Speakers: Michael T. Jackson
With Judge Stephen Bough of the U.S. Federal Court of the Western District of Missouri granting final approval on 26 November of the proposed settlements by the National Association of Realtors (NAR) and HomeServices of America (HSOA) to a range of buyer broker compensation litigation, the settlements passed a milestone in the legal journey toward a final settlement and the awarding of compensation to parties of the class actions. That said, the court’s decision is not the final step in the process, and below are four key considerations that talent mobility professionals should keep in mind:
1. The Court’s Final Approval Does Not Mean the Settlements Are Fully Finalized
Judge Bough’s decision granting final approval is a critical step in the legal process related to the NAR and HSOA settlements, but it does not mean that parties of the class action will receive compensation from the settlements anytime soon. These settlements still must navigate the various appeals filed and have decisions rendered in all of them before any financial settlements are disbursed.
2. Other Legal Cases Not Covered Under the Settlements Are Still Ongoing
Settlements to date by NAR and various brokerage defendants have covered the major buyer broker compensation litigation that has been percolating through the legal system in recent years, but other cases involving both homebuyers and sellers are not covered under the settlements and continue to work their way through legal channels nationwide. Additionally, the criteria set within the NAR settlement specifically excluded a number of major brokerages from being eligible to be covered under its settlement, and some brokerages and MLS networks that were eligible opted not to be a part.
3. Question Marks Still Linger Around Future DOJ Actions
For months, one of the biggest question marks around the changing buyer broker compensation landscape has been how the U.S. Department of Justice would weigh in on the NAR settlement. When it commented on the Nosalek case via a statement of interest in February 2024, the filing’s language indicated an interest by the DOJ in seeing the full decoupling of sellers from any involvement with a buyer agent’s compensation. However, the DOJ’s statement of interest on the NAR settlement, filed less than 48 hours before the hearing on final court approval, did not address decoupling and was instead primarily focused on its concerns about buyers having to sign agreements before touring a property.
Included in the DOJ filing, however, were statements indicating that the DOJ’s focus on the U.S. real estate sector and broker compensation practices will persist despite the court’s ruling in this settlement. Reiterating that the DOJ still has an open investigation into residential real estate practices, the DOJ stated: “The United States continues to scrutinize policies and practices in the residential real estate industry that stifles competition … [c]ompetition in real estate is crucial, and home ownership is a key component of the wealth of American households.”
With the Trump administration taking office in January and new leadership coming into DOJ as a result, it remains unclear to what extent this will be the case and how the new administration will navigate this issue and the changing landscape nationwide. The DOJ’s antitrust investigation into NAR and associated residential real estate practices was originally opened during the first Trump administration, with Trump’s DOJ reaching a settlement with NAR in 2020. This settlement was rescinded and the antitrust investigation into NAR reopened the following year by the Biden administration. The ensuing litigation (DOJ vs. NAR) around the DOJ’s rejection of the settlement and reopening the settlement is still ongoing, as NAR has appealed lower court rulings affirming the DOJ’s position to the U.S. Supreme Court.
A second Trump administration and its DOJ will need to determine how it will proceed regarding the DOJ vs. NAR litigation and the reopened NAR antitrust investigation. Additionally, the DOJ will need to decide if and how it will weigh in on any of the ongoing litigation and pending settlements around buyer broker compensation practices, and what it does or does not do here will be critical in determining how much the landscape may further change in the coming few years.
4. Changes Around Buyer Broker Compensation Practices and Requirements Nationwide Are Continuing Regardless of the NAR Settlement Ruling
The ruling on 26 November may have diminished the prospect of the legal process changing the terms set by NAR within the settlement, but it does not mean that further changes will not occur around buyer broker compensation. California’s new law strengthening requirements in the state around written buyer agency agreements goes into effect on 1 January 2025, making it the 28th state to enact state requirements. More states are likely to consider their actions to add or strengthen requirements in 2025, which, if enacted, would result in additional requirements going into effect. Additionally, various local REALTOR associations and brokerages across the country continue to update their various forms to implement further changes in light of the evolving landscape, and this trend is anticipated to continue for the foreseeable future.
What Does This Mean for Talent Mobility?
For talent mobility professionals, the court’s decision on the NAR settlement is an important step in the road toward clarifying the overall landscape but does not fundamentally alter the landscape that companies, their service providers, and their impacted transferees must operate within.
For the foreseeable future, the mobility industry must continue to navigate a fragmented landscape of forms and processes accounting not just for the terms of the NAR settlement, but also for the evolving landscape of state law requirements and new or updated processes and forms implemented by REALTOR associations, brokerages, and/or MLS networks across the United States.
In the coming months, it will be critical for companies and service providers to keep an eye on how the above considerations affect the overall industry and how shifting real estate market trends nationwide and in various markets may change how transferees are impacted by changes around buyer broker compensation.