Updated July 2026 | By Eric Engelbert
How the NAR Commission Lawsuits Started
In October 2023, a federal jury in Missouri handed down a verdict that shook the real estate industry. In the Sitzer/Burnett case, the jury found that the National Association of Realtors and several major brokerages had conspired to artificially inflate agent commissions through a rule that required home sellers to offer compensation to a buyer's agent as a condition of listing on any MLS. The jury awarded nearly $1.8 billion in damages, which could have tripled to over $5 billion under antitrust law.
The central issue was the "Participation Rule," which effectively meant that sellers were paying both their own agent and the buyer's agent, with the buyer's agent fee set by the seller but hidden from the buyer. Critics argued this created a system where commissions were shielded from competition and buyers had no visibility into what their agent was earning. A wave of copycat lawsuits followed, including actions in California targeting NAR and local brokerages on similar grounds.
Who Settled and for How Much
Rather than fight the cases through years of additional litigation, NAR and most of the major brokerages chose to settle. The settlements collectively approached and then exceeded $1 billion in total payments to home sellers who had paid commissions under the old system.
NAR agreed to pay $418 million spread over four years, announced in March 2024 and given final court approval later that year. As part of the settlement, NAR also agreed to eliminate the Participation Rule from its MLS guidelines nationwide.
The major brokerages that settled separately include:
- HomeServices of America (Berkshire Hathaway affiliates): $250 million
- Anywhere Real Estate (Coldwell Banker, Century 21, ERA, Sotheby's): $83.5 million
- Keller Williams: $70 million
- RE/MAX: $55 million
- Compass, Douglas Elliman, Realty One Group, At World Properties, The Real Brokerage: each settled for undisclosed amounts
The settlement funds were distributed to home sellers who paid commissions in covered transactions during the class period. Eligible sellers were notified and could file claims through the settlement administrators.
What the Settlement Actually Changed: The New Rules
The changes that came with the NAR settlement went into effect on August 17, 2024, and they restructured how buyer agent compensation works across every MLS in the country.
MLS commission offers are gone. Sellers can no longer post a buyer agent compensation offer on any MLS listing. Previously, the listing itself would show what the seller was offering to pay the buyer's agent. That is now prohibited. Sellers can still offer to pay the buyer's agent as a concession at closing, but it cannot be advertised through the MLS.
Buyers must sign a written agreement before touring homes. Any agent working with a buyer must have a signed buyer representation agreement in place before showing a property. That agreement must clearly state how the agent will be compensated, either by the buyer directly, as a seller concession, or some combination. Buyers can no longer be shown homes by an agent without first knowing and agreeing to how that agent gets paid.
Buyer agent fees must be negotiated upfront. The compensation agreed to in the buyer representation agreement defines what the buyer's agent can receive. If the seller agrees to pay a concession that covers the fee, great. If not, the buyer is responsible for the difference or the parties renegotiate.
What Changed Specifically in California
California made its own legislative and contractual changes on top of the national settlement rules.
AB 2992, which took effect January 1, 2025, codified the buyer representation requirement into California law. Under AB 2992, a buyer-broker agreement must be executed no later than the time a buyer signs an offer to purchase. The law also limits the initial term of buyer representation agreements to 90 days and restricts automatic renewals, giving buyers a clear exit if the relationship is not working.
The California Association of Realtors released a revised Buyer Representation and Broker Compensation Agreement, known as the BRBC, in July 2024 ahead of the August 17 effective date. The form explicitly sets out the agent's compensation, the term of the agreement, and the conditions under which a seller concession can satisfy the buyer's obligation. CAR also updated related forms including buyer disclosure documents and modified the Residential Purchase Agreement to clarify how percentage-based commissions are calculated on the final purchase price.
California was already a state where commissions were treated as negotiable and disclosed in contracts, so the transition was less disruptive here than in states where the old MLS commission model was more deeply embedded. That said, the new forms and the AB 2992 requirements added new administrative steps to every buyer transaction and required agents and brokers to have more direct compensation conversations with clients earlier in the relationship.
Did Consumers Actually Benefit?
This is the honest question, and the data one year out is more complicated than the reformers expected.
Commission rates did not fall. By early 2025, the average total commission nationally had actually edged upward to approximately 5.44%, compared to 5.32% in the year before the settlement. Buyer agent commissions specifically averaged around 2.43% in 2025. The predicted compression in rates did not materialize in any significant way.
The reason is market dynamics. In most transactions, sellers continued offering to pay buyer agent fees as a concession because doing otherwise reduced the pool of buyers who could or would make an offer. Buyers who had to pay their own agent out of pocket on top of a down payment and closing costs were in a more difficult affordability position, which tended to suppress offer activity. Sellers and their agents figured this out quickly and continued offering concessions that effectively replicated the old model.
What did change meaningfully is transparency and accountability at the buyer level. Buyers now know before they tour any home exactly how their agent is being compensated and how much. They sign an agreement that spells this out. This is a genuine improvement over a system where many buyers never knew their agent was receiving a commission from the seller, or how large it was, until well into escrow. Whether it led to lower costs in practice is a different question, but the structural transparency is real.
New agent compensation models, including flat fees and hourly arrangements, have become more visible in the market since the settlement. Whether these alternatives gain meaningful traction in a market like Orange County, where full-service representation is the strong norm, remains to be seen.
What This Means for Orange County Buyers and Sellers Today
For sellers in Orange County, the practical advice has not changed much. Offering a buyer agent concession at competitive market rates remains the standard approach to attracting the broadest pool of qualified buyers. Sellers who refuse to offer any concession are narrowing their buyer pool, and in a market where affordability is already stretched, that is a meaningful risk. The concession is no longer advertised on the MLS, but it is negotiated in the offer process.
For buyers, the most important change is the upfront conversation about representation. Before you tour any home with an agent, you will sign a buyer representation agreement. Read it. Understand what your agent is being paid and under what circumstances you might owe them directly if a seller does not offer a concession that covers the fee. In most Orange County transactions, the seller concession has been covering buyer agent fees, but this is not guaranteed and it needs to be negotiated on each deal.
At Orange County Real Estate, Inc., we have updated all of our processes and forms to reflect both the national settlement rules and California's AB 2992 requirements. We walk every buyer through the compensation conversation clearly before any home tour, and we make sure sellers understand the concession decision and its market implications before listing.
Questions About How This Affects Your Transaction?
The rule changes from the NAR settlement are now part of every California transaction. Whether you are buying or selling, understanding how agent compensation works today helps you negotiate more effectively and avoid surprises in escrow. We are happy to walk you through exactly how it works in the current market.
