jury’s ruling is still awaiting final approval from the judge. It’s unclear when the judge could deliver the final judgment, but the filing could confirm tripling the damages awarded to the plaintiffs in accordance with antitrust rules, which would push the total to more than $5 billion.
The money awarded will be distributed among the home sellers included as plaintiffs in the class-action suit, according to the plaintiff’s attorney Michael Ketchmark.
The plaintiffs could also request that the judge mandate policy changes that could alter industry practices. It’s unclear what those changes could include, but settlement agreements proposed by former defendants in the case could pave the way for other recommendations.
Anywhere Real Estate and RE/MAX agreed to settle for $85 million and $55 million, respectively, in deals that also included rule changes to increase transparency around buyer’s agent fees and to no longer require agents to belong to NAR.
If approved by the judge, the settlement agreements, which do not include admission of wrongdoing, also excuse both companies from the upcoming Moehrl trial.
Defendants NAR, Keller Williams and HomeServices of America vowed to appeal the decision, which would likely extend for several years.
NAR has also said that it will ask the judge to reduce the damages, according to a statement from president Tracy Kasper. NAR will also post bond, which will allow the group to defer the damages payment while it moves forward with an appeal.
Legal troubles still to come
The defendants are also facing another lawsuit over broker commissions, known as Moehrl, which is headed to trial in Chicago early next year.
Though the case is similar to Sitzer/Burnett, the potential damages in the upcoming trial are significantly higher. If the plaintiffs prevail in the Moehrl case, and the judge rules to triple the damages, the defendants could be on the hook for $40 billion.
“Cases are tried separately, and we remain confident we will ultimately prevail because we have a strong case we’ll present on appeal and because our rules are pro-consumer and pro-business competitive,” Kasper wrote in the statement.
Minutes after Tuesday’s verdict, the plaintiff’s attorney Michael Ketchmark filed another nearly identical lawsuit against NAR and another set of major brokerages, including Douglas Elliman, Compass, eXp and Redfin.
The suit, brought on behalf of three sellers, alleges that NAR forces agents in areas with Realtor-run MLSs to comply with its participation rule and prevents sellers from negotiating lower commissions for fear buyer’s agents will steer their clients to homes with higher compensation offers.
A spokesperson for NAR referred to the new lawsuit as a “copycat” in an emailed statement, which reiterated the group’s support for its participation policy.
If the new lawsuit follows its predecessor’s timeline, it could be more than four years before it heads to trial.
Ketchmark said on CNBC that the damages in the upcoming lawsuit could exceed $100 billion.
