November 7, 2023
The information you obtain on this website is not, nor is it intended to be, legal advice. You should consult with an attorney for individual advice regarding your own situation.
You may have heard about the verdict against the National Association of Realtors ("NAR"), and others, for $1.8 billion dollars.
I wanted to get a better understanding of what it was about and what the jury found. To do that I looked at the jury instructions given to the jury and the verdict form.
HERE are those documents here so you can see what I'm talking about. I clumsily highlighted what I thought were the most important parts of the jury instructions.
In summary, the jury found that NAR violated the federal "Sherman Antitrust Act," by conspiring to enforce the "Cooperative Compensation Rule," which had the purpose or effect of raising, inflating, or stabilizing broker commission rates paid by home sellers.
The Cooperative Compensation Rule is generally the practice where Sellers will hire real estate agents and agree to pay them a percentage of the sales price. That commission will be shared with the Buyer's real estate agent (the "cooperating broker").
NAR alleged that they did not conspire to impose the Cooperative Compensation Rule. They claim it's not a rule at all. It's negotiable. They argued that the practice unreasonably restrained competition. They also argued that the rule did not injure the Sellers and may have actually benefitted them.
The Jury found for the Plaintiffs. The case is being appealed. I'm not sure on what grounds.
So, what happens now? My crystal ball tells me things will go on pretty much the same as they always have. Brokerages will come up with legal forms that insulate them from claims like this. Maybe there will be a disclosure indicating that the amount of commission is negotiable. It will say that you can but do not have to agree to pay a commission to the Buyer's agent. Basically, the forms will give the Sellers the option on how to list things for sale. I predict that in many cases the sellers will elect to continue the Cooperative Compensation practice because they think it will help them get a better price for the property.
Buyer's agents may have to get into the practice of getting representation agreements with their clients saying that if the Seller chooses not to pay the Buyer's agent a commission, the Buyer will pay that commission.