In the Eye of the Storm: Examining the NAR Lawsuit’s Impact on the Commercial Real Estate Brokerage Business

By: Lee Rosner, CCIM SIOR

The $1.8 billion lawsuit verdict against the National Association of Realtors (NAR) has significant implications for the commercial real estate brokerage business and the industry as a whole. This landmark ruling, stemming from accusations of anticompetitive practices in commission structures, could lead to transformative changes in how real estate transactions are conducted. The verdict challenges the traditional commission structure where home sellers pay the commissions for both the seller’s and buyer’s agents, which could lead to a more transparent, competitive, and possibly more consumer-friendly market. This change might necessitate adjustments in how commissions are negotiated and could impact buyer behavior, especially for those with less liquidity who might need to pay broker commissions out of pocket. The decision has already sparked a surge in similar lawsuits and class actions across the United States, indicating a broader dissatisfaction and demand for reform within the industry [citation:1,The Impact Of The $1.8 Billion NAR Lawsuit Verdict Against Realtors] (https://pointacquisitions.com/commercial-real-estate/insights/nar-lawsuit/).

For commercial real estate (CRE), the repercussions could be profound. The practice of sellers and landlords covering brokers’ fees is now at risk, potentially leading to stricter regulations, increased transparency, and stronger client protections. This shift could foster a more ethical environment but also requires CRE professionals to adapt to new practices and expectations [citation:2,NAR Lawsuit Could Impact CRE Commissions | GlobeSt] (https://www.globest.com/2023/11/14/nar-lawsuit-could-impact-cre-commissions/). Furthermore, the lawsuit highlights the importance of reputation management and innovation in marketing listings effectively. As the industry faces these changes, leveraging digital platforms and online marketing can provide agents with a broader reach and the ability to command higher commissions, despite the potential challenges of navigating new commission structures and ethical considerations around practices such as double-ending deals [citation:3, What does the NAR Class Action Lawsuit mean for Real Estate? – The Paperless Agent] (https://thepaperlessagent.com/blog/what-does-the-nar-class-action-lawsuit-mean-for-real-estate/).

In summary, the NAR lawsuit serves as a wake-up call for the real estate industry, signaling a move towards greater transparency and fairness in commission practices. This pivotal moment requires all involved—agents, brokers, buyers, and sellers—to adapt to a rapidly evolving landscape, with an emphasis on informed decision-making and maintaining integrity in all transactions.

Lee Rosner

A veteran of the commercial real estate industry, Lee’s career spans more than 35 years gaining him hands on experience in nearly every facet of the business including sales, leasing, investment strategies, property management and ownership. In 1997, Lee launched a commercial real estate brokerage firm that is now NAI Long Island, building on his exceptional depth of industry knowledge and pairing it with his natural leadership style to set a path of growth for the company. He currently is the Managing Principal of NAI Long Island. He is actively involved, daily, with business development, coaching, transaction management, recruiting, operations and long-term visioning for the firm. Under Lee’s leadership and management, NAI Long Island has grown into one of the leading Long Island -based full service commercial real estate firms completing over $1B in transaction values and thousands of transactions over the years. The firm manages more than 1.5M square feet of commercial real estate. Lee completed two terms as a Trustee of the Incorporated Village of Port Jefferson and is the former Chairman of the Zoning Board of Appeals. From 2010 to 2016 he was an Adjunct Professor at Stony Brook University’s College of Business teaching an MBA level course (traditional and online) in commercial real estate fundamentals, user decision-making and investment analysis through a case study approach to learning.