All parties have settled the Sitzer/Burnett suit, so what’s next?


When HomeServices of America reached a nationwide settlement agreement last week in the commission lawsuits filed by home sellers, it became the final defendant in the two original commission cases, Sitzer/Burnett and Moehrl, to do so.

Just six months ago, when a Missouri jury found HomeServices of America, Keller Williams and the National Association of Realtors (NAR) liable for colluding to artificially inflate real estate agent commissions, the industry’s path forward was very murky. Not only was there uncertainty surrounding potential appeals, but there were questions as to how the defendants would pay for the potent $5.3 billion in damages, as well as what the judge’s final ruling would look like.

Although the settlement agreements are still awaiting final approval from Judge Stephen R. Bough, who oversaw the Sitzer/Burnett trial (and the HomeServices settlement is still awaiting preliminary approval), they have given the real estate industry a road map for how to begin moving forward. There is a clearer picture of what comes next on the litigation calendar —most notably eliminating the uncertainty of the Moehrl suit trial timeline.

First up on the calendar is May 9, 2024, the date of the final approval hearing for the settlement agreements reached by Anywhere, RE/MAX and Keller Williams. Anywhere and RE/MAX settled in the early fall of 2023 prior to the mid-October start date of the Sitzer/Burnett trial, while Keller Williams did not decide to settle the commission lawsuits until February 2024, months after the trial had concluded.

“Since entering into the settlement in September of 2023, RE/MAX has been committed to obtaining final approval,” a RE/MAX spokesperson wrote in an email. “We are hopeful that final approval is granted, and we can move forward with full focus on supporting our affiliates and continuing to foster greater transparency in the industry. RE/MAX believes that whatever changes come to the industry, the invaluable contributions of real estate agents will endure.”

Representatives for Anywhere and Keller Williams declined to comment on the fast-approaching hearing date.

Missing from next week’s settlement approval hearing are the agreements reached by NAR and HomeServices of America. As these parties only recently filed their settlement agreements, with NAR’s receiving preliminary approval from the court last week, they will not be up for final approval for quite some time.

According to court documents, the final approval hearing for NAR’s settlement is set for Nov. 26, 2024, while a spokesperson for HomeServices of America said the firm “expects a final approval hearing scheduled between late November and December” of this year.

The statement from HomeServices of America comes despite the firm’s settlement agreement having not yet received preliminary approval from the court.

Chris Kelly, an executive vice president at HomeServices of America, wrote in an email that the firm is “confident” its agreement will receive preliminary approval from the court.

“The settlement emerged from extensive, transparent, and honest negotiations, and we firmly believe the court will recognize that it serves the best interests of the class,” Kelly wrote. “Looking ahead, this settlement provides our companies, agents, and franchisees with a greater sense of certainty, enabling us to focus on delivering exceptional service to our clients in a rapidly evolving real estate market.”

NAR has outlined an estimated timeline of key upcoming milestones in the litigation process between now and the end of November. Notable deadlines include June 18, which is the opt-in deadline for Realtor-affiliated MLSs, non-Realtor MLSs and brokerages with more than $2 billion in transaction volume in 2022 to be included as a released party under NAR’s settlement,

In late July, NAR anticipates that the business practice changes outlined in its settlement agreement will be implemented. Realtor-affiliated MLSs, as well as the non-Realtor MLSs and brokerages that opt in, will have until roughly Sept. 16 to implement these changes.

Additionally, NAR’s timeline notes that the plaintiffs may begin issuing class notices, similar to the postcards sent to homeowners in February regarding the RE/MAX, Anywhere and Keller Williams settlements.

Speaking at HousingWire’s The Gathering last week just hours after news broke that the court had granted preliminary approval of the trade group’s settlement agreement, NAR President Kevin Sears said he was “very satisfied” by the news, but his main focus was clearly on the agreement being granted final approval.

“The sooner that we can get this final approval in, the sooner we can let our agents have this in the rearview mirror, and they can continue to work and continue to help consumers navigate what is likely the biggest financial transaction of their lives,” Sears said.

Although it is not a given that Bough will grant final approval to any of the settlement agreements — especially as the Department of Justice may choose to intervene by filing a statement of interest as it did in the Nosalek commission lawsuit — industry veteran Steve Murray, the co-founder of RealTrends Consulting, is fairly optimistic.

“I think he is going to approve it,” Murray said. “He has now granted preliminary approval on four occasions, so I am assuming he will grant final approval. Most of the people in the industry that I am talking to, as well as some antitrust attorneys, also feel that they will be approved.”

Despite Murray’s optimism, there is the chance that Bough may not approve of the settlement agreements, as he could take issue with the agreed-upon monetary amounts or the business practice changes outlined in the agreements. If Bough does not grant final approval of any or all of the settlement agreements, he will tell the parties what his issues are, giving them the chance to go back to the table and renegotiate the agreements.

For many, the DOJ is the main potential wildcard in this situation, but Trip Riley, a partner at Saul Ewing LLP, also said to keep an eye on the objections filed against the settlement agreements. So far, the vast majority of the objections on the court docket have come from private citizens. But last month, homebuilder PulteGroup filed an objection, claiming that it does not have enough information to adequately determine the amount of money it could recover, among other issues.

“First, the settlement agreements exclude key information about the method of allocating funds, details necessary for Pulte to evaluate its expected recovery,” the company’s attorneys wrote in the filing. “Second, the settlement agreements envision claims made through a hand-filled claim form, a needless and time-consuming complication for a homebuilder that will be downloading this information from computer databases.”

“I think what will be interesting is who may object to all or some of the settlements, such as builder associations and/or lenders that have large REO portfolios,“ Riley wrote in an email. “They will have to think long and hard about the relationship tarnishing effect that may have: Large builders like Lennar have had strong relationships with large brokerages.”

Although it is tempting to sit back as the industry waits to see if the settlement agreements will receive final approval from the court, James Dwiggins, CEO and co-founder of NextHome, said that now is the time for the industry to start advocating for itself and for the clients it serves.

“We are really concerned about whether the buyer can afford representation in a world where, if a seller doesn’t want to offer anything, then the buyer is on their own,” Dwiggins said. “The big concern is that there are significant consequences here if the federal government doesn’t create a way for veterans to be able to pay for representation and for consumers to pay for representation.”

Dwiggins noted that unrepresented buyers also pose a major threat to the industry. When they are involved in a transaction, the risk of litigation increases.

“The government is either going to be proactive or there are going to be a lot of people getting screwed, causing a lot of noise, and then Congress will step in and instruct the GSEs to make changes,” Dwiggins said.

Due to this, Dwiggins said now is the time for the industry to shift its focus to being a better advocate for buyers and sellers.

“If we can start to position ourselves in that process, we are strategically setting ourselves up right for the future,” Dwiggins said. “It is not about our own needs. It is about our customers’ needs, and I think the more we focus on the consumer in the way we do everything, I think we will position ourselves very well in the future as people will see that we are advocates for them.”



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