NAR Litigation Update
Three years ago, NAR and four corporate defendants were sued in class action lawsuits filed in Illinois and then Missouri alleging that home sellers are damaged when their listing broker offers to compensate the buyers’ representative. The lawsuits falsely allege that various NAR guidelines and our members’ adherence to those guidelines have led to artificially fixed and inflated compensation being paid to real estate professionals.
In April, a federal judge in Missouri granted class certification in the case, but this in no way reflects on the actual or perceived merits of their claims. The ruling was procedural in what is yet to be a lengthy process and now allows others who have allegedly been affected to join the litigation as plaintiffs. As is common and expected, class action attorneys now begin to notify members of the class of their right to opt out of the class via direct mail, advertising and press stories, even before the validity of the case has been decided.
NAR continues to maintain their position that the pro-competitive, pro-consumer local broker marketplaces serve the best interests of buyers and sellers. Sellers making offers of compensation to buyer brokers gives first-time, low/middle-income and all homebuyers a better shot at affording a home and professional representation. As you know, the free market organically establishes commission costs within local real estate markets based on service, consumer preference and what the market can bear.
NAR does expect the class action to gain some attention and its possible current and/or former clients may reach out for more information. It is important to recognize these promotional actions by the plaintiffs are expected, and we are more than ready to defend ourselves from these baseless claims and expect to win. You can also direct consumers with questions about the Sitzer/Burnett case to realestatecommissionfacts.com.
NAR continues to maintain engagement with the media and key stakeholders, including stories about REALTORS® as experts, updates to realestatecommissionfacts.com and competition.realtor and keeping our point of view in the forefront through various stories that run in media.
NAR also encourages its members to continue to use of Buyer Representation Agreements in order to formalize a working relationship with clients and detail what services consumers are entitled to and what the buyer agent expects from their client in return. We also encourage members to remind clients that there are no fixed commissions and that they are negotiable at any point in the transaction.