If you’re following literally any realtor on Instagram, you’ve probably seen them panic-posting about the huge class action lawsuit that’s shaken up the real estate industry. The vibes? Somewhere between “this is the end of the world” and “I have no idea what’s happening, but it's probably not great".
So, what is actually going on? Enter: the Sitzer/Burnett lawsuit—a big, bad antitrust case that basically said, "Hey NAR, you and your brokerage buddies have been inflating buyer agent commissions for years, and that needs to stop now.” And the jury? In short, they agreed.
A whopping $418 million dollar class action settlement was awarded to folks who sold a home after Oct. 31, 2019. Those sellers are eligible for a payment, so long as their home was listed in an MLS AND a commission was paid. Though the settlement amount accounts for nearly 21 million homes sold, “Assuming legal fees consume one-third of the settlement, that leaves just under $300 million for home sellers, or just over $13 apiece,” writes Rob Hahn of Las Vegas, a former industry consultant & real estate blogger. “Homeowners will get a cup of coffee, and lawyers will get millions,” Hahn said. (https://www.ocregister.com/2024/03/25/sold-a-home-recently-heres-what-youll-get-from-the-418-million-realtor-settlement/)
Now, real estate commissions as we knew them have changed… once again.
So, What Exactly has Changed?
Traditionally, when someone sells a house, they not only pay THEIR listing agent, but also offer to cover the buyer’s agent’s commission as an incentive — essentially “sharing” the commission between agents on both sides of the transaction. Realtors call it cooperation. But with this lawsuit, that setup is looking… well, questionable. There’s now a very real possibility that buyers will have to pay their own agents directly—because, ya know, buying a house wasn’t expensive enough already.
On the plus side, this will (hopefully) bring more competition and transparency to commission rates. But the downside? Once the commission rule change was announced, nearly everyone in the industry expressed concern that first-time home buyers — or pretty much anyone who isn’t swimming in cash — might struggle to afford an agent at all. And that’s a pretty big deal.
Buyer Agents: Time to Justify Your Worth
If you’re a buyer’s agent, CONGRATULATIONS! You’re going to become very good at explaining what you do and why you deserve to get paid. Now, formalized buyer agency agreements are not only the norm — they’re required. NJAR has released the brand new, 6-page Exclusive Buyer Agency Agreement, outlining right off the bat not only how the buyer-agent relationship is defined, but also memorializing in writing early on how buyers plan to handle their agent’s compensation. Buyers will need to agree upfront on how much they’re willing to pay their agent—and whether or not they’ll expect the seller to chip in. This could make transactions more transparent, sure, but it could also turn every home purchase into an awkward "Who’s paying for dinner?" moment.
New Ways to Pay?
With buyers potentially footing the bill for their agents, we might see some creative new commission models popping up. Think:
Flat-fee agency services ("I’ll help you buy a house for $X")
Hourly agent consulting (because nothing says ‘exciting’ like paying your realtor an hourly rate!)
A la carte pricing? (“Would you like a side of negotiation tactics with your home tour?”)
What About Mortgage Loans?
Currently, most mortgage lenders won’t let buyers finance their agent’s commission. But if buyers are suddenly expected to pay that fee out of pocket, lenders might need to rethink their rules. We could eventually see new financing options, like rolling agent commission fees right into the mortgage, or (if the real estate gods are feeling generous) some new mortgage assistance programs that seek to offset the steep costs to buyers.
And Sellers? What’s Their Move?
Sellers might gain a little more flexibility when it comes to commissions. They can still offer to cover the buyer’s agent fee, but it won’t be an automatic expectation anymore. This could lead to:
More negotiation (because sellers love nothing more than MORE paperwork)
Lower commission costs (great for sellers, not so great for agents)
A super-competitive listing environment (good luck standing out!)
“If sellers and buyers can negotiate agent compensation outside of the MLS, sellers may be unwilling to cover the buy-side agent’s commission, which has averaged around 2.5% of the purchase price,” writes RISMedia’s Deborah Kearns. (https://www.rismedia.com/2024/07/17/financing-agent-commissions-doesnt-pencil-out-for-buyers-mortgage-experts-say/)
Interestingly enough, since the commission & agency rule change officially went into effect in August 2024, very few sellers (i.e. almost none!) have decided against offering a buyer’s agent a potential commission. Here we are in March 2025, and most sellers have continued to offer the same ol’ commission to buyer agents that they would have offered before the Sitzer/Burnett suit concluded. A majority of sellers understand that they’ll be doing themselves no favors if they don’t incentivize buyers & buyer agents to show the property they have listed for sale. It’s mostly business as usual, at least here in South Jersey.
The Bottom Line
This lawsuit has certainly thrown those in the real estate world for loop, and nobody is quite sure what the final fallout will be. In the short term, you can likely expect a little bit of scrambling. In the long term? More financial transparency, more consumer choice, and a whole lot of realtors figuring out new ways to differentiate themselves from the crowd and stay in business.
Real estate agents, it’s time to sharpen those negotiation skills. Buyers, start budgeting & saving as best (and as early) as you can. Sellers, get ready for a shift in strategy. For everyone else? Maybe just sit back and enjoy the drama.
Comments