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Commissions, Compensation, and Next Steps in the Burnett Case

Note: The National Association of REALTORS® (NAR) has provided updates on Missouri litigation known as “the Burnett case,” along with other related legal developments. To help our EMTAR members stay up-to-date and aware, we are sharing some of the latest news in this blog.

What was the Burnett case about, and what does the verdict mean?

“This Missouri case was brought by a local plaintiffs’ lawyer who claims that NAR and others set out to harm consumers by fixing commissions. This argument is utterly false and not supported by the evidence. Not only does NAR not require the payment of any type of compensation by a home seller to the agent of a home buyer, NAR does not set commissions or compensation of any kind. Fortunately, America’s judicial process allows NAR to challenge this outcome and the shaky ground on which it rests. This is just the first chapter in a longer legal process.”

What are the next steps in the Burnett case?

“NAR plans to file an appeal asking the court to set aside the jury’s verdict as being wrong on the law and the facts. In the meantime, NAR will not remain silent in the face of misinformation about how real estate agents and brokers are compensated, particularly from plaintiffs’ lawyers, who are the ones who actually stand to profit from the cases against the industry.”

What do NAR rules actually say about compensation?

“NAR does not require, suggest, or even track broker compensation or commissions—compensation can be a percentage, fixed rate, hourly rate, or any other arrangement. Compensation is negotiable between agents and their clients.

“NAR’s policy, despite how it was misrepresented in a Missouri courtroom, does not require sellers to do anything, and it requires only that listing brokers communicate the amount they are offering to pay a buyer’s broker for their work—this helps ensure transparency and efficiency for all parties in a transaction, it benefits sellers by bringing more potential buyers to a home, and it benefits buyers by ensuring they have representation, if they want it.

“There is no rule that tells listing brokers and their clients how much to offer a buyer broker. They can offer $0.

“Also, NAR’S policies expressly prohibit MLSs, associations, and brokers from setting or suggesting real estate commissions or fees. NAR has numerous anti-price-fixing rules and guidance, including our MLS rules, which expressly state that ‘the broker’s compensation for services rendered in respect to any listing is solely a matter of negotiation between the broker and his or her client, and is not fixed, controlled, recommended, or maintained by any persons not a party to the listing agreement.’”

Will NAR continue to support cooperative compensation in the face of the verdict?

“Cooperative compensation benefits consumers and creates efficiency in the real estate market, it was a part of real estate before NAR had rules, it is a part of real estate in cities that do not follow NAR’s rules, and it is authorized by state real estate laws (including Missouri) and federal housing policies. Regardless of this verdict, cooperative compensation will be a part of real estate.

“NAR thinks the practice is a good thing that benefits buyers and sellers. Sellers can have their home seen by more buyers, ensure they receive the best offer, and ultimately sell it for more. Buyers benefit from professional representation in what for many will be the most significant, complex purchase of their lives.

“Critically, this compensation model promotes access to homeownership. For lower- and middle-income buyers in particular, saving for a down payment can be difficult enough. Adding broker compensation on top of closing costs would push the dream of homeownership even further out of reach. The same would be true for veteran home buyers because VA loans prohibit them from paying buyer broker fees.”

What does the Burnett verdict mean for NAR members and their businesses?

“The verdict doesn’t change how agents who are REALTORS® conduct business. Compensation is negotiable between agents and their clients. . . . Consumers have choices, and NAR encourages members to continue communicating with their clients about their choices, explaining that compensation is negotiable and using listing and buyer agreements to help clients understand what services and value will be provided and for how much.”

You’ll find more information about this and related issues at the following links:

Fostering Consumer-Friendly Real Estate Marketplaces

Burnett trial updates

Frequently Asked Questions on the Burnett case

NAR 2024 President Tracy Kasper USA Today editorial (12/17/23)

President Kasper on CNBC’s The Exchange (12/14/23)

About EMTAR: Chartered in 1969, our Association’s 1,300+ REALTORS® are a proud part of the 36,000+ members of Tennessee REALTORS® and of the 1.5 million+ members of NAR, all working to serve the public and protect the rights of America’s property owners. EMTAR members are known not only for their unmatched real estate excellence and high ethical standards, but also for being generous, hospitable, others-focused, loyal, hardworking, and eager to help wherever and whenever help is needed.