NAR commission settlement survives appeal, leaving new brokerage model intact

The Eighth Circuit has upheld the nationwide settlement behind written buyer agreements and the removal of compensation offers from NAR-affiliated multiple listing services.

The operating model introduced across much of the US real estate industry in 2024 will remain intact after a federal appeals court upheld the nationwide commission settlement involving the National Association of Realtors and several major brokerage groups.

A three-judge panel of the US Court of Appeals for the Eighth Circuit affirmed the district court’s approval of the settlement on August 19, rejecting multiple attempts to overturn the agreement.

The decision does not introduce another set of commission rules for agents and brokerages to implement. Its immediate effect is to preserve the system under which the industry has already been operating.

That system requires buyer agents participating through covered NAR arrangements to enter written agreements with buyers before touring properties. Offers of buyer broker compensation can no longer be published through NAR-affiliated multiple listing services, and consumers must be told that brokerage fees are negotiable.

The settlement does not prevent a seller from agreeing to contribute toward buyer broker compensation. It changes how that possibility is discussed, approved and communicated.

How the industry reached this point

The litigation began in 2019 when a group of Missouri home sellers alleged that NAR and several large real estate companies had conspired to inflate commissions through the Cooperative Compensation Rule.

That rule required listing brokers using NAR-affiliated multiple listing services to make an offer of compensation to buyer brokers.

A jury found the defendants liable in October 2023 and awarded $1.785 billion in damages, an amount that was subject to potential trebling under federal antitrust law.

A series of settlements followed. NAR agreed to contribute $418 million, HomeServices of America agreed to pay $250 million and other participating brokerages made additional contributions, taking the combined settlement fund above $1 billion.

The agreement also delivered the practice changes that have reshaped buyer representation and compensation discussions since August 2024.

Objectors challenged the settlement on several grounds. Their arguments included the size and scope of the nationwide class, the treatment of buyer and seller claims, the inclusion of claims involving the Real Estate Board of New York, the distribution process and a $333 million award for plaintiffs’ legal fees.

The appeals court rejected those challenges and found that the district court had acted within its discretion when it approved the settlement as fair, reasonable and adequate.

What the ruling means for agents

The practical consequence is continuity.

Buyer agents must continue establishing the terms of representation before showing homes. The agreement should clearly identify the services being provided, the method and amount of compensation and the potential sources from which that compensation may be paid.

An agent cannot simply rely on a customary local rate or suggest that compensation has been standardized across the market.

Listing agents must also be precise when discussing buyer broker compensation with sellers. Sellers retain choices, but those choices must be explained without implying that a particular payment is mandatory or required for access to buyers.

For brokerage leaders, the decision is a reason to audit implementation rather than assume the legal issue has passed.

Forms, training, listing presentations, buyer consultations, transaction records and digital workflows should all reflect the current requirements. Brokerages should also ensure agents can explain their value before asking a buyer to enter a representation agreement.

The ruling does not resolve every legal or regulatory question surrounding residential brokerage compensation. It resolves the consolidated appeals challenging approval of this particular settlement, and parties may still seek further judicial review.

Unless a later court intervenes, however, the post-2024 model remains the industry’s operating framework.

The legal battle may have produced the rules, but the competitive test now sits with agents and brokerages: whether they can explain their service, demonstrate their value and negotiate their compensation transparently.