NAR Legal FAQs

There are lawsuits pending in multiple jurisdictions relating to the offer of compensation rule. Some cases name NAR as a defendant, some name state or local associations, some name brokerages, and some name a combination of these groups.

The plaintiffs' lawyers bringing these cases claim that NAR and others set out to harm consumers by fixing commissions. This argument is utterly false and not supported by the evidence. Not only does NAR's cooperative compensation rule not require the payment of any type of compensation by a home seller to the agent of a home buyer, NAR does not set commissions or compensation of any kind.

NAR supports centralizing 19 currently pending commission lawsuits. NAR believes the best venue to hear the pending lawsuits is the federal court in the Northern District of Illinois. NAR will contest all of these matters and any others that may be filed under similar theories.

In December 2023, plaintiffs in some of the cooperative commission lawsuits filed a motion with the Judicial Panel on Multidistrict Litigation (JPML) asking the panel to centralize and transfer various cases to the federal court in the Western District of Missouri, which is where the Burnett case was tried.

In January 2024, NAR filed our response to that motion. As we state in our filing, NAR supports centralizing 19 currently pending commission lawsuits, but disagrees with plaintiffs' arguments that it would be most efficient to transfer the cases to the Western District of Missouri. Instead, NAR believes the best venue to hear the pending lawsuits is the federal court in the Northern District of Illinois.

NAR believes that the Northern District of Illinois is the most appropriate venue because:

• It is the district in which the original actions were filed and remain pending.
• It is the only district with both a home-seller action and home-buyer actions in it.
• It is the district with the largest number of actions in it.
• NAR headquarters, and therefore much of the discovery related to these cases, is located in the Northern District of Illinois.
• The Northern District of Illinois has longstanding experience with NAR rules.
• Chicago is an easily accessible location in the center of the country. The city has two convenient airports and frequent flights throughout the United States.
• Although NAR believes that the Northern District of Illinois is the most appropriate venue, NAR does not oppose transfer to the Eastern District of Texas, the location of the largest number of defendants.
• Of the approximately 200 defendants named in the Related Actions, 46 are named only in Martin and/or QJ Team, the Texas actions.

If the JPML decides to consolidate the cases, they will be pending for pre-trial purposes in the court to which the JPML decides to send the cases. Once pre-trial issues have been resolved, the cases would likely be transferred back to the jurisdictions in which they were filed for trial.

Yes. Any consolidated proceeding should include home-seller and home-buyer cases to best achieve the benefits of consolidation such as judicial and party efficiency.

The Burnett case is not eligible for MDL consolidation, as it is now post-trial.

This Missouri case was brought by a local plaintiffs' lawyer who claims that NAR and others set out to harm consumers by fixing commissions. This argument is utterly false and not supported by the evidence. Not only does NAR not require the payment of any type of compensation by a home seller to the agent of a home buyer, NAR does not set commissions or compensation of any kind.

Fortunately, America's judicial process allows NAR to challenge this outcome and the shaky ground on which it rests. This is just the first chapter in a longer legal process.

In early January, NAR filed motions asking the Missouri federal court to vacate the verdict and enter judgment as a matter of law in favor of NAR or order a new trial. According to the schedule set by the court, the motions will be fully briefed by mid- March, and the court will rule on them sometime after that.

The motions could affect certain issues on appeal, but, ultimately, unless the trial court grants them, NAR plans to file an appeal asking the court to set aside the jury's verdict as being wrong on the law and the facts.

In the meantime, NAR will not remain silent in the face of misinformation about how real estate agents and brokers are compensated, particularly from plaintiffs' lawyers, who are the ones who actually stand to profit from the cases against the industry.

Fortunately, America's judicial process allows NAR to challenge this outcome and the shaky ground on which it rests.

NAR disagrees with this verdict, but has confidence in the judicial system and those who administer it to get to the right result eventually. This is just the first chapter in a longer legal process.

Consumers have choices, and NAR encourages members to continue communicating with their clients about their choices, explaining that compensation is negotiable and using listing and buyer agreements to help clients understand what services and value will be provided and for how much.

NAR does not require, suggest, or even track broker compensation or commissions— compensation can be a percentage, fixed rate, hourly rate, or any other arrangement. Compensation is negotiable between agents and their clients.

NAR's policy, despite how it was misrepresented in a Missouri courtroom, does not require sellers to do anything and it requires only that listing brokers communicate the amount they are offering to pay a buyer's broker for their work—this helps ensure transparency and efficiency for all parties in a transaction, it benefits sellers by bringing more potential buyers to a home, and it benefits buyers by ensuring they have representation, if they want it.

There is no rule that tells listing brokers and their clients how much to offer a buyer broker. They can offer $0.

Also, NAR's policies expressly prohibit MLSs, associations, and brokers from setting or suggesting real estate commissions or fees. NAR has numerous anti-price fixing rules and guidance, including our MLS rules, which expressly state that "[t]he broker's compensation for services rendered in respect to any listing is solely a matter of negotiation between the broker and his or her client, and is not fixed, controlled, recommended, or maintained by any persons not a party to the listing agreement."

The Missouri case does not require us to change the rule. And, again, NAR's policy, despite how it was misrepresented in a Missouri courtroom, does not require sellers to do anything and it requires only that listing brokers communicate the amount they are offering to pay a buyer's broker for their work. There is no rule that tells listing brokers and their clients how much to offer a buyer broker. They can offer $0.

Cooperative compensation benefits consumers and creates efficiency in the real estate market, it was a part of real estate before NAR had rules, it is a part of real estate in cities that do not follow NAR's rules, and it is authorized by state real estate laws (including Missouri) and federal housing policies. Regardless of this verdict, cooperative compensation will be a part of real estate.

NAR thinks the practice is a good thing that benefits buyers and sellers. Sellers can have their home seen by more buyers, ensure they receive the best offer, and ultimately sell it for more. Buyers benefit from professional representation in what for many will be the most significant, complex purchase of their lives.

Critically, this compensation model promotes access to homeownership. For lower- and middle-income buyers in particular, saving for a down payment can be difficult enough. Adding broker compensation on top of closing costs would push the dream of homeownership even further out of reach. The same would be true for veteran home buyers because VA loans prohibit them from paying buyer broker fees.

No. NAR does not require, suggest, or even track broker compensation or commission—compensation can be a percentage, fixed rate, hourly rate, or any other arrangements. Compensation is negotiable between agents and their clients. NAR's policies expressly prohibit MLSs, associations, and brokers from setting or suggesting real estate commissions or fees.

NAR is committed to supporting any association that is named in a copycat lawsuit and will continue to follow up directly with those affected.

In the event your association or brokerage is served with or named in a lawsuit, please contact the NAR legal team Katie Johnson (kjohnson@nar.realtor(link sends e-mail)); Lesley Muchow (lmuchow@nar.realtor(link sends e-mail)); Charlie Lee (clee@nar.realtor(link sends e-mail)); or outside counsel Chris Curran (ccurran@whitecase.com(link sends e-mail)) at White & Case LLP.

NAR will work with any named associations to evaluate their particular circumstances and is continuing to explore additional options to assist associations and MLSs that may be named in future copycat lawsuits. Coverage under existing policies will depend in part on whether future copycat lawsuits "relate back" to the original 2019 claim under the 2019 Chubb professional liability policy, and whether any named associations and MLSs purchased excess antitrust insurance in 2019.

In the event your association or brokerage is served with or named in a lawsuit, please contact the NAR legal team Katie Johnson (kjohnson@nar.realtor(link sends e-mail)); Lesley Muchow (lmuchow@nar.realtor(link sends e-mail)); Charlie Lee (clee@nar.realtor(link sends e-mail)); or outside counsel Chris Curran (ccurran@whitecase.com(link sends e-mail)) at White & Case LLP.

Yes. NAR is committed to providing the tools required to support day-to-day conversations with members, brokers, potential home buyers and sellers, and media. The landscape will continue to evolve, and NAR will share new information and updated materials as it does. NAR is particularly concerned about the impact this flawed verdict may have on the real estate market more broadly, including for first- time homebuyers, lower-income buyers, and veterans.

NAR always has been open to resolutions that maintain a way for buyers and sellers to continue to benefit from the cooperation of real estate professionals and eliminates members' risk of liability for the claims alleged.

NAR's cooperative compensation rule requires listing brokers to communicate the amount they are offering to pay a buyer's broker for their work. Cooperative compensation benefits consumers and creates efficiency in the real estate market. It was a part of real estate before NAR had rules, it is a part of real estate in cities that do not follow NAR's rules, and it is authorized by state real estate laws (including Missouri) and federal housing policies.

NAR thinks the practice is a good thing that benefits buyers and sellers. Sellers can have their home seen by more buyers, ensure they receive the best offer, and ultimately sell it for more. Buyers benefit from professional representation in what for many will be the most significant, complex purchase of their lives.

NAR does not require, suggest, or even track broker compensation or commissions—compensation can be a percentage, fixed rate, hourly rate, or any other arrangement. Compensation is negotiable between agents and their clients.

NAR's policy, despite how it was misrepresented in a Missouri courtroom, does not require sellers to do anything and it requires only that listing brokers communicate the amount they are offering to pay a buyer's broker for their work—this helps ensure transparency and efficiency for all parties in a transaction, it benefits sellers by bringing more potential buyers to a home, and it benefits buyers by ensuring they have representation, if they want it.

There is no rule that tells listing brokers and their clients how much to offer a buyer broker. They can offer $0.

Also, NAR's policies expressly prohibit MLSs, associations, and brokers from setting or suggesting real estate commissions or fees. NAR has numerous anti-price fixing rules and guidance, including our MLS rules, which expressly state that "[t]he broker's compensation for services rendered in respect to any listing is solely a matter of negotiation between the broker and his or her client, and is not fixed, controlled, recommended, or maintained by any persons not a party to the listing agreement."

Cooperative compensation has existed for over 100 years. NAR did not invent cooperation or offers of compensation—they evolved in the free marketplace based on what was best for buyers and sellers and the most efficient way to sell homes.

The model promotes access to homeownership, and NAR believes it benefits everyone involved in a transaction. For lower- and middle-income buyers in particular, saving for a down payment can be difficult enough. Adding broker compensation on top of closing costs would push the dream of homeownership even further out of reach. The same would be true for veteran home buyers because VA loans prohibit them from paying buyer broker fees.

Real estate agents provide critically needed guidance and support to Americans during what is one of the most consequential and expensive transactions they will make in their lifetimes. Real estate agents support their clients in myriad ways, including:

• Helping buyers and sellers navigate a maze of forms and complex paperwork;
• Coordinating with lenders, inspectors, other agents, escrow companies, title companies, appraisers, and other professionals;
• Ensuring that our clients' interests are represented in pricing, negotiation, and closing;
• Helping our clients interpret the information they find online or elsewhere; and
• Speaking with our clients at all hours, through the highs and the lows, and help to navigate unexpected situations and solve problems.

Nine out of ten people who work with an agent say they would use their same agent again or recommend them to others.

Multiple Listing Services (MLSs) are local broker marketplaces that connect buyers and sellers of real estate in the U.S. They are where brokers accurately, transparently, and efficiently share a wide range of information on properties they have listed and invite other brokers to cooperate in the sale. Via the MLS, brokers representing sellers offer to compensate other brokers who bring the buyer who closes on the transaction.

NAR does not own or operate MLSs. However, many local REALTOR® associations own or operate an MLS. MLS participation is completely optional. NAR policy does not require a real estate broker or agent to be a REALTOR® to participate in the MLS. As such, some local associations make MLS services available only to REALTORS® and some make it available to REALTORS® and non-members. This is a matter of local discretion.

NAR has established guidance for local MLS broker marketplaces to ensure consumers get comprehensive, equitable, transparent, and reliable home information and that brokerages of any size, service or pricing model get a fair shot at competing. The result is an efficient model for brokers to serve sellers and buyers, and to enable market-driven pricing for consumers.

The ability to find listings for homes online is made possible by local MLS broker marketplaces. Online home listing sites receive the vast majority of their inventory from these local MLS broker marketplaces. That data exists because of real estate professionals and others' commitment to cultivating comprehensive housing data reinforced by guidelines that ensure accuracy and transparency so consumers can confidently rely on the information.

Having buyers take on the additional out-of-pocket expense would freeze many homebuyers—particularly first-time, low- and middle-income homebuyers—out of an already competitive market. And that could also force many homebuyers to forgo professional help during what is likely the most complex and consequential transaction they'll make in their lifetime.

Saving for a down payment can be difficult enough, and the daunting prospect of buying a house will, for many, be the most significant, complex purchase of their lives. Adding broker compensation on top of closing costs would push the dream of homeownership even further out of reach. This also applies to veteran home buyers, as VA loans prohibit them from paying buyer broker fees.

The U.S. real estate market is the world standard and has long been viewed as the most consumer-friendly in the world. Buyers abroad are forced to wade through complex markets that require consumers to work with multiple brokerages to access fragmented inventory because listings are not shared freely in the marketplace. The result is more time consuming, impersonal, and costly.

By consolidating fees and the overall process, the U.S. model simplifies the experience, provides greater certainty of success to both buyers and sellers, and provides guidelines that ensure the equity, transparency, and accuracy of housing inventory made available to real estate professionals and their consumers, all at comparable or lower total costs than those in other countries where there are many hidden costs.

Everyone deserves the opportunity of home ownership – it is the American Dream. At NAR, we are working hard to make housing both more affordable and more accessible. This includes incentives to rehabilitate, build and convert properties to affordable housing, and a commitment to allowing first-time homebuyers and low-income Americans to afford both a down payment and professional representation.

NAR is leading the industry in addressing an historically unjust system. Among other things, we advocate for policy change in Washington and increased funding for the Office of Fair Housing and Equal Opportunity. In 2020, we unanimously passed a Fair Housing Action Plan, which engages and mobilizes our 1.5 million REALTORS® to protect and advance housing in America. Also, local broker marketplaces that REALTORS® and other real estate agents feed into are a critical fair housing tool because they make the majority of inventory in a particular market available to all people regardless of race, income or other background.

Homeownership benefits individuals and communities. Homeownership is the most common way the average family builds generational wealth – and, in turn, closes the gap between the rich and poor. Every home sale generates roughly $88,000 in local economic activity accounting for nearly 18% of the nation's GDP, and every two home sales supports one American job. Those jobs include the 88% of REALTORS® identifying as small business owners.