How The Mega Brokerages Responded to the NAR Lawsuit

For me, this is where the whole thing gets interesting. It’s a little ‘inside baseball,’ but I think it is critical to separate what has happened from what may happen.

The four most well-known defendants in the lawsuit were Keller Williams, Home Services of America, RE/MAX, and Anywhere Real Estate. Keller Williams and Home Services chose to go to trial. RE/MAX and Anywhere Real Estate settled out of court rather than go to trial.

Why Did Home Services and Keller Williams Go to Trial?

There are a few possible reasons why Keller Williams chose to go to trial in the case against them.

Strategic Reasons:

• It set a legal precedent: Keller Williams and Home Services may have seen the case as an opportunity to validate the NAR’s Clear Cooperation Policy (CCP), which would have been beneficial in any potential future antitrust lawsuits.
• This case will shape public opinion: Keller Williams and Home Services may have also seen the trial as an opportunity to shape public opinion about the NAR and its CCP. By presenting the case in court, they could argue that the CCP is fair to both buyers and sellers and, therefore, in the best interest of consumers to maintain. 

Financial Reasons:

• It avoids settling for a “bad deal”: Keller Williams and Home Services may have felt that they could not get a favorable settlement offer from the plaintiffs. If they settled for a “bad deal,” they could be seen as admitting that the CCP is anti-competitive. Going to trial was a riskier option, but it also held the potential for a more favorable outcome.
• It may protect their reputations: Keller Williams and Home Services may have been concerned that settling the case would damage their brand reputation. Going to trial, even if they lost, could allow them to maintain the appearance that they were fighting for what they believed in.

Ultimately, the decision of whether or not to go to trial was likely a complex one that weighed a variety of factors. Keller Williams and Home Services may have ultimately decided to go to trial because they believed that it was the best way to protect their interests and their reputations. 

Why RE/MAX and Anywhere Real Estate Settled

RE/MAX and Anywhere ultimately decided to settle their lawsuits with the plaintiffs rather than go to trial for several reasons.

• Reduced Legal Costs and Uncertainty: Settling the lawsuits before trial allowed both RE/MAX and Anywhere to avoid the significant costs and uncertainty associated with litigation. Trials can be lengthy, expensive, and unpredictable – and the outcome is never guaranteed. By settling, both companies could avoid the risk of a costly and potentially unfavorable verdict.
• Avoid Negative Publicity and Damage to Reputation: Going to trial could have exposed RE/MAX and Anywhere to significant negative publicity and damage to their reputations. Public scrutiny of the lawsuits could have tarnished their brands and eroded consumer trust in their companies. Settling allowed them to avoid this potential damage and move forward with their businesses.
• Maintain Control over the Outcome: Settling the lawsuits gave RE/MAX and Anywhere more control over the outcome of the cases. By negotiating a settlement, they could avoid the risk of an unfavorable verdict from a jury or judge. This allowed them to protect their interests and minimize the potential harm to their businesses.
• Focus on Business Operations: Settling the lawsuits allowed RE/MAX and Anywhere to focus their attention and resources on their core business operations. Protracted litigation would have diverted time and energy away from their primary business activities, potentially hindering their growth and profitability.
• Protect Relationships with Buyer Agents: RE/MAX and Anywhere both rely on buyer agents to generate their business. Settling the lawsuits helped to preserve these relationships and avoid alienating buyer agents who may have been hesitant to work with them due to the pending litigation.

In conclusion, RE/MAX and Anywhere’s decision to settle their lawsuits was a strategic one that weighed the potential benefits of settlement against the risks and uncertainties of going to trial. Settling allowed them to avoid significant legal costs, protect their reputations, maintain control over the outcome, focus on their businesses, and preserve relationships with buyer agents.

RE/MAX and Anywhere Real Estate Settlement Terms Explained

The terms of the settlement between RE/MAX, Anywhere, and the plaintiffs were as follows:

1. RE/MAX and Anywhere agreed to pay $55 million and $83.5 million, respectively, to the plaintiffs.
2. RE/MAX and Anywhere agreed to stop requiring their agents to be members of the National Association of Realtors (NAR) or follow its Code of Ethics or the MLS Handbook.
3. RE/MAX and Anywhere agreed to implement revised policies regarding offers of compensation to buyer agents.
4. RE/MAX and Anywhere agreed to provide training for their agents on the antitrust laws and the implications of the settlement.
5. Both companies agreed to cooperate with the Federal Trade Commission (FTC) in its ongoing investigation into the antitrust allegations.

The settlement was approved by the courts in February 2023 and is now final. The plaintiffs have until October 2023 to file compensation claims.

Why RE/MAX and Anywhere Real Estate Left the National Association of Realtors

RE/MAX and Anywhere Real Estate left the National Association of Realtors (NAR) in 2023 for several reasons.

Antitrust Concerns: Both RE/MAX and Anywhere Real Estate were involved in class-action antitrust lawsuits against NAR. The lawsuits alleged that NAR’s Clear Cooperation Policy (CCP) artificially inflated real estate commission rates by requiring sellers to pay buyer brokers a commission, even if the buyer is not represented by an agent. As part of the settlements, both companies agreed to no longer require their agents to be members of NAR or follow NAR’s CCP.

CCP Restrictions: RE/MAX and Anywhere Real Estate also objected to other NAR rules that they believed restricted competition and harmed consumers. For example, they objected to NAR’s rules that limited transparency around commission rates and prohibited agents from sorting listings by commission amount.

Strategic Flexibility: By leaving NAR, RE/MAX and Anywhere Real Estate gained more flexibility to experiment with new business models and pricing strategies. This could allow them to better compete with other real estate brokerages and online real estate companies.

Cost Savings: NAR membership fees can be expensive for large brokerages like RE/MAX and Anywhere Real Estate. By leaving NAR, these companies could save millions of dollars in annual membership dues.

Consumer Choice: RE/MAX and Anywhere Real Estate may have also believed that leaving NAR would give consumers more choice and improve the overall quality of real estate services. By not being required to be members of NAR, agents from these companies would be free to choose which trade organizations they want to belong to and which rules they want to follow.

Overall, the decision by RE/MAX and Anywhere Real Estate to leave NAR was a significant event in the real estate industry. It remains to be seen whether other large brokerages will follow suit, but it is clear that NAR is facing increasing scrutiny and competition.

Final Thoughts

The settlement between RE/MAX, Anywhere, and the plaintiffs has significant implications for the real estate brokerage industry as a whole. It represents a major victory for antitrust advocates who have been challenging the anti-competitive practices of the NAR, particularly its mandatory buyer-broker compensation rule.

The settlement is likely to lead to increased competition in the real estate industry, as buyer agents will now have more freedom to choose how they are compensated. This could result in lower commission rates for sellers and more transparency in the pricing of real estate services.

The settlement could also have a significant impact on the NAR, which has long been a powerful force in the real estate industry. The NAR’s mandatory buyer-broker compensation rule was a major source of its power, and its removal could weaken the NAR’s influence over the industry.

In addition, the settlement is likely to lead to more lawsuits against the NAR and other real estate organizations. The plaintiffs in the RE/MAX and Anywhere cases have set a precedent for other antitrust lawsuits, and other plaintiffs may be emboldened to file similar lawsuits.

Overall, the settlement between RE/MAX, Anywhere, and the plaintiffs is a significant event that will likely have a major impact on the real estate brokerage industry. It is a victory for antitrust advocates and could lead to increased competition, lower commission rates, and more transparency in the pricing of real estate services.