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Home Sellers Embrace for $1.78B N.A.R. Lawsuit Impact

By Mihaela Lica Butler | November 17, 2023

After a trial in Kansas City on October 31st, 2023, a jury determined that the National Association of Realtors (N.A.R.), Keller Williams, Anywhere (formerly Realogy), RE/MAX, HomeServices of America, B.H.H. Affiliates, and HSF Affiliates have caused significant impact in the real estate industry by conspiring to artificially inflating broker commission rates paid by home sellers.

The suit, brought by nearly half a million Missouri home sellers, asked for damages of $1.78 billion. The jury found that N.A.R. and two brokerage firms, HomeServices of America and Keller Williams Realty, were liable for US$1.8 billion in damages, expected to be tripled by law, totalling a substantial US$5.4 billion.

Two other companies initially mentioned in the lawsuits, Re/Max and Anywhere Real Estate (Realogy) — the parent company of Coldwell Banker, Century 21, Sotheby's International Realty, and Corcoran — reached an out-of-court settlement totalling almost $140 million, Re/Max paying $55 million and Anywhere Real Estate paying $83.5 million in damages.

As part of the agreement, Re/Max and Anywhere Real Estate also committed to changing their business practices, such as no longer requiring agents to be members of N.A.R.

This is just one of many lawsuits against N.A.R., also under investigation by the U.S. Department of Justice.

Besides this lawsuit and the struggling housing market, N.A.R. has had a tough year: in August, N.A.R. president Kenny Parcell resigned due to sexual harassment allegations, and last month, Redfin ended its association with N.A.R.

In response to this legal setback, N.A.R.'s Chief Legal Officer, Lesley Muchow, addressed the matter at the NAR NXT conference in Anaheim:

"We do believe that we have a very strong basis for a complete reversal of the jury's verdict, as well as the damages awarded. We anticipate over the next coming months that we will file post-trial motions."

The real estate industry is waiting for the legal process to unfold as N.A.R. gets ready to challenge a decision that could significantly affect other companies in the field. This case could change how the industry operates and set new rules for how companies can work together in the real estate market.

Over 1.5 million real estate agents in the United States pay fees to N.A.R. to use the title Realtor and guarantee to home sellers and buyers that they follow the organization's strict rules on ethics and home sales. The outcome of the ruling is yet to be seen, but it is evident that the decision and the amount of the damages indicate a change in the way agent commissions are currently paid - for example, real estate agents' commissions could fall by 30% annually, according to experts.

More lawsuits are likely to come soon. Just minutes after the verdict on Tuesday, October 31st, 2023, the plaintiffs' lawyers filed another class-action suit in U.S. District Court in Missouri. This new case represents three new home sellers and alleges that having home sellers pay sales commissions to buyers' agents violates the Sherman Antitrust Act. The lawsuit names N.A.R. as a defendant and several major brokerages, including Compass, eXp World Holdings, Redfin, and Douglas Elliman.

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Mihaela Lica Butler is senior partner at Pamil Visions PR. She is a widely cited authority on public relations issues, with an experience of over 25 years in online PR, marketing, and SEO.She covers startups, online marketing, social media, SEO, and other topics of interest for Realty Biz News.
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