Real Estate Commission Lawsuit: 2025 Industry Impact Guide

The $1.78 billion verdict against the National Association of Realtors (NAR) in October 2023 sent shockwaves through the real estate industry.

It challenged decades-old commission practices that have defined how homes are bought and sold in the U.S.

For generations, real estate commissions have followed a predictable pattern: sellers pay a percentage of their home’s sale price to be split between agents representing both sides of the transaction.

Now, this long-standing system is brought under legal and regulatory scrutiny.

For homeowners, homebuyers, and real estate professionals alike, it’s important to understand how courtroom decisions will affect the real estate market. We’ll tell you the story below.

Traditional Commission Structure

Real estate commissions have historically operated through a standardized system where sellers compensate both their own agent and the buyer’s agent.

When a home sells, the total commission, which typically ranges from 5% to 6% of the sale price, is first paid to the listing broker.

This commission is then split between the listing and buying real estate brokerage, who share it with their respective agents according to predetermined agreements.

Consider a $400,000 home sale with a 6% commission. The $24,000 might be split equally ($12,000 each) between the brokerages, who give their respective agents 60% to 90% of that amount, depending on their terms.

The Multiple Listing Services Role

This commission structure was largely facilitated by Multiple Listing Service (MLS) systems.

These are a network of regional databases that serve as the primary marketplace for residential real estate. An MLS system does two things:

• It allows listing agents to publish detailed property information and specify the commission split they’re offering to buyer’s agents. This “cooperative compensation” is typically posted directly in the MLS listing, and every member agent can see it.
• As a consequence, it effectively standardizes commission rates within local markets. Because buyers’ agents can easily compare commission offerings across properties, sellers feel pressure to offer competitive rates to attract agents to their properties.

At a glance, this standardized, transparent, efficient system looks like it benefitted everyone; it encouraged cooperation and streamlined the process of negotiation and commission division.

Legal Challenges

Early Concerns and Criticisms

However, this system was criticized by many. Though the cooperativeness and straightforwardness of the traditional model helped it become embedded in the real estate industry, people began questioning its fairness.

Before the landmark Burnett case, critics had long argued that it created market inefficiencies and limited price competition. It was harmful in many ways, too. For example:

• For the most part, MLS listings could only be accessed by licensed real estate agents. As a consumer, you had to work through agents; otherwise, you’d miss out on many properties and end up with a smaller pool to choose from.
• Agents primarily use the MLS to identify properties with higher commission offers. Sellers, in turn, have to pay more in commissions to attract agents. To make up for their losses, these commissions pass on to buyers in the form of higher home prices.
• Most MLS standardized commissions. It reduced competition among agents and discouraged price negotiation. Annually, Americans pay $100 billion in commission rates.
• Smaller real estate agencies struggled to compete with established firms that dominated MLS access.

The Burnett et al. v. NAR Landmark Case

These concerns came to a head with a groundbreaking legal challenge in October 2023: Burnett et al. v. National Association of Realtors (NAR).

The plaintiffs accused NAR of engaging in anticompetitive practices that artificially maintained high commission rates, limited price competition, tied sellers into the MLS system, and created a system where buyer agent commissions were effectively hidden from homebuyers.

Frustratingly, sellers noted that they were often required to offer non-negotiable commissions to selling agents.

The district court ruled against NAR, and the Missouri federal jury’s verdict delivered two outcomes:

• A clear legal precedent established that traditional commission practices violated antitrust laws.
• A $1.78 billion judgment against NAR and major brokerages dealt a serious financial blow to NAR and signaled a reexamination of how commissions are structured.

NAR’s March 2024 Settlement

Most importantly, the Burnett et al. case spurred further examinations and lawsuits targeting similar systems.

The $1.78 billion verdict against NAR was just the beginning. In November 2024, a hearing was held to discuss final approval of the settlement.

On March 15, 2024, NAR agreed to pay $418 million in damages and adopt sweeping changes to its policies regarding real estate commissions.

It addressed some of the key areas critics attacked, including:

• The prohibition of mandatory commission offers on MLS. Sellers were no longer required to offer a preset commission to buyer agents as part of MLS listings, thus rendering negotiations more flexible.
• The requirement for written agreements. Buyers had to sign written agreements specifying how their agents would be compensated to increase clarity and ensure the buyers were directly involved in discussions about agent fees.
• The transparent disclosure of compensation. Agents had to clearly disclose how commissions were divided so that buyers and sellers could get a more complete understanding of costs. Practices that tied MLS access to specific commission arrangements were forbidden.

The case—and its subsequent settlement—set a precedent, and other lawsuits and regulatory actions soon followed, targeting other layers and practices within the industry. Among them was a lawsuit targeting eXp World Holdings.

eXp World Holdings Settlement

In December 2024, eXp World Holdings agreed to a $34 million settlement in response to an antitrust lawsuit alleging that the company’s commission practices contributed to anti-competitive behavior.

Similar to the claims faced by NAR, eXp was accused of requiring sellers to pay commissions to buyer agents in order to list their properties.

Homeowners accused this practice of artificially inflating commission rates and stifling market competition.

However, the settlement received harsh criticism for its small amount and lack of industry impact.

Some observers noted that the settlement amount was relatively small and feared that it could set a precedent for lower amounts in future cases and discourage others from taking legal action against similar practices.

The Federal Trade Commission

Like falling dominoes, these concerns amplified the urgency of regulatory oversight. Around the same time, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) intensified their scrutiny of real estate commission practices.

What the FTC sought to do is:

• Investigate potentially deceptive fee practices in property management.
• Examine transparency issues in real estate transactions.
• Pursue enforcement actions against companies engaged in anticompetitive behavior.

The Greystar Lawsuit

Notably, in January 2025, the FTC and the state of Colorado filed a lawsuit against Greystar, a major property management company.

They accused it of misleading renters with hidden fees; Greystar defended its position, criticizing the FTC for pursuing litigation instead of collaboration and stressing its efforts to improve fee disclosures.

The Department of Justice

Meanwhile, the DOJ resumed its investigation into NAR’s policies and began taking steps toward protecting consumers in housing-related industries.

Its eyes are still on the NAR. Building on the momentum of earlier lawsuits and settlements, their investigation seeks to determine if its remaining policies spread anti-competitive behavior.

Any findings of wrongdoings could lead to additional lawsuits, policy overhauls, or federal mandates to regulate commission practices.

Billions of dollars are at stake, and the entire real estate community is watching these developments.

Some fear new developments will disrupt long-standing agent-client relationships, whereas others believe that a correction to this outdated system is long overdue.

The Lawsuits’ Impact on the Real Estate Market

The combined effect of these legal challenges has fundamentally altered the structure of real estate commissions.

Here’s what you need to know, depending on where you stand:

Impact on Sellers

The immediate benefit for home sellers is greater flexibility in negotiating commission rates and freedom from mandatory buyer agent commission offerings on MLS.

You’re no longer required to offer a set percentage to buyer agents simply to list your property on MLS platforms, and you can determine commission structures that align with your financial goals and reduce your overall selling costs.

What Is the Catch?

If these developments continue as anticipated, you’ll have to consider carefully evaluating the value provided by agents and negotiating terms that benefit you. You should also enjoy the extra control you now have over marketing and listing strategies.

In addition, if you sold your home on the Peninsula between October 31, 2019, and February 1, 2024, and used the MLS, you could be eligible for a portion of $700 million in settlement fees stemming from class-action lawsuits against, among others, the NAR, Anywhere, RE/MAX, and Keller Williams over inflated commission fees.

Settlement notices have been mailed and posted online in recent months. To receive a payment, class members must submit a valid claim form by May 9, 2025.

Impact on Buyers

If you’re looking to buy a property—good news. The changes promise increased transparency regarding agent compensation.

You’re now expected to sign agreements outlining your agent’s fees, which means you have both the opportunity to negotiate with them directly and a clearer understanding of what you’re paying for and how it affects your overall purchase costs.

What Is the Catch?

This extra flexibility could lead to a decline in commission rates over time and increase a positive type of competition among agents—competitive rates and superior customer service.

In the future, buyers might even see different pricing models for buyer representation, such as flat fees or pay-as-you-go.

And, if sellers pass along savings from lower commission obligations, buyers might see a reduction in transaction costs.

Impact on Agents

There’s much to bear in mind if you’re one of the ~2 million agents in the U.S. or plan to become one.

Business Model Adjustments

Now, you have to clearly demonstrate the value proposition to clients and shift from standardized to negotiable commission structures and new pricing models.

To concretize your position in the industry, you’ll need to be that competitive-cost-high-value agent everyone vouches for.

Pay attention to future developments and be ready to adapt—the market is looking more competitive than ever.

Professional Requirements

Beyond focusing on service quality and client satisfaction over commission amounts, you must ensure transparency in your practices and develop strong negotiation skills.

Now, many sellers and buyers will approach you with the intention of getting the best deals for themselves—be ready to stand your ground while remaining competitive with other professionals.

There might be further policy changes and new regulations, depending on the DOJ and FTC’s actions in the upcoming months (or years).

Stay up-to-date with them, remain compliant, follow ethical business practices, and document every agreement you make to protect yourself.

Make Your Next Real Estate Move with PhysiciansThrive!

The real estate industry is undergoing a monumental transformation that both buyers and sellers stand to benefit from.

As a physician, your real estate investments are significant, and understanding these commission structures and how they can impact your bottom line is the first step toward protecting your wealth and well-being.

Ready to make your next real estate move? The real estate experts at Physicians Thrive can guide you through these changes and secure the best possible terms for your transaction. Contact us today to get started!