303.917.8000 Faun@FaunHauptman.com

by Faun G. Hauptman, President and Employing Broker, Paragon Realty Professionals

The real estate industry is facing massive disruption as a result of the Burnett v Nar et al jury decision. For those not familiar, the lawsuit sought to claw back $1.8 billion in commissions paid from individual home sellers, to buyer’s agents and brokerage firms, for services rendered pursuant to their seller listing contracts and cooperation agreements pursuant to their listing agent’s offer of cooperation through their local MLS.

The real estate industry has always been a hotbed of innovation and change. Realtors are some of the most hard-working, intelligent, resilient, and flexible people I know. Cooperation has been at the heart of our industry for at least 60 years, when the state and local boards began developing MLS systems. At its core, MLS is a standing agreement among its members to share commissions and cooperate to assist a ready, willing and able buyer to find and purchase a property for sale. Over the decades, cooperation has become the grease with which we have streamlined and created an ever-more-efficient and liquid real estate marketplace. I personally know agents who were selling homes long before MLS existed. I don’t know how they did it, but I do know it was a very inefficient process compared to what we have today.

The real estate industry has, for at least 60 years, also known high levels of regulation at both the state and the Federal levels. As most Americans know, there is a never-ending tension between states and the Federal government which impacts almost all regulated industries as well as our political and economic policies. That a judge in one state seemingly holds cooperation in the balance while we await his ruling on the case, is surreal to me. Already here in the Denver metro area, we are seeing changes to how agents are cooperating through the MLS. Cooperation is disintegrating as some of us (or our sellers) seek to avoid the obvious, ultimate cooperative behavior, commission-sharing.

If we lose cooperation, we’ll be back to the days when listing agents had to find the buyers for their own listings. That system produced many of the court cases we rely on today for practice guidelines. Do we really want to go back to that?

Real estate is and always has been an illiquid asset. In recent years in many markets including Denver, homes have sold faster than people can say “investment account withdrawal.” Our evolution worked. We enabled an illiquid asset to become highly liquid, simply because we, as members of real estate associations like DMAR, funded and benefitted from the development and evolution of MLS systems which created unprecedented levels of cooperation and real estate liquidity. Our clients have benefitted greatly from our evolution, and now, the jury holds that society-at-large owns our systems, rather than those of us who paid for the initial development and ongoing redevelopment of the MLS as a professional tool.

Update in Case of Burnett v. NAR et al.

Statement from
NAR President Tracy Kasper

October 31, 2023

NAR and plaintiffs have reached a proposed settlement agreement that would end litigation of claims brought on behalf of home sellers related to broker commissions. Get the latest information on the settlement at facts.realtor.

I have an important litigation update. After an 11-day trial in the case of Burnett v. NAR et al, the eight-person jury in a Kansas City, Mo., federal courtroom, came back 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 finding because we stand by the fact that NAR rules serve the best interests of consumers, support market-driven pricing and advance business competition. We remain optimistic we will ultimately prevail.  In the interim, we will ask the court to reduce the damages awarded by the jury. 

In court, NAR presented evidence that consumers are better off and business competition is able to thrive because of our rules and how well local MLS broker marketplaces function. In fact, the NAR cooperative compensation rule for local MLS broker marketplaces 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. NAR also presented that REALTORS® are everyday working Americans who are experts at helping consumers navigate the complexities of home purchases and advocates for fair housing and wealth building for all. 

NAR was formed 100 years ago because there was a need for a higher level of ethical practice. We should all be proud that REALTORS® continue to serve in that role. I know our mission to advocate for homeownership and always put our clients’ interests first is unwavering. We recognize our legal team and outside counsel have worked tirelessly on this case. It will likely be several years before we reach a conclusion.  

I am grateful to our NAR staff and our 1.5 million members who work to serve their clients every day. We have an important shared purpose for consumers, and we could not achieve that without all that each of us does.

Below are some key questions people may have. We will continue to keep you informed of any notable litigation milestones, and in the meantime, I encourage you to continue to refer to the competition.realtor website, which provides a comprehensive overview of—and many resources for explaining— how REALTORS® and local MLS broker marketplaces benefit consumers. The need for each of us and every member to continue to express our value every day in as many ways as we can remains an imperative. 

Tracy Kasper
NAR President

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