A federal appeals court on Wednesday upheld the more than $1 billion in settlements and the sweeping commission rule changes that reshaped how homes are bought and sold in the U.S., rejecting seven separate challenges.
The 8th Circuit Court of Appeals unanimously affirmed the real estate industry settlement in the Sitzer | Burnett commission lawsuit, further cementing the sweeping practice changes that took effect two years ago.
The order came after a series of appeals from groups that argued that consumers wouldn’t get anywhere near sufficient value from the settlement, either monetarily or through its required business practice changes, and that it may actually leave them worse off.
“The practice changes address the challenged rules and attempt to remediate the harm,” the three-member panel of judges wrote. “Thus, we conclude that Appellants have an injury-in-fact and that the requested relief addresses it.”
The settlement included lump sum payments by the National Association of Realtors and large brokerages, as well as changes to how real estate commissions are negotiated and advertised.
“We are pleased with the Court’s order affirming the district court’s decision to approve the settlement agreement,” NAR said in a statement. “We will continue to work to foster fair, transparent and pro-consumer real estate markets while providing resources and value to our Realtor members nationwide.”
Appeals are a standard and expected part of the legal process for a case as substantial as Sitzer | Burnett.
A reversal threatened to unwind the release and potentially the business practice changes, keeping the industry exposed during a delicate time.
NAR agreed to pay $418 million to settle the lawsuit. That settlement came after a jury sided with homeseller plaintiffs following a landmark trial in federal court in Kansas City in 2023. The jury had awarded the plaintiffs $5.3 billion in damages.
As part of its settlement, NAR agreed to repeal the Cooperative Compensation Rule that required brokers to offer compensation to buyer brokers on MLS listings.
The settlement also required buyer agents to enter written agreements with clients before touring homes. The agreements are required to disclose the broker’s compensation for a closed transaction, and prohibits the eventual fee from exceeding the amount identified in the agreement.
The settlement covered brokerages that transacted less than $2 billion in sales volume in 2022. The roughly 100 brokerages who earned above that were required to broker their own settlement agreements with the plaintiffs.
The ruling also made clear that the settlement includes brokerages that operated outside of NAR rules, and it specifically named Brown Harris Stevens as an opt-in brokerage that was covered.
This is a breaking news story and will be updated.
