Bombshell Verdict in NAR Case Spurs More Quick Lawsuits

By Franco Faraudo

After 11 days of trial in Kansas City, a jury delivered a verdict on the Sitzer/Burnet case. For anyone not familiar, this case was brought against the National Association of Realtors (NAR) for its role in supporting the common practice of requiring the seller to pay for both agents in a real estate transaction. In what was somewhat of a surprise to many legal experts, the jury not only sided with the plaintiff’s allegations that this was an anti-competitive practice, but they also awarded them the full damages, an incredible $1.78 billion.

In an emailed statement, NAR said, “This matter is not close to being final. We will appeal the liability finding because we stand by the fact that NAR rules serve the best interests of consumers, support market-driven pricing, and advance business competition.” The email also explained that “In the interim, we will ask the court to reduce the damages awarded by the jury.” NAR expects the appeals process to take years. As for the option of settling with the plaintiffs, the statement said, “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.”

Even if NAR is able to tie up the case in appeals court, there is a risk of the plaintiffs filing an injunction that would, at least temporarily, eliminate the cooperative compensation rule at the heart of the case. The reasons that NAR gives for why it will not change the rule is that the rule “ensures efficient, transparent and equitable marketplaces where sellers can sell their home for more and have their home seen by more buyers while buyers have more choices of homes and can afford representation.”

Since the beginning of the trial, NAR has expressed concern that a judgment for the plaintiff would spark copycat lawsuits. That fear has turned out to be valid. Shortly after the ruling was delivered, other lawsuits were immediately filed against NAR as well as other companies such as Compass, eXp World Holdings, Redfin, Weichert Realtors, United Real Estate, Howard Hanna, and Douglas Elliman. The news sent stocks of many of these companies, along with others like Zillow and Opendoor, down over 5 percent.

Going up against NAR is a huge undertaking. The organization is well-established and has some of the industry’s finest lawyers. It is also one of the largest lobbying groups in the country. The outcome of this particular lawsuit is still not determined, but one thing that this lawsuit has done, whether it wins in appellate court or not, is show that NAR can be held liable and the status quo of the industry is not written in stone.

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