Is The Real Estate Commission Litigation Lawsuit Real?

If you're buying or selling property in Denver, CO, you've likely heard about sweeping changes to real estate commissions. The National Association of Realtors reached an agreement in March 2024 to settle litigation brought by home sellers related to broker commissions. Sullenberger Roskamp helps clients understand how these changes affect their real estate transactions and protects their rights in property disputes.

Yes, the real estate commission lawsuit is absolutely real, and it's already changing how Americans buy and sell homes. This article explains what happened, what it means for you, and when you might need legal help with real estate matters.

Understanding the NAR Lawsuit

What Was the Lawsuit About?

In 2019, home sellers in Missouri filed a class-action lawsuit against the National Association of Realtors, claiming antitrust violations and alleging that its practices inflated real estate agent commissions. The plaintiffs argued that NAR's rules forced sellers to pay inflated commissions to buyer's agents, reducing competition and artificially raising costs.

In October 2023, a jury sided with the Missouri home sellers, awarding a $1.78 billion verdict against the powerful trade group representing about 1.5 million real estate professionals. This verdict sent shockwaves through the real estate industry.

The Settlement Agreement

On November 26, 2024, the court granted final approval of a $418 million settlement against NAR that includes sweeping, industry-wide injunctive relief. This wasn't just about money—the settlement fundamentally changed how real estate transactions work.

The settlement would resolve claims against NAR, over one million NAR members, all state and local Realtor associations, all association-owned MLSs, and all brokerages with an NAR member as principal that had a residential transaction volume in 2022 of $2 billion or below.

Major Changes to Real Estate Transactions

New Rules for Buyer Agreements

Real estate agents who use and list properties for sale on a Multiple Listing Service will be required to enter into written agreements with buyers before touring a home. These agreements must clearly state:

• The specific amount or rate of compensation the agent will receive

• How compensation will be determined

• A statement that broker fees and commissions are fully negotiable and not set by law

August 17 is the deadline for this major change, and it's required for any agent who's a member of NAR, which is a whopping 1.5 million agents in America.

Commission Disclosure Changes

NAR has agreed to put in place a new MLS rule prohibiting offers of broker compensation on the MLS. This means seller's agents can no longer advertise buyer's agent commissions on listing platforms.

These offers are no longer allowed on Multiple Listing Service platforms. Sellers can still offer compensation off an MLS. The key difference is that commission negotiations now happen directly between parties rather than being publicly displayed.

How This Affects Traditional Commissions

Historically, home sellers paid the full commission, typically 5% to 6% of the sale price, split between their agent and the buyer's agent. While the settlement does not explicitly spell the end of the traditional 6% commission, split between the seller's agent and the buyer's agent, commissions are expected to fall because they will become competitive and negotiable.

According to Redfin, the typical buyer agent commission has already started declining from 2.61% in March to 2.55% in July.

Who Is Eligible for Settlement Compensation?

Qualifying Home Sellers

The judgment covers a wide range of sellers: those who listed homes on any U.S. Multiple Listing Service during specific periods ending August 17, 2024.

If you sold a home between Oct. 31, 2019, and Aug. 17, 2024, you may be eligible to file a claim. The exact eligibility dates vary by location, so checking the official settlement website is important.

How to File a Claim

If you sold property during the eligible period, you may be entitled to compensation from the settlement fund. The process involves:

• Gathering documentation of your home sale, including sales contracts and closing statements

• Filling out the required claim forms from the settlement administrator

• Submitting documentation within the specified deadline

• Tracking your claim status through the settlement website

Don't miss out on compensation you're entitled to receive. Property transaction records are essential for proving your eligibility.

Real-World Impact on Denver Real Estate

Changes for Home Buyers

Buyers in Denver now face different expectations when working with agents. You must sign a written agreement before touring properties, clearly outlining what services you'll receive and how much you'll pay.

This increased transparency helps you understand costs upfront, but it also means you may need to negotiate directly with your agent about compensation. Some buyers worry about affording agent fees, particularly in Denver's competitive market, where home prices are already high.

Changes for Home Sellers

Sellers in Denver are no longer automatically responsible for paying both their agent and the buyer's agent. You have options:

• Offer to pay the buyer's agent commission as part of negotiations

• Let buyers handle their own agent fees

• Increase your asking price to help buyers cover their agent costs

• Negotiate based on market conditions and buyer demand

The flexibility can work in your favor, but it also requires more strategic thinking about pricing and negotiations.

Impact on Real Estate Agents

Real estate professionals face significant adjustments. Buyer's agents who want to stay busy are going to need to learn to showcase and defend the value they are adding to the process as they negotiate their own compensation.

Agents must now actively demonstrate their worth to clients rather than relying on standard commission structures. This competition may improve service quality, but it also creates uncertainty for newer agents building their businesses.

When You Need Legal Help with Real Estate Disputes

Complex Transaction Issues

The new commission rules create potential for confusion and disputes. You might need legal assistance when:

• Contract terms regarding commission payment are unclear or disputed

• Agents pressure you to agree to unfavorable compensation terms

• Questions arise about who owes what to whom

• Sellers and buyers disagree about commission responsibilities

• Written agreements conflict with verbal promises

Property Boundary and Neighbor Disputes

Real estate legal issues extend beyond commissions. Property owners in Denver frequently face:

• Boundary disputes: Disagreements about property lines, fences, or encroachments require legal resolution to protect your ownership rights.

• Easement conflicts: Access rights, utility easements, and shared driveways can create tension between neighbors when terms aren't clear.

• Title issues: Problems with property titles, liens, or ownership claims need prompt legal attention to secure your interests.

• Zoning and land use conflicts: Disputes with neighbors or local government over how property can be used affect your investment value.

Contract and Closing Problems

Real estate transactions involve substantial legal documents and financial commitments. Legal representation protects you when:

• Purchase agreements contain problematic terms or contingencies

• Sellers fail to disclose material defects or problems

• Financing falls through due to title or appraisal issues

• Closing delays threaten your moving timeline or other commitments

• Post-closing disputes arise about the property condition

Understanding Your Rights Under the New Rules

Negotiation Power

NAR has long encouraged its members to use written agreements with buyers because they help consumers understand exactly what services they have agreed to, the roles and responsibilities, and the amount.

These written agreements protect both parties by creating clear expectations. You have the right to negotiate every aspect of agent compensation; nothing is set in stone.

Transparency Requirements

Written agreements must include a specific and conspicuous disclosure of the amount or rate of compensation the real estate agent will receive or how this amount will be determined, and a conspicuous statement that broker fees and commissions are fully negotiable and not set by law.

If an agent presents an agreement without these clear disclosures, that's a red flag requiring legal review.

Consumer Protections

The settlement aims to increase fairness and competition in real estate transactions. You're protected by:

• Required written disclosures before viewing properties

• Clear commission negotiation opportunities

• Elimination of hidden or mandatory commission structures

• Increased transparency about costs and services

What Hasn't Changed

Property Rights and Ownership

The settlement affects commission structures, not fundamental property rights. Your ownership rights, ability to buy and sell property, and basic transaction processes remain the same.

Legal Requirements for Real Estate

State and local real estate laws, disclosure requirements, inspection rules, and closing procedures haven't changed. Colorado's specific property laws still apply to all Denver transactions.

Need for Professional Guidance

Both buyers and sellers still benefit from professional representation, whether from agents, attorneys, or both. The complexity of real estate transactions makes expert guidance valuable for protecting your interests.

How Long Will Changes Take to Implement?

The bulk of the settlement went into effect on Aug. 17 in most parts of the country. However, full implementation and industry adaptation will take time.

Real estate professionals, buyers, and sellers are all adjusting to the new landscape. Some confusion and growing pains are expected as everyone learns the updated procedures and negotiation dynamics.

Understanding Your Rights in the New Real Estate Landscape

The real estate commission lawsuit is absolutely real, and home sellers have achieved more than $997.1 million in settlements thus far, of which more than $876.5 million has been granted final approval by the courts. These changes affect every property transaction in Denver and across the country.

Understanding your rights under the new rules protects your financial interests, whether you're buying or selling. The increased transparency and negotiability of commissions benefit consumers, but they also require more active participation in fee negotiations.

If you're facing real estate disputes in Denver, CO, whether related to commission agreements, property boundaries, neighbor conflicts, or transaction problems, contact Sullenberger Roskamp today. Our experienced attorneys help clients protect their property rights and resolve real estate issues efficiently.

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