Sitzer et al v. NAR: A Lawsuit that Could Change the Real Estate Industry Forever

Real Estate in Toronto

January 28, 2023

The real estate industry is on the brink of a seismic shift as a lawsuit against the National Association of Realtors (NAR) threatens to reshape the entire industry and could lead to a significant drop in the number of real estate agents in the US. The Sitzer et al v. NAR lawsuit, which alleges that several of NAR’s rules violate the Sherman Antitrust Act, has the potential to change the commission structure of the industry, eliminate the role of buyers’ agents and leave consumers without access to important information. The outcome of this lawsuit could have far-reaching consequences for the industry, making it essential for consumers to stay informed about the developments in the case.

The real estate industry is currently facing a lawsuit that could change the way it operates forever. In 2019, a group of plaintiffs filed a lawsuit against the National Association of Realtors (NAR) alleging that several of its rules violate the Sherman Antitrust Act, a federal law that prohibits activities that restrict interstate commerce and competition. The lawsuit, known as Sitzer et al v. NAR, has the potential to reshape the entire industry and could lead to a significant drop in the number of real estate agents in the US.

The commission structure in the real estate industry is an important aspect of how agents are compensated. Typically, a commission is split between the listing agent and the buyer’s agent, with the listing agent representing the seller and the buyer’s agent representing the buyer.

However, if NAR loses the lawsuit, buyers’ agents could be removed from the equation, leading to a significant drop in the number of real estate agents in the US and major brokerages going out of business.

One of the key issues in the lawsuit is the NAR’s policy of exclusive right to represent, which requires agents to represent either the buyer or the seller in a transaction, but not both. This policy is believed to limit competition among agents and restrict consumer choice. The plaintiffs argue that this policy is a violation of the Sherman Antitrust Act and should be eliminated.

The outcome of the lawsuit could also lead to a change in the commission structure of the industry. The traditional model, where the commission is split between the listing agent and the buyer’s agent, could be replaced with a model where the listing agent represents both the buyer and the seller, similar to the model used in Australia.

This could result in lower total commissions for real estate transactions, which could have a negative impact on the income of agents and brokerages.

Some experts believe that this change could be unhealthy for the consumer as well. The buyer’s agent is typically responsible for providing the buyer with important information about the property and the transaction, such as the property’s condition, the terms of the sale, and the closing costs. Without a buyer’s agent, the buyer may not have access to this important information, which could lead to a less informed decision.

In a nutshell, the Sitzer et al v. NAR lawsuit is a game-changing event in the real estate industry that has the potential to completely transform the way the industry operates. The outcome of this lawsuit could lead to a reduction in the number of real estate agents, a change in the commission structure, and a shift in the responsibilities of agents and brokerages. This has the potential to impact not only the industry but also the consumers who rely on the services of real estate agents.

It is important for all stakeholders to stay informed about the developments in the case, as it has the potential to shape the future of the real estate industry.

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Real Estate in Toronto – REIT

Sitzer et al v. NAR: A Lawsuit that Could Change the Real Estate Industry Forever

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