NAR Lawsuit Explained for Realtors - Learn how the National Association of Realtors lawsuit verdict will impact how real estate agents do business.

In this quick, 5-minute video and blog, I’ll give you the NAR lawsuit explained for Realtors, as well as an explanation of the verdict.

In an effort to get this important update to you as quickly as possible, I recorded the video within this blog. There has been a recent ruling at the district court level for the Burnett versus NAR case in the state of Missouri. Let’s dive in and look at the ruling itself, as well as what it means for you as a Realtor and my prediction for what is to come.


VIDEO: NAR Lawsuit Explained for Realtors

NAR lawsuit explained for Realtors: quick summary

The plaintiffs in this case brought suit about our cooperative compensation system that we have in the US. The ruling came down for the plaintiffs against the National Association of Realtors (NAR). 

The jury’s verdict found that NAR and the system of this cooperative compensation actually amounted to collusion … everyone setting commissions higher than they should be. In the news, you have been constantly hearing the plaintiff’s attorney say that there are other countries where the commission is only 2-3%, and it’s outrageous how much the public is being charged here in the US (5-6%).

So, as agents, what should you do next?

First of all, this is only a state court ruling in the state of Missouri. That will be appealed. NAR has actively vowed to appeal, and they have a decent shot. There is a decent argument that the way we co-op and share commissions actually gets the most exposure for listings and gets the highest sale price. Not to mention, commissions are shared, and it’s done very regularly. That’s the whole system — that 5-6% is really getting split down to 2-3%, like other countries.

If that gets appealed, it could take this case to the Supreme Court. 

NAR lawsuit explained for Realtors: it’s going to take time

It is going to take some time to sort this out, and NAR knows how to fight. We have a long way to go. I personally don’t really buy the plaintiff’s attorney to begin with, and I think we may have had a confused jury in this case. This happens.

As the case moves along to professionals who are perhaps more adept with anti-trust practices, such as appellate court justices and Supreme Court justices, I think we may see different results.

How to protect yourself: Buyer Agency Agreements

If not, what you can do to protect yourself at all times is to use Buyer Agency Agreements. NAR has been trying to tell you that, too. I know most people are afraid to use them, but that very fear is what causes lawsuits like this. 

You need to be very clear about how much you get paid, as well as how you get paid, and you need to disclose that agency relationship. If you have fear, I’m sorry — you have a real estate license. You need to be confident about the services that you provide and how much you charge for them. You need to be okay with explaining, “Here’s what I expect. Here’s what you are going to pay me.” 

If everyone got better at that and got over this fear, we probably wouldn’t have these problems, right? There’s so much confusion about commissions. We must get better at explaining how it works. 

Lay it out with a Buyer Agency Agreement. If every agent did that, we’d be in much better shape. ICC coaches all of our coaching clients to use agency agreements. Top producers use them at a high level. Please use Buyer Agency Agreements that outline your working relationship with your client very clearly and with details to protect everyone, including our way of life. It formalizes that agency relationship.

There’s so much confusion about commissions. We must get better at explaining how it works. 

Brian Icenhower

NAR lawsuit explained for Realtors: conclusion & prediction

In all likelihood, what will come out of this? 

I don’t think very much will. In the end, we may see some new disclosure with every sale in the US that outlines how commissions are paid to everyone involved, so it’s very clear and it’s not confusing to anyone. 

Or, we could start to see how much commissions are paid to both the listing agent and the buyers agent, separately and publicly with every listing. That could happen, too. Which isn’t the end of the world. Bringing all of these commissions out in the open would certainly make the whole process more transparent and bring everyone into compliance.

Don’t buy into the media hype

I know the media likes to take this ruling and make it into something big and scary. Remember, this is just a lower court ruling. We still have a ways to go. Things will change and evolve as the process works its way through the system.

Please don’t let this distract you! At ICC, we are in the business of coaching the highest-producing agents, teams, and brokerages in North America. We are telling all of our clients to get back to business right now. We are going into the winter months, so it’s time to put your head down and focus on your business. Realtors will adjust and adapt. You’ll know when and if it is time to make adjustments or do something differently. We will prevail and get through this — don’t believe the hype! Push forward.