Fifth Circuit Upholds NAR Three-Way Agreement Suit Dismissal

The Fifth Circuit Court of Appeals upheld a 2025 dismissal of a lawsuit that challenged the National Association of Realtors' (NAR) long-standing "three-way agreement." This agreement, which dictated how real estate agents were compensated, had been a central point of contention in antitrust litigation against the NAR. The panel's decision affirmed the lower court's finding that the plaintiffs had not suffered an antitrust injury related to Multiple Listing Service (MLS) access and association membership requirements. The lawsuit, filed by a group of home sellers, alleged that the NAR's rules, particularly those concerning agent commissions, violated antitrust laws by inflating prices and limiting consumer choice. Specifically, the plaintiffs argued that the requirement for listing brokers to offer compensation to buyer brokers, as mandated by the three-way agreement, constituted an illegal restraint of trade. They contended that this practice forced sellers to pay for both their own agent's commission and the buyer's agent's commission, thereby increasing transaction costs. The original dismissal in 2025 by the U.S. District Court for the Eastern District of Missouri found that the plaintiffs failed to demonstrate a direct antitrust injury stemming from the NAR's MLS access and membership rules. The district court reasoned that the sellers could have negotiated commission rates directly with their agents or chosen not to list their properties if they found the terms unacceptable. The Fifth Circuit's affirmation means that the NAR's existing commission structure, as it pertains to the claims in this specific lawsuit, remains in place for now, at least within the jurisdiction of the Fifth Circuit. This ruling comes amidst a broader period of intense scrutiny and legal challenges for the NAR and its commission rules, including a significant settlement reached in March 2024 that is set to fundamentally alter commission practices across the industry starting in July 2024. That settlement, which is still subject to court approval, involves the elimination of the rule requiring listing brokers to offer compensation to buyer brokers. The Fifth Circuit's decision in this case, however, focused on the specific legal arguments presented regarding antitrust injury and did not directly address the broader implications of the industry-wide settlement. The plaintiffs in the Fifth Circuit case had sought damages and injunctive relief, arguing that the NAR's policies created a monopolistic market. The court's decision suggests that, under the specific legal framework applied, the plaintiffs did not meet the burden of proof required to establish an antitrust injury. The NAR has consistently defended its rules as promoting competition and facilitating efficient transactions in the real estate market, arguing that the three-way agreement ensures fair compensation for all parties involved in a sale and provides essential services through MLS access and professional standards. The ongoing legal battles and regulatory changes signal a transformative period for the traditional real estate brokerage model.