I have an important update on the litigation. After an 11-day trial in the case of Burnett v NAR et al.The eight-person jury in federal court in Kansas City, Missouri, returned Tuesday and found the National Association of REALTORS® and other corporate defendants liable in the case.
This matter is not close to being final. We will appeal the liability determination because we defend the fact that NAR rules serve the best interests of consumers, support market-driven pricing, and promote business competition. We remain optimistic and will ultimately prevail. In the meantime, we will ask the court to reduce the jury’s award.
In court, NAR presented evidence that consumers are better off and business competition can thrive because of our rules and how well local MLS broker markets work. In fact, the NAR’s cooperative compensation rule for local MLS broker markets ensures efficient, transparent and equitable markets where sellers can sell their home for more and have their home seen by more buyers, while buyers have more home options and can afford representation. NAR also presented that REALTORS® are everyday working Americans who are experts in helping consumers navigate the complexities of home buying and advocates for fair housing and wealth creation for all.
The NAR was formed 100 years ago because a higher level of ethical practice was necessary. We should all be proud that REALTORS® continue to play that role. I know that our mission to defend homeownership and always put our clients’ interests first is unwavering. We recognize that our legal team and our outside attorneys have worked tirelessly on this case. It will probably be several years before we reach a conclusion.
I thank our NAR staff and our 1.5 million members who work to serve their customers every day. We have an important shared purpose for consumers and we couldn’t achieve it without everything each of us does.
Below are some key questions people may have. We will continue to keep you informed of any notable milestones in the litigation, and in the meantime, I encourage you to continue checking the competition.realtor website, which provides a comprehensive overview (and many resources to explain) how REALTORS® and local MLS broker markets benefit consumers. The need for each of us and each member to continue to express our value every day in as many ways as we can remains an imperative.
President of the NAR
Burnett Questions Answered
In the case of Burnett v NAR et al., on Tuesday, October 31, the jury found NAR and the co-defendants liable. The plaintiffs claimed that real estate commission rates are too high, that buyer brokers are paid too much, and that NAR rules and the defendants’ corporate practices lead to price fixing.
The reality is that NAR rules put consumers first, support market-driven pricing, and promote business competition. We support that NAR’s guide to local MLS broker markets ensures that consumers get complete, fair, transparent and reliable home information and that brokers of any size, service or pricing model have an opportunity fair to compete.
Below you will find answers to questions you may have.
- What are the next legal steps and timing?
This matter is not close to being final as we will appeal the jury’s verdict and remain confident that we will ultimately prevail. In the meantime, we will ask the court to reduce the jury’s award. Due to the nature of appeals, this case will likely not be concluded for several years.
- What will be the basis of NAR’s appeal?
We can’t talk about the details until we file our appeal, but we can say that we have a very solid legal basis for appealing.
- Is there anything REALTORS®, brokers, state/local associations or MLS should do differently because of this verdict?
Not because of this verdict. But the NAR has emphasized two important things for many years. 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 required to do under 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 buying agent expects from their client in return. Secondly, it is also imperative that members continue to express that commissions are negotiable and set between brokers and their clients; explain how local MLS broker markets promote fairness, transparency, and market-driven pricing for consumers; and persistently communicate the incredible value that REALTORS® provide.
- What does the future of buyer representation look like after the verdict?
This verdict does not require a change in our rules, but if class action attorneys had their way, buyer representation would be at great risk because many first-time home buyers, among others, would not be able to afford to pay representation out of pocket. It is important that members take advantage of every opportunity to express how they are experts guiding consumers through the financial, legal, and community complexities of buying or selling a home.
- How does this verdict affect other ongoing litigation, including the other seller’s lawsuit?
It is not like this. The cases are tried separately and we remain confident that we will ultimately prevail because we have a strong case that we will present on appeal and because our rules are competitive in favor of the consumer and in favor of businesses.
- Is there any scenario in which the NAR would consider reaching an agreement?
The NAR has always 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 alleged claims. That said, we remain confident that we will prevail in our calling.
- Would the NAR ever consider changing the cooperative compensation rule?
This rule has always been in place to protect and serve the best interests of consumers, support market-driven pricing, and promote business competition. The NAR constantly reviews and considers the evolution of its rules in a way that responds to changes in the industry and what best serves consumers.
- What is the situation with the Department of Justice? Has anything changed with this verdict?
We reached an agreement with the Department of Justice almost two years ago. The NAR has held up our end of the agreement, and we expect the Department of Justice to do the same, as a federal court’s careful ruling affirms. This is a separate issue from the case of Burnett v NAR et al..