Brokerages and MLSs Left Out of NAR Settlement

According to Housingwire, larger brokerages and specific MLSs are not covered by the NAR settlement and remain exposed to legal ramifications. Here’s a breakdown based on the settlement documents:

Brokerages surpassing an average of $2 billion in residential transaction volume over the past four years are exempt from the NAR agreement. Notably, there are 94 brokerages meeting this criterion, including Compass (with $227.98 billion in 2022 sales volume), eXp ($159.1 billion), and Redfin ($39.8 billion).

Brokerages opting for settlement have two alternatives:

  • Option 1: Deposit funds into a settlement escrow account within 120 days, equivalent to .0025 multiplied by the average annual total transaction volume over the most recent four calendar years.
  • OR
  • Option 2: Engage in non-binding mediation within 110 days following preliminary approval of the settlement agreement if they cannot fulfill the amount specified in option 1.

Similarly, MLSs provided with settlement choices face two alternatives:

  • Option 1: Transfer funds equal to 100 times the number of subscribers the MLS had in 2023 into an escrow account within 120 days.
  • OR
  • Option 2: Enter non-binding mediation within 110 days after preliminary approval of the settlement agreement if they are unable to meet the requirements of option 1.

Analysis: Upon reviewing the settlement terms, it initially appeared puzzling as to why the plaintiffs opted for settlement, considering the substantial reduction from the initial Sitzer verdict. However, it becomes evident that significant liabilities await the major brokerages. For instance, a brokerage of Compass’s magnitude could potentially face liabilities exceeding $500 million. This perspective sheds light on why the plaintiffs deemed settlement as the appropriate course of action.