The NAR lawsuit is a group of antitrust cases, led by Sitzer/Burnett, that challenged how real estate commissions were structured in the United States. A Missouri jury found in October 2023 that the National Association of Realtors had conspired with major brokerages to keep agent commissions artificially high and awarded roughly $1.785 billion in damages. Rather than face trebled liability above $5 billion, NAR agreed to pay $418 million and to change the rules that govern how agents advertise their pay and sign up clients. Those changes took effect on August 17, 2024, and they now shape every residential transaction that touches the Multiple Listing Service.
What the Lawsuit Alleged
The plaintiffs’ theory rested on Section 1 of the Sherman Antitrust Act, which makes agreements that restrain trade illegal.1Office of the Law Revision Counsel. 15 US Code 1 – Trusts, Etc., in Restraint of Trade Illegal; Penalty The specific target was NAR’s “participation rule,” which required every listing broker to offer a set commission to any agent who brought a buyer. Without that offer, the property could not appear on the MLS.2National Association of REALTORS. NAR Settlement FAQs
The result, plaintiffs argued, was that price competition never developed. Sellers had to commit to a buyer-agent payout before any buyer surfaced, so they could not shop the fee down. Buyer agents had no reason to compete on price because their pay was baked into the listing. Combined commissions stayed near 5% to 6% for years. Plaintiffs also said the setup gave buyer agents an incentive to steer clients toward listings that paid more, rather than homes that fit better.
The Verdict and the Settlement
The Sitzer/Burnett case was filed in 2019 in the U.S. District Court for the Western District of Missouri and went to trial in October 2023. On October 31, the jury returned a verdict of approximately $1.785 billion, an amount subject to automatic trebling under federal antitrust law. With similar suits pending elsewhere, NAR negotiated a nationwide deal to resolve Sitzer/Burnett and related cases. The court granted final approval on November 27, 2024.3Real Estate Commission Litigation. Residential Real Estate Commissions Settlements
The settlement has two pieces: $418 million into a fund for eligible home sellers, paid in four annual installments, and a set of mandatory practice changes that every NAR-affiliated agent and every association-owned MLS must follow.4National Association of REALTORS. NAR Settlement Factsheet Major brokerages, including Anywhere, RE/MAX, Keller Williams, Compass, Redfin, and HomeServices of America, reached separate settlements on their own terms.
How Commission Offers Changed on the MLS
Before August 17, 2024, every MLS listing showed exactly what the listing broker would pay a buyer’s agent. That field is gone. The rules now prohibit any offer of compensation to buyer agents on the MLS, and the ban extends to any platform fed by MLS data, including IDX and VOW feeds on brokerage websites.2National Association of REALTORS. NAR Settlement FAQs An MLS cannot even carry a yes/no field indicating whether compensation is available. Listing agents may include a link to their contact information, provided the link itself does not contain a compensation offer.
Seller-paid commissions are still legal. A seller can offer to pay a buyer’s agent, but the offer has to happen off the MLS. Listing agents can advertise compensation on their own websites (as long as those sites don’t pull from an MLS feed), through email, on flyers, or in direct conversation. Buyers can also ask sellers to cover the buyer-agent fee as a term of the purchase offer.2National Association of REALTORS. NAR Settlement FAQs Concessions for things like closing costs can still appear on the MLS. The specific ban is on advertising agent compensation through the central listing platform.
Written Buyer Agreements Are Now Required
Since August 17, 2024, any agent working with a buyer must have a signed written agreement in place before showing a home, including a live virtual tour. The agreement must include three specific provisions:5National Association of REALTORS. Written Buyer Agreements 101
- Specific compensation, stated in concrete terms such as a flat dollar amount, a percentage, or an hourly rate. Open-ended language like “whatever the seller offers” is not allowed.
- A cap on compensation from any source, so the agent cannot receive more than the amount agreed with the buyer.
- A conspicuous disclosure that broker commissions are fully negotiable and not set by law.
For consumers, this is the most visible change. Under the old system, buyers often had no clear idea what their agent was being paid or by whom. Now the fee conversation happens before touring begins, which creates real leverage to negotiate or shop between agents on price.
The compensation cap matters. If a buyer signs an agreement for 2.5% and the seller happens to be offering 3% off-MLS, the agent cannot pocket the difference. The agreement sets the ceiling, which is intended to remove the steering incentive that plaintiffs identified.
Buyers Who Do Not Sign an Agreement
A buyer who declines to sign can still purchase a home, but an agent cannot show them MLS-listed properties. In practice, an unrepresented buyer deals directly with the listing agent or the seller, and the listing agent typically has the buyer sign a disclosure confirming that the agent does not represent them. Individual brokerages and sellers set their own policies about whether to work with unrepresented buyers, so the experience varies.
Impact on VA and FHA Borrowers
Veterans using VA loans were caught in a bind. VA regulations had effectively prohibited veterans from paying buyer-agent commissions out of pocket, so when the MLS stopped displaying compensation offers, some veterans faced losing buyer representation altogether if sellers declined to pay.
The VA issued a temporary policy change effective August 10, 2024, authorizing veterans to pay reasonable buyer-broker fees in cash at closing. Two restrictions apply: the fees cannot be financed into the VA loan, and the veteran must have sufficient liquid assets to cover them after down payment and other closing costs.6Veterans Benefits Administration. Circular 26-24-14 When a seller voluntarily pays the buyer’s agent, that payment counts as a cost of sale, not against the VA’s 4% seller concession cap.
FHA borrowers face a related problem. FHA rules allow buyers to pay agent commissions, but the money has to come from cash reserves and cannot be rolled into the loan. FHA caps total seller contributions toward a buyer’s closing costs at 6% of the purchase price. For a buyer already stretching to make a down payment, an out-of-pocket commission of 2% to 3% is a meaningful added expense.
What Has Actually Happened to Commission Rates
The settlement was designed to bring commissions down through competition. Early data is mixed. The average buyer-agent commission in the first quarter of 2025 was about 2.40%, barely different from the 2.36% recorded in the third quarter of 2024 when the new rules took effect. For homes priced above $1 million, the rate slipped slightly to 2.17%. For homes below $500,000, it actually rose to 2.49%.
Two explanations fit the numbers. Sellers are still widely offering to cover buyer-agent fees off-MLS to attract offers, especially in slower markets. And buyer agreements are clustering around the 2% to 3% range that was standard before, because both agents and buyers are anchored to familiar figures. Whether real price competition develops over the next few years will decide whether the settlement changed the market or only rearranged the paperwork.
The Seller Claim Deadline Has Passed
Sellers who paid a commission on an MLS-listed sale during the class period were eligible for a share of the fund, with class-period start dates varying by MLS and running through August 17, 2024.7Real Estate Commission Litigation. Notice of Proposed Settlement with the National Association of Realtors The claim deadline was May 9, 2025, and it has closed.3Real Estate Commission Litigation. Residential Real Estate Commissions Settlements Late claims are not accepted. The settlement administrator uses the claims already filed to calculate each seller’s share on a pro-rata basis, with distributions tied to the installment payment schedule and the resolution of any remaining appeals.
Tax Treatment of Any Payment You Receive
If you filed a claim and receive a payment, expect it to be taxable. The IRS treats settlement proceeds based on what the payment was meant to replace. This fund compensates sellers for inflated commissions on past sales, which is an economic loss, not a personal physical injury, so the exclusion under IRC Section 104(a)(2) does not apply.8Internal Revenue Service. Tax Implications of Settlements and Judgments
The payment likely qualifies as ordinary income. If you receive a Form 1099 from the settlement administrator, report the amount on your return. Individual payouts are likely to be modest given the size of the class relative to the fund. If the commission on your original sale was deducted as a selling expense in a prior year, the settlement payment may effectively reverse part of that deduction, so a tax professional is worth consulting when the payout is significant.