One year ago today, the jurors in Sitzer/Burnett came back with a verdict for the plaintiffs. And plenty has happened since then.
The most recent development is an objection filed on Monday, October 28th by University of Buffalo law professor Tanya Monestier against the proposed NAR settlement. But I’m getting ahead of myself.
If you’ve been with us long, you’ll remember the live BAM broadcast Byron Lazine hosted minutes after the verdict went public. Agents across the country tuned in to get the details and to sound off on the jurors’ decision, the attorneys on both sides of the lawsuit, and how the verdict could impact the industry and their businesses.
We’ve put together a timeline of events related to the verdict that have impacted agents and consumers alike since then—and leading up to the approval hearing set for November 26th.
Timeline of Industry Developments Since Halloween 2023
For this list, we’re highlighting industry milestones specifically related to the Sitzer/Burnett verdict, including the NAR settlement and major news updates stemming from that.
- October 31, 2023: The Sitzer/Burnett jury issues a verdict for the plaintiffs, leaving the litany of defendants, led by the National Association of Realtors (NAR), owing them a trebled damages award of over $5 billion.
- Also on October 31st: Michael Ketchmark, lead attorney for the Sitzer/Burnett plaintiffs, files another lawsuit, Gibson, against an even longer list of defendants, including NAR. From there, sellers and buyers across the U.S. start filing similar lawsuits against Realtor associations, brokerages, and MLSs.
- February 29, 2024: Attorneys for the Sitzer/Burnett plaintiffs file a request for $82.4 million of the settlement funds from Anywhere, RE/MAX, and Keller Wiliams for attorney fees.
- March 15, 2024: NAR agrees to change commission rules in a $418 million settlement that leaves 94 major brokerages, all with 2022 transaction volumes of over $2 million, to either settle on their own or join the settlement at a hefty price.
- April 23, 2024: Judge Stephen R. Bough, who presided over Sitzer/Burnett, grants preliminary approval for the proposed NAR settlement and sets the approval hearing for November 2024.
- April 30, 2024: Zillow announces their new, non-exclusive touring agreement in response to the NAR settlement’s requirement that buyer agents have a signed buyer representation agreement before touring a home with a buyer.
- May 30, 2024: Northwest MLS (NWMLS) becomes the first MLS to say “No, thanks” to the NAR settlement terms.
- August 17, 2024: NAR settlement terms go into effect, including the new requirements for buyer representation forms and the removal of all buyer-broker compensation language from the MLS.
- August 22, 2024: Attorneys for the plaintiffs in the Gibson antitrust lawsuit (filed by Michael Ketchmark) file a request for $36.9 million in attorney fees, accounting for roughly one-third of the settlement funds from Compass and Redfin.
- Also in August, 2024: University of Buffalo law professor Tanya Monestier publishes a report highlighting her concerns with buyer agreements post-NAR-settlement.
- September 17, 2024: Attorneys for the Sitzer/Burnett plaintiffs file a request for attorney fees totaling more than $220 million or about one-third of the total settlement amounts for NAR and HomeServices, adding to the $82.4 million requested back in February.
- October 28, 2024: Monestier takes it a step further and files an objection to the proposed NAR settlement, describing it as the “worst of all possible worlds” and calling out agent “workarounds” as well as the $300 million-plus in requested attorney fees.
Stay tuned as we learn whether Monestier’s objection will delay the final approval hearing for NAR’s proposed settlement—as well as the judge’s final ruling.
How has the settlement changed the industry?
One widespread concern related to the Sitzer/Burnett verdict and the NAR settlement changes has been what will happen to agent commissions. After all, the central issue for the plaintiffs was the alleged collusion to inflate commissions and compel sellers to compensate the buyer’s agent as well as their own.
With NAR settlement terms explicitly removing all mention of buyer agent compensation from the MLS, at least 50% of real estate agents expect buy-side commissions to decline as a result, according to Ryan Tomasello, an analyst for Keefe, Bruyette and Woods (KBW).
KBW, if you’ll remember, published a 75-page report in October of last year arguing for a strong possibility that the Sitzer/Burnett and Moehrl class action lawsuits would eventually lead to a ban on cooperative commissions by early 2024. And while NAR settlement terms still allow agents and their buyers and sellers to negotiate terms that include cooperative compensation, there are many in the industry who believe it won’t be much longer before the DOJ (or other forces) shut it down completely.
Because of that, many expect buy-side commissions will take a hit. But in the two months since the settlement terms went into effect, agents and brokers have made conflicting reports.
Here’s a quick review of the some of the data:
- Redfin: One month prior to the NAR settlement changes going into effect, the typical U.S. home seller paid a 2.55% commission to the buyer’s broker during the four-week period ending July 14—down from an average of 2.62% during the four-week period ending January 28th.
- Also from Redfin: Recent data shows agent commissions have “remained essentially unchanged” since the new commission policies went into effect on August 17th. Breaking it down further, average buyer’s agent commissions:
- Increased slightly from 2.41% in August to 2.43% in October for homes listed under $500,000
- Stayed nearly the same (2.25% down to 2.24%) from homes between $500,000 and $1 million.
- Decreased from 2.24% in August to 2.11% in October for homes listed above $1 million.
- Real Brokerage: According to its survey of roughly 300 of its agents across North America between August 30th and September 15th, slightly less than half expected to earn 2.6% to 3%—down from 57% before the settlement changes went into effect. Another 10% expected rates of 1.6% to 2%, up from a 3% share prior to August 17th.
- Clever Real Estate: According to its survey of 516 agents in late August and early September, listing agents hope to have their seller offer an average of 2.6% in buyer-broker compensation—down 0.13% from the average prior to August 17th.
- RISMedia: Results from a RISMedia survey of over 1,300 real estate professionals across the U.S. showed that commissions dropped after NAR settlement changes went into effect in August.
Data from Real also showed that for 55% of its agents whose sellers were willing to offer buyer-broker compensation, the rate was 2.5% or higher. Another 30% said sellers were willing to offer some level of buy-side compensation below that.
And while there’s variability among brokers as to how much their agents are earning, most report sellers are still open to offering some degree of buyer-broker compensation.
Our agents are telling us that the vast majority of sellers are open to paying or all of the buyer broker compensation. But it comes down to the offer. Now it is one more term that is being negotiated. So, as long as it works for the seller and the net (profit) they want to walk away with, then agents say they are willing to cover it for buyers.
The market has plenty to do with how much sellers are willing to offer as buyer-broker compensation. In strong buyers’ markets like San Diego, sellers are more likely to offer higher buy-side commission rates to get their home sold.
It makes sense. But that doesn’t mean buyer agents in sellers’ markets should expect to settle for bargain basement rates. In every market, agents who show their value throughout the process of buying a home are more likely to get paid what they’re worth.
Make that a fundamental part of your business plan for 2025.
