Have you ever wondered why a seller is responsible for the buyer’s commission? With the internet and the ever-increasing access to information concerning homes on the market, should a seller be required to pay the commission due to the buyer’s agent? This is a question that became the center of a landmark lawsuit: Burnett, et al v. The National Association of Realtors, et al.


Understanding the Facts: In the realm of consumer real estate transactions, transparency and fair practices are paramount. The case of Burnett et al v. The National Association of Realtors et al, which unfolded in the U.S. District Court for the Western District of Missouri, No. 4:19-cv-00332, shed light on issues concerning competition and fair practices within the residential real estate industry. Undoubtedly, the verdict will have far-reaching impacts for residential real estate transactions.


Background: The lawsuit was initiated by Burnett and several other home sellers against The National Association of Realtors (NAR) and four major real estate brokerages. The crux of the Plaintiffs’ case was that these entities engaged in anti-competitive practices that inflated the costs assessed to home sellers in the United States due to the requirement that sellers pay the commission fees due to the buyer’s agents.


Key Allegations: The core allegation of the Plaintiffs revolved around the practice of requiring sellers to pay the commission for both their own agent (the seller’s agent) and the buyer’s agent.


Legal Arguments: Counsel for the Plaintiffs argued that if sellers had the ability to negotiate directly with the buyer’s agent and offer varying commission rates, it would lead to lower costs for sellers and increased competition among agents.


Defendants argued that the seller’s responsibility for the buyer’s agent’s commission is a common industry practice that benefits consumers by ensuring that buyer’s agents are adequately compensated for their services. They maintained that the rule promotes efficiency and encourages cooperation among real estate agents, ultimately benefiting homebuyers and sellers alike.


Court Proceedings: On October 31, 2023, the jury entered a verdict in favor of Plaintiffs in the amount nearly $1.8 billion.


Settlement and Implications: Within the last few weeks, the only Defendant remaining in the case is the National Association of Realtors as it appears that all other Defendants have entered into settlements. And settling those cases rather than engaging what is sure to be a long and protracted appeal process may make sense as a business decision for the brokerages. But questions remain: How will Buyer’s agents be compensated? How can the Buyer’s agent establish his/her value, especially in a seller’s market? And how will this affect the commercial real estate industry?


Stay tuned as we watch this unfold in the current real estate market. The Hunter Law Group continues to monitor this case closely and we aim to keep you updated with the most relevant information. Understanding the intricacies of real estate law and staying informed about landmark cases like this one is crucial for everyone involved in the industry, from buyers and sellers to real estate agents and brokers. Knowledge is power, and in the fast-paced world of real estate transactions, it can make a substantial difference.