Missouri Judge Gives Final Approval to the NAR Settlement

In a significant development for the real estate industry, a district court judge in Missouri has given final approval to the National Association of Realtors (NAR) settlement. While the ruling itself was widely anticipated, the fairness hearing and subsequent clarifications have left many industry professionals reeling. Here's what this means for realtors, buyers, and the broader real estate landscape.

The Road to Settlement Approval

The final approval came as little surprise after Judge Stephen R. Bough mandated that objectors to the settlement appear in person in Missouri for a fairness hearing.

“Objectors were required to spend thousands of dollars on travel and accommodations, only to be granted three minutes to speak,” remarked a legal observer. “The ‘fairness’ hearing, ironically, felt anything but fair.”

Despite a last-minute intervention by the Department of Justice (DOJ), which hinted at potential antitrust violations related to buyer agreements, the judge moved forward.

The DOJ’s position was clear: the settlement might resolve the civil case, but the agency reserves the right to pursue antitrust actions in the future. This creates an environment of uncertainty for the real estate industry, particularly around buyer-representation agreements.

Key Takeaways from the Settlement

The settlement isn’t just a monetary issue; it comes with far-reaching implications for real estate professionals. Here’s what the plaintiffs clarified in their November 20 filing:

1. No Upward Modification of Buyer Agreements
   Realtors cannot modify their buyer representation agreements to collect additional compensation.

2. No Seller-Paid Bonuses Post Agreement
   Once a representation agreement is in place, collecting seller-paid bonuses is off the table.

3. Goodbye to Compensation Ranges
   Realtors can no longer use minimum/maximum compensation ranges.

4. No Property-Specific Agreements
   Crafting agreements tailored to seller compensation rates is prohibited.

5. Mandatory Touring Agreement Terms
   Touring agreements must explicitly state compensation terms upfront, without supplements through later agreements.

Industry Impact: What Happens Next?

This settlement doesn’t just tie up loose ends; it introduces a whole new set of challenges for industry participants.

What Realtors Need to Do:

• Update Forms: Ensure all forms comply with the new rules.
• Retrain Teams: Conduct training to help agents navigate the new landscape.
• Communicate with Platforms: Notify platforms like Zillow about the changes.

Legal Risks

Failure to adhere to these new requirements could open the door to fresh litigation. Plaintiffs have explicitly stated that violators could face individual lawsuits under these new terms.

“This could lead to a wave of new lawsuits, possibly even a ‘Sitzer | Burnett 2.0,’” the filing warns.

The DOJ’s Long Game

While the settlement has passed through the district court, the Eighth Circuit Court of Appeals will now review it. The appeals process will examine several critical elements:

• Class definitions
• Scope of the release
• Settlement fund valuation
• Injunctive relief measures

Looming over all this is the threat of a renewed DOJ antitrust action. If political dynamics shift, the DOJ could intensify its scrutiny of the real estate industry, creating a volatile regulatory environment.

What This Means for You

As a real estate professional, staying ahead of these changes is crucial. Whether you're revisiting buyer agreements, revamping training programs, or strategizing to remain compliant, this settlement is a call to action.

The bottom line: The NAR settlement may be final, but the industry challenges it presents are just beginning. Prepare now to stay compliant and competitive in this shifting landscape.

Stay tuned for updates on this ongoing case and other developments impacting the Southern California real estate market. For more insights, visit our real estate blog.