Yesterday came news that was disappointing to all of us in the industry. After deliberating, in the case of Burnett v. NAR et al, the jury found NAR and the co-defendants liable. The plaintiffs’ claim in the case was that real estate commission rates are too high, buyer broker compensation is not clearly delineated and is excessive, and that NAR rules and corporate defendants’ practices lead to set pricing.

The most important thing for you to know at this juncture is that NAR plans to appeal the jury’s verdict. So, despite this setback, it will likely still be several years, as the case moves through the appellate system, before we have a resolution.

In a statement issued yesterday, NAR said that it “stands by the fact that its guidance for local MLS broker marketplaces ensures 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. NAR will continue to focus on our mission to advocate for homeownership and always put consumer interests first.”

Below are answers to some of the questions you may have. If you’d like guidance on how to address this topic with your clients, be sure to visit Competition.Realtor for resources.

In the meantime, DCAR is here to listen. As this situation continues to evolve, feel free to share with us your questions or comments so that we can keep NAR informed about your concerns. And please know that DCAR will continue to advocate for, protect and promote the interests of our members and the public we serve as the voice of real estate in the District.

QUESTIONS & ANSWERS FROM NAR

What are next steps legally and the timing?
This matter is not close to being final as we will appeal the jury’s verdict, and we remain confident we will ultimately prevail. In the interim, we will ask the court to reduce the damages awarded by the jury. Due to the nature of appeals, this case likely will not be concluded for several years.

What will be the basis for NAR’s appeal?
We can’t speak to the specifics of that until we file our appeal, but we can say that we have a very strong legal basis for appeal.

Is there anything REALTORS®, brokers, state/local associations or MLSs need to do differently because of this verdict?
Not because of this verdict. But NAR has emphasized for many years two important things. One is the use of buyer representation agreements, which maximize transparency by putting all agreements in writing to ensure clarity and understanding, as all members are obligated to do pursuant to the NAR Code of Ethics. These agreements formalize the professional working relationship with clients and detail what services consumers are entitled to and what the buyer agent expects from their client in return. Second, it’s also an imperative for members to continue to express that commissions are negotiable and set between brokers and their clients; explain how local MLS broker marketplaces promote equity, transparency and market-driven pricing for consumers; and persistently communicate the incredible value agents who are REALTORS® provide.

What does the future of buyer representation look like as a result of the verdict?
This verdict does not require a change in our rules, but if class action attorneys had it their way, buyer representation would be very much at risk because many first-time home buyers, among others, couldn’t afford to pay for representation out of pocket. It’s important that members take every opportunity to express how they are experts who guide consumers through the financial, legal and community complexities of buying or selling a home.

Does NAR have the funds to pay the proposed damages or post a bond to file an appeal?
NAR is going to appeal and has the funds to post bond, which allows us to proceed with our appeals and defer potential payment of damages. While appeals will take years, and we are confident we will ultimately prevail, we also are financially prepared for any final judgment.

How does this verdict affect other ongoing litigation, including the other seller lawsuit?
It doesn’t. Cases are tried separately, and we remain confident we will ultimately prevail because we have a strong case we’ll present on appeal and because our rules are pro-consumer and pro-business competitive.

Is there any scenario where NAR would consider settling?
NAR always has been open to a resolution that maintains a way for buyers and sellers to continue to benefit from the cooperation of real estate professionals and eliminates our members’ risk of liability for the claims alleged. That being said, we remain confident we will prevail on our appeal.

Would NAR ever consider changing the cooperative compensation rule?
This rule always has been in place to protect and serve the best interests of consumers, support market-driven pricing and advance business competition. NAR consistently reviews and considers evolving its rules in a way that responds to changes in the industry and what best serves consumers.

Do you expect the plaintiffs to seek an injunction that would require NAR to stop making the rule mandatory or eliminate the rule altogether?
We cannot predict what plaintiffs will do.  We would contest any such effort because this rule always has been in place to protect and serve the best interests of consumers, support market-driven pricing and advance business competition.

What’s the status with the Department of Justice and has anything changed with this verdict?
We reached an agreement with the DOJ nearly two years ago. NAR has upheld our end of the agreement, and we expect the DOJ to do the same as affirmed by a federal court’s careful ruling. That is a separate matter from the case of Burnett v. NAR et al.