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Residential real estate commissions settlements details
- An estimated 50 million people across the United States may be entitled to a portion of nearly $700 million in settlement money from class action lawsuits filed against the real estate industry over inflated commission fees.
- Anyone who sold a home on the Multiple Listing Service anywhere in the United States and paid a commission fee to a real estate brokerage in connection with the sale of the home between Oct. 31, 2019, and Feb. 1, 2024, could be eligible for compensation.
- Claim forms need to be filed by May 9, 2025.
- Depending on how many people file a claim, the amount each seller could receive from these class-action settlements may be as low as $13 after divvying up the payments and deducting attorney’s fees.
- Find more information on the Residential Real Estate Broker Commissions Antitrust Settlements Website
Good news for anyone who sold a home on the Peninsula over the past five years – you could be among the estimated 50 million people across the United States entitled to a portion of nearly $700 million in settlement money from class action lawsuits filed against the real estate industry over inflated commission fees.
Settlement notices have been sent out to potential claimants as well as posted online in recent months alerting home sellers that they may have overpaid thousands of dollars in real estate commission fees.
On the Peninsula, where the median price for a single-family home is above $2 million, the average home seller could have overpaid more than $50,000 in commission fees.
The formal notice comes after a federal jury determined that the National Association of Realtors and some residential brokerages conspired to inflate commissions by forcing sellers to make non-negotiable offers of compensation to the buyer’s agent for listings on the Multiple Listing Service. To resolve litigation claims, the National Association of Realtors trade group and several large real estate brokers agreed to pay settlement fees.
The bad news: Depending on how many people file a claim, the amount each seller could receive from these class-action settlements reportedly may be as low as $13 after divvying up the payments and deducting attorney’s fees.
Figures from the National Association of Realtors show that more than 21 million homes were sold during the period that the settlements cover, according to data from the law firm Robbins LLP.
Benjamin Brown, co-chair of the anti-trust practice at Cohen Milstein, one of the law firms involved in the class-action case, told NPR that the number of potential claimants could be as high as 50 million.
Who’s eligible to file a claim
Anyone who sold a home on the Multiple Listing Service anywhere in the United States and paid a commission fee to a real estate brokerage in connection with the sale of the home between Oct. 31, 2019, and Feb. 1, 2024, could be eligible for compensation, according to the Residential Real Estate Broker Commissions Antitrust Settlements Website, where sellers can file claims from now through May 9, 2025.
The settlements cover multiple real estate brokerage companies, and in some parts of the country outside of California, the eligible sales dates go back as far as April 29, 2014, depending on which Multiple Listing Service database was used during the transaction.
Under the settlement agreements, the National Association of Realtors has agreed to pay $418 million in settlement fees over the next four years. Anywhere and RE/MAX brokerages have agreed to collectively pay $138.5 million, and Keller Williams will pay $70 million.
New commission rules
The Sitzer/Burnett buyer-broker commission lawsuit, which was filed in Kansas City, Mo., last October on behalf of 260,000 home sellers in the Midwest over the National Association of Realtors’ commission rules, paved the way for the settlements and new regulations affecting sellers, buyers and agents nationwide.
Along with the settlement payments, the National Association of Realtors also agreed to revamp how Realtors get paid commission, putting an end to the decades-old practice requiring home sellers to pay 5% to 6% of a home’s purchase price to cover the commission fee for both the listing agent and the buyer’s agent. The new rules rolled out on Aug. 17.
Under the new system, the most significant change is how buyers’ agents are paid. While the seller can choose to pay a buyer’s agent, the rules make it crystal clear that sellers are no longer required to offer any compensation to a buyer’s agent.
Buyers now will be required to negotiate directly with their own agents and must enter into signed agreements that outline how they will compensate their agent (flat fee, hourly rate or other arrangements), the amount they will pay and what services they want their agent to provide. Written agreements will be required before a buyer and their agent can do any in-person or live virtual home tours. Buyers do not need a written agreement if they are just speaking to an agent at an open house or asking them about their services.
There are also changes to how and where real estate professionals may communicate with each other about offers of compensation. These offers are no longer allowed on Multiple Listing Service platforms, which are private databases created, maintained and paid for by real estate professionals and provide property listings to Zillow, Trulia, Realtor.com and others.
Individual agents and real estate companies, however, will still be able to reference compensation on their own websites.
Despite the National Association of Realtors’ widespread coverage, the association’s agreement does not yet cover all brokers in the industry. Officials of HomeServices of America Inc. of Edina, Minn., are still litigating the lawsuit, known as the Sitzer-Burnett vs. National Association of Realtors case. HomeServices of America is the parent company of Intero Real Estate Services, which has local offices in Palo Alto, Menlo Park, Los Altos and Redwood City.
