Just when you think the drama surrounding the National Association of Realtors® (NAR) might actually calm down and take a breath…nope. Out comes another headline with news that’s guaranteed to get a collective groan from NAR leadership.
Terms of the Anywhere and RE/MAX settlements went public at almost the same time NAR pulled a 180 and announced it was perfectly fine with zero-percent buyer agent commission on seller listings—after years of declaring that the amount in the cooperative compensation field had to be more than zero.
Turns out the one-penny minimum is not a hill NAR leadership was willing to die on. And if NAR is no longer committed to enforcing the Participation Rule with a greater-than-zero commission rate for the buyer agent, what can we expect when Sitzer/Burnett goes to trial next week?
In any case, here’s a timeline of the biggest headlines from NAR’s class action lawsuits and sexual harassment allegations.
It starts…with a penny
Back in 2019, when the Moehrl and Sitzer/Burnett cases were opened, the sticking point was NAR’s insistence (up until just recently) that the amount or percentage specified in the cooperative compensation field of the listing agreement had to be more than zero.
It could be as low as one dollar or one penny, depending on who you asked, but the gist was clear: it had to be more than nothing.
To the sellers filing those cases, NAR’s insistence that sellers pay something more than zero to compensate the buyer agent was overstepping. It wasn’t NAR’s place to insist that the seller give anything to the buyer’s agent. They were already paying for their own.
Even NAR’s willingness to accept a penny told sellersthat NAR was determined to exert control over how much sellers contributed to buyer agent compensation. And that was unacceptable to the plantiffs.
The Moerhl case opened on August 22, 2019, and the Sitzer/Burnett case opened on October 8th of the same year. Both listed several defendants, including NAR, RE/MAX, Anywhere (formerly Realogy) and Keller Williams.
Then, in April of 2022, a federal judge granted class certification in the Sitzer/Burnett case; Moehrl vs NAR became a class action lawsuit almost a year later on March 29, 2023.
Not long afterward, on August 9, 2023, BrightMLS made some waves by changing their listing entry system to allow any amount in a listing’s cooperative compensation fields—including zero.
NAR exposed
Meanwhile, NAR was dealing with an internal issue.
On July 14th, 2023, an attorney for Polsinelli Law Firm, Denise Drake, wrote a letter to NAR CEO Bob Goldberg, who tapped the firm to investigate allegations of sexual harassment and other misbehavior by NAR leadership, including former president Kenny Parcell.
Drake sent the letter a little more than two weeks after Janelle Brevard filed a lawsuit against Parcell alleging sexual misconduct and discrimination—and one week after Brevard withdrew the case when she and her attorney reached a settlement with NAR.
Then, about a month and a half later, on August 26, 2023, the New York Times published an exposé with allegations of sexual harassment and discrimination against NAR leadership, specifically but not limited to former NAR president Kenny Parcell.
Parcell resigned two days later, and the new NAR president, Tracy Kasper, issued a statement assuring NAR members and staff that things would be different. By then, the comment section on The Times article was overflowing with testimonies from NAR staff (both former and current).
The general sentiment could be summed up in three words: “We deserve betteR.”
Meanwhile, on August 28, 2023, the U.S. Court of Appeals in San Francisco revived an antitrust case against NAR’s “Clear Cooperation Policy” aimed at pocket listings. And the Department of Justice (DOJ) filed an amicus brief to argue on behalf of the plaintiffs.
And on August 30th, Manhattan-based Compass agent Jason Haber announced the NAR Accountability Project—a group of real estate professionals committed to holding NAR accountable for its promises to make necessary changes.
Anywhere and RE/MAX reach a settlement
A little more than a week later, on September 5, 2023, Anywhere (fka Realogy) reached a settlement with the plaintiffs in both of the class action lawsuits on buyer agent compensation.
NAR responded to the news on September 6th, stating it “will continue to defend pro-consumer local MLS broker marketplaces” after its co-defendant settles.
On September 8th, Inman reported on the confidential letter from Denise Drake of Polsinelli Law Firm, the firm NAR had tapped to investigate allegations of sexual harassment and discrimination. The letter, dated July 14th, gave evidence of disrespectful and “creepy” behavior on the part of NAR leadership, going back long before Brevard’s lawsuit.
On September 18th, Great Place to Work®—a global authority on workplace culture—withdrew its certification from NAR after receiving emails from the NAR Accountability Project.
Also on September 18th, RE/Max became the second defendant in the Moehrl and Sitzer/Burnett lawsuits to reach a settlement with the plaintiffs.
An anonymous NAR staff letter and a leaked memo
September 18th had one more development worthy of the timeline: a letter penned by about a dozen internal NAR staffers, which Shannon King, NAR Regional Vice President, presented at the Executive Committee meeting.
The letter outlined staff grievances and contained a list of demands, including the resignation of top executives Bob Goldberg (NAR CEO), Donna Gland, and Katie Johnson. It also demanded the removal of current NAR president Tracy Kasper.
Then, on September 27th, Inman reported on a leaked internal memo, dated June 29, 2022, that showed NAR leadership knew about the sexual harassment allegations and “hostile, toxic work environment” as early as March 2022.
NAR spokesperson Mantill Williams said NAR responded, within days of receiving the memo, by hiring an independent, outside investigator, Polsinelli Law Firm, to investigate the allegations.
That investigation led to Denise Drake’s July 14th letter to CEO Bob Goldberg. NAR responded by creating a “Culture Transformation Commission,” which apparently resulted in little, if any, meaningful change.
On the lawsuit front, on September 29th, plaintiffs in the Sitzer/Burnett case notified the court of their wish to remove three plaintiffs, including Scott Burnett, as class representatives. In response, NAR filed a motion arguing the plaintiffs were trying to avoid cross-examination.
Redfin leaves NAR, and NAR flips on zero-percent buyer agent compensation
On October 2nd, Redfin announced its decision to leave NAR and to require its brokerages and agents to cancel their NAR membership wherever they can do so without losing access to the MLS and other critically important agent resources.
Then, a few days later, NAR changed its stance on buyer agent commission, saying zero-percent commission is allowed—after years of insisting, even under oath, that the buyer commission specified on the listing had to be more than zero.
To be clear, NAR’s former insistence on a greater-than-zero rate or amount in a listing’s cooperative compensation field was one of the two reasons why Redfin chose to cut ties with the organization (the second being NAR’s history of sexual harassment and discrimination).
Settlement terms go public—and leave NAR out in the cold
Also on October 6th, the terms for the Anywhere and RE/Max settlements went public.
Both agreed to monetary damages in substantial amounts. And both agreed to some minor changes in their business practices.
The biggest impact of both settlements came from agreements on the part of Anywhere and RE/MAX leadership to no longer require NAR membership for any of their brokers or agents. Also removed was any obligation to conform to NAR’s Code of Ethics or MLS Handbook.
It seems likely that if other defendants choose to settle, the terms of their agreements will include the same commitment to removing the obligation to NAR membership. And with NAR no longer insisting on greater-than-zero buyer agent commission, it’ll be interesting to see how things develop when the Sitzer/Burnett case goes to trial next week, starting October 16th.
We’ll post timely updates as the NAR saga continues.
