Around 2pm ET in a federal courtroom, a jury found the National Association of Realtors, and the largest  national  real-estate  broker  franchisors, including Berkshire Hathaway’s HomeServices, had conspired to artificially inflate the home-sale commissions paid to real estate agents. The jury ordered NAR and others to pay nearly $1.8 billion in damages to a class of more than 250,000 home sellers. Under antitrust law, that figure can be tripled to over $5 billion, at the court’s discretion. 

The case, Burnett v. NAR et al, is the first of two antitrust lawsuits centered on NAR’s commissions policy to go to trial, and it could upend the structure of the entire real-estate industry, which the class of plaintiffs claims amounts to a giant price-fixing conspiracy. The “cornerstone” of this conspiracy, according to the complaint, is the requirement for home sellers to pay commissions to the agent representing the buyer before listing homes on the property database used nationwide, the Multiple Listings Service—which local NAR associations control. 

Since the vast majority of homes are sold on an MLS marketplace, the plaintiffs claim, home sellers are forced to pay a cost that should be paid by the buyer. As the NAR and the major franchisors possess “market power,” the plaintiffs argued, they structure the market in such a way that results in higher fees and less competition.

The jury answered yes to every question it was asked, according to the verdict form, including whether this conspiracy caused sellers to “pay more for real estate brokerage services when selling their homes than they would have paid absent that conspiracy.”

NAR was defiant. In a statement provided to Fortune, the group’s vice president of communications, Mantill Williams, said its rules “prioritize consumers, support market-driven pricing and promote business competition. Williams added that “This matter is not close to being final as we will appeal the jury’s verdict,” and it will ask the judge to reduce the jury’s verdict in the interim.

Williams said NAR stands by “the fact that NAR’s guidance for local MLS broker marketplaces ensures consumers get comprehensive, equitable, transparent and reliable home information and that brokerages of any size, service or pricing model get a fair shot at competing.” It will likely be several years before this case is fully resolved, he added. 

In a statement, HomeServices said that the company will appeal the verdict as well, according to The Washington Post. “Today’s decision means that buyers will face even more obstacles in an already challenging real estate market and sellers will have a harder time realizing the value of their homes,” the company said.

Additionally, Keller Williams spokesman Darryl Frost told The Washington Post that the company is “disappointed that before the jury decided this case, the court did not allow them to hear crucial evidence that cooperative compensation is permitted under Missouri law.”

Michael Ketchmark, the lead attorney for the plaintiffs, struck a vastly different tone. “We spent 4½ years uncovering the evidence of this conspiracy,” he told The Washington Post. “When the jury saw the evidence and heard the testimony … they agreed this is wrong and illegal.”

When the lawsuit was initially filed, it included Anywhere Real Estate (formerly known as Realogy) as a co-conspirator to NAR’s practices, but that company reportedly settled out for $83.5 million. 

A stunned market reacts

The market digested the news by immediately taking major brokerage stocks down 5% or more. Just a few hours after the verdict, the big drops included Zillow plunging by $600 million, eXp World Holdings by $200 million, and Opendoor by $150 million. On the smaller side, Redfin lost $32 million and Compass lost $61 million. This means that the market wiped out over $1 billion from brokerage stocks in a matter of hours as their business model got a stiff challenge from a Kansas City jury.

The verdict of the case surprised some industry experts. For one, Daryl Fairweather, chief economist at Redfin, was impressed that the jury understood the complex antitrust arguments about market power well enough to rule for the class. 

“It was unclear whether a jury would understand the economics of price-fixing well enough to see NAR’s rule of having the seller pay the buyer’s agent as a scheme to prevent competition, but they did,” she posted on X this afternoon. “Bravo to the [prosecutors] for their economics communication skills.” 

Redfin CEO Glenn Kelman says the company welcomes the verdict, as the company tries to be “on the right side of history,” he wrote in an extensive post, “Change Comes to the Real Estate Industry.” Kelman has moved in recent weeks to sever his brokerage’s ties with NAR entirely for various reasons, including bombshell allegations of a culture of sexual harassment, as reported in The New York Times.

“As a company that exists to give real estate consumers a better deal, Redfin is proud of our unwavering consumer advocacy,” he said in a statement. “Redfin has saved our clients more than $1.5 billion in fees.” 

Zillow hasn’t released any similar guidance or reactions to the case.

A major change to commission structure coming?

Nonetheless, the verdict could change the real estate industry’s commission structure as we know it. NAR chief legal officer Katie Johnson addressed the lawsuit in the company’s podcast earlier this month.

“The outcome, no matter which way it goes, could have major consequences for the real estate industry and profession for years to come,“ Johnson said in the podcast. “What’s really at stake here is the way that compensation is made from listing broker to buyer broker.”

Amanda Orson, an entrepreneur, founder and CEO of unlisted real estate marketplace Galleon, which is developing an AI-based transaction platform, says a change to commission structures is “long overdue.” Orson said a “triad of forces” are working against the old commission model: lawsuits, the market itself with frozen inventory and high interest rates, and A.I. acceleration.  

“It [bears] noting that the vast majority of the pending lawsuits are *by brokerages* against the NAR. Not homeowners!” she posted on X. “Change is not only coming, but long overdue.”