The National Association of Realtors’ Washington, D.C. office building. iStock photo

The National Association of Realtors abruptly reversed course Friday morning, announcing it was settling all lawsuits against it over real estate commissions for a substantially smaller sum than it would have paid under a preliminary verdict announced last year.

NAR will pay $418 million to plaintiffs over the next four years and put in place a new rule on multiple listings services owned by its local Realtor associations that would ban offers of buyer’s agent compensation from being communicated via those MLSs. The rule would not prohibit the parties in a transaction from working out commission details on their own as part of the normal negotiations around a home sale.

In addition, Realtor association-owned MLSs representing homebuyers would require participants to enter into representation agreements with their clients.

The new rules will go into effect in mid-July, the association said, although it appears that any settlement still requires the approval of judges in the various lawsuits. NAR said that it continues to deny any wrongdoing in the settlements.

“Ultimately, continuing to litigate would have hurt members and their small businesses,” Nykia Wright, interim CEO of NAR, said in a statement. “While there could be no perfect outcome, this agreement is the best outcome we could achieve in the circumstances. It provides a path forward for our industry, which makes up nearly one fifth of the American economy, and NAR. For over a century, NAR has protected and advanced the right to real property ownership in this country, and we remain focused on delivering on that core mission.”

NAR lost the first of several high-profile federal class-action anti-trust lawsuits against its commissions policy in Missouri in October. The jury in that case awarded plaintiffs $1.78 billion in damages, a sum most observers contend NAR had no ability to pay and which would force it to settle rather than appeal.

In its announcement of the settlement, NAR claimed it would absolve all Realtor-led brokerages in the country with $2 billion or less in sales volume in 2022 of all lawsuits related to agent commissions.

Anywhere Real Estate, parent company of Coldwell Banker and Sotheby’s International Realty, along with Keller Williams and RE/MAX had all previously settled. That means, of Connecticut-based brokerages, only William Raveis Real Estate remains exposed according to 2022 sales data reported by RealTrends. The brokerage has not been named in any commission lawsuits to date.

Also not covered: any brokerage affiliated with Berkshire Hathaway HomeServices. NAR’s announcement said it “fought to include all members in the release” but specifically was unable to get the plaintiffs to agree to include HomeServices of America and its related companies in the deal. HomeServices is the last corporate defendant in the Missouri case that hasn’t yet settled.

“NAR exists to serve our members and American consumers, and while the settlement comes at a significant cost, we believe the benefits it will provide to our industry are worth that cost,” 2024 NAR President Kevin Sears, broker of Springfield-based Sears Real Estate, said in a statement. “NAR is focused firmly on the future and on leading this industry forward. We are committed to innovation and defining the next steps that will allow us to continue providing unmatched value to members and American consumers. This will be a time of adjustment, but the fundamentals will remain: buyers and sellers will continue to have many choices when deciding to buy or sell a home, and NAR members will continue to use their skill, care, and diligence to protect the interests of their clients.”