A series of significant antitrust lawsuits and a landmark settlement are poised to reshape the U.S. real estate market by altering how real estate agents are compensated. These legal challenges, brought by private plaintiffs and federal agencies, target long-standing practices by the National Association of Realtors (NAR) that critics argue have kept agent commissions artificially high for decades.
The most impactful development is a settlement that changes rules governing the Multiple Listing Service (MLS), the primary database for property listings. This could introduce greater transparency and competition, potentially lowering the typical 5% to 6% commission rates that have long been standard in the United States.
Key Takeaways
- A major 2024 settlement forces the National Association of Realtors (NAR) to change its rules, notably by prohibiting the advertisement of buyer-agent commissions on the Multiple Listing Service (MLS).
- U.S. real estate commissions, averaging 5-6%, are significantly higher than those in most other developed countries, where rates are often between 1-3%.
- The Department of Justice (DOJ) and the Federal Trade Commission (FTC) are actively investigating and suing over practices they claim reduce competition in the industry.
- The changes aim to allow buyers to negotiate commissions directly with their agents, a shift from the traditional model where sellers effectively set the buyer's agent fee.
The Core Issue: High Commission Rates
For many years, the standard commission for a home sale in the United States has hovered between 5% and 6% of the sale price. This fee is typically paid by the seller and then split between the seller's agent and the buyer's agent.
This rate is an outlier on the global stage. According to a 2025 report from the U.S. Chamber of Commerce, commission rates in most other developed nations are considerably lower. For instance, rates in the United Kingdom average 1.3%, while in Germany they range from 3% to 6% but are often split between buyer and seller.
A Global Comparison
While U.S. commissions average 5-6%, rates elsewhere are often much lower. A study by the Brookings Institution noted that technological advances that have lowered costs in other industries have not had the same effect on real estate commissions in the U.S.
Critics argue these persistently high fees are a symptom of weak competition. A study cited by Brookings found that discount brokers in the U.S. often struggle to gain traction, partly due to a lack of cooperation from traditional agents operating under the established commission structure.
The Role of the NAR and the MLS
At the center of the debate is the National Association of Realtors, the largest trade association in the country, with over 1.5 million members. The NAR sets the rules for most of the 500-plus local Multiple Listing Services across the nation.
The MLS is an essential tool for real estate professionals. It is a comprehensive database of homes for sale in a particular area, allowing agents to share listing information efficiently. Access to the MLS is critical for an agent's ability to compete effectively.
What is the Multiple Listing Service?
The MLS is a private database created and maintained by local real estate brokers. It allows brokers to see one another's listings of properties for sale. The key benefit is that it encourages cooperation among brokers, but critics argue that the rules governing it, set by the NAR, have stifled price competition.
One of the most contested NAR rules required listing brokers to make a blanket offer of compensation to any buyer's agent who brought a purchaser for the home. This offer was published on the MLS, making it a standard part of the transaction rather than a point of negotiation.
Landmark Legal Battles Unfolding
Recent years have seen a surge in litigation aimed at dismantling this structure. These lawsuits argue that the NAR's rules constitute an illegal conspiracy to inflate commission rates, violating federal antitrust laws.
Burnett v. NAR: The Game-Changing Settlement
The most significant case is Burnett v. NAR. In 2023, a jury sided with a group of home sellers, finding the NAR and several large brokerage firms liable for conspiring to keep commissions high. The verdict resulted in a massive financial judgment.
To resolve this and other similar lawsuits, the NAR agreed to a landmark settlement in 2024. The organization will pay $418 million in damages and, more importantly, will implement sweeping rule changes. Key terms of the settlement include:
- Prohibiting the publication of buyer-agent compensation offers on the MLS.
- Requiring agents working with buyers to enter into written agreements that specify their compensation.
- Forbidding agents from accepting more compensation than what is stated in their written agreement with the buyer.
These changes, which are expected to take effect in mid-2025, are designed to increase transparency and encourage buyers to negotiate fees directly with their agents.
REX v. Zillow & NAR: A Challenge from a Discounter
Another notable case involved the discount brokerage REX, which sued Zillow and the NAR in 2021. REX alleged its business was harmed by an NAR rule that allowed Zillow to segregate non-MLS listings from MLS listings on its website.
REX claimed that Zillow's compliance with the NAR's "no-commingling" rule effectively hid its listings, making it difficult to compete. The NAR has since dropped the rule.
However, both the district court and the 9th Circuit Court of Appeals ruled against REX, stating that an anticompetitive conspiracy had not been proven. REX has since petitioned the U.S. Supreme Court to hear the case.
FTC v. Zillow and Redfin: Government Scrutiny
Federal regulators are also taking action. In September 2025, the Federal Trade Commission (FTC) sued Zillow and Redfin, alleging they entered into an unlawful agreement. The FTC claims Zillow paid Redfin $100 million to exit the multifamily rental advertising market.
According to the FTC, this deal eliminated a direct competitor and is likely to lead to higher prices and less innovation in the online rental space. The lawsuit seeks to undo the agreement and restore competition.
What This Means for Home Buyers and Sellers
The full impact of these legal challenges remains to be seen. The changes from the Burnett v. NAR settlement represent the most direct potential for change in the residential sales market.
Experts believe that by removing commission offers from the MLS, the system will shift toward direct negotiation between buyers and their agents. This could lead to a variety of new compensation models, such as flat fees or hourly rates, and may result in an overall reduction in transaction costs.
However, market practices can be slow to change. A culture accustomed to the 5-6% commission standard may not transform overnight. The long-term effects on competition, agent income, and home prices will depend on how consumers and real estate professionals adapt to the new rules.
The ongoing antitrust scrutiny from both private lawsuits and government agencies suggests that the pressure to reform the real estate industry will continue, potentially leading to a more transparent and competitive market for all participants.
