The Truth About Real Estate Commissions After the Sitzer Lawsuit

The real estate world has been buzzing for the last 12 months. You remember all the headlines about “massive commission lawsuits” and “the end of real estate as we know it.” Now that the dust has settled, it’s clear much of the panic was overblown. Here’s what the 2024 Sitzer/Burnett lawsuit and subsequent NAR settlement really mean for California buyers and sellers, especially here on the Monterey Peninsula.

What Actually Happened

It all started with a case called Sitzer/Burnett, a class-action lawsuit that made national news after a jury in Missouri ruled that several major brokerages and the National Association of REALTORS® (NAR) had conspired to keep real estate commissions artificially high.

The plaintiffs in the case were home sellers who argued they were unfairly required to pay the commission of the buyer’s agent, something they claimed limited competition and drove up costs. The verdict sent shockwaves through the industry and ultimately led to NAR’s 2024 settlement, which introduced a series of rule changes to take effect nationwide.

For many, those headlines sounded like the rules of real estate had been flipped on their head. But here’s the truth: California was already far ahead of most other states in transparency, disclosure, and consumer protection. The sky isn’t falling. The basics haven’t changed. And understanding the real implications can help both buyers and sellers make smarter, calmer decisions.

Myth vs. Fact: Setting the Record Straight

Myth #1: “Sellers are no longer allowed to pay a buyer’s agent.”
Fact: Sellers can still offer a commission to a buyer’s agent, and, in many cases, it remains in their best interest to do so.

The key change is how those offers are communicated. Before the settlement, listing agents could publicly advertise a buyer’s agent commission through the MLS (Multiple Listing Service). Going forward, those offers can’t be displayed there, but they can still be made privately, in writing, between agents.

In other words, the cooperation hasn’t ended. It’s just less visible.

For sellers, this matters. Imagine you’re listing your home. You have two identical offers on the table: one from a buyer with an agent whose commission is covered, and another from a buyer who must pay their agent out of pocket. Which buyer is more likely to have cash reserves to cover closing costs, inspections, and repairs? The first one.

In California, where affordability already stretches most buyers to their limit, offering a buyer’s agent commission often means keeping the largest possible pool of qualified buyers interested in your home.

Myth #2: “Buyer’s agents are going away.”
Fact: Not even close. But the way buyers hire their agents is evolving.

Under the new rules, buyers and their agents must have a written agreement before viewing a property, something that’s long been standard practice for many (albeit not all) agents in California anyway. This agreement outlines exactly how the agent will be compensated, and by whom.

For most California buyers, much of the buying process will feel like business as usual. The state’s contracts have always been among the most detailed and consumer-protective in the nation. And unlike in many other states, California law already required agents to disclose their compensation, their agency relationships, and their fiduciary duties in writing.

So while these new national rules might seem like a dramatic shift elsewhere, for Monterey County buyers, it’s more of a formalization of what good agents were already doing.

Myth #3: “Commissions were fixed or mandated before.”
Fact: They never were. Not in California, and not anywhere else.

Commissions have always been negotiable. The Sitzer lawsuit didn’t change that; it simply highlighted confusion among consumers about how commissions were presented.

Here’s how it works:
The seller and their listing agent agree on a total commission rate. Traditionally, part of that commission was offered to the buyer’s agent as an incentive for bringing a ready, willing, and able buyer. That structure helped ensure cooperation between agents and, by extension, smoother transactions for clients on both sides.

Now, those same conversations are simply more explicit. Instead of assuming the buyer’s agent will be compensated via the MLS listing, everyone discusses it upfront. And that’s a good thing. Clarity benefits everyone.

Myth #4: “If I go directly to the listing agent, I’ll save money.”
Fact: Not necessarily, and you may lose valuable representation in the process.

In California, real estate transactions are complex. The contracts are lengthy, the disclosures are extensive, and the legal obligations for both parties are significant. An experienced buyer’s agent serves as an advocate — someone who protects your interests, negotiates on your behalf, and helps you navigate the process from inspection to closing.

When you go directly to the listing agent, that agent’s fiduciary duty is to the seller. They’re obligated to get the best possible price and terms for their client, not for you. While some agents can act as dual representatives (with written consent), it’s a tricky balance and not ideal for every situation.

Having your own agent doesn’t just make the process easier, it can also save you from costly mistakes.

Why California Was Ahead of the Curve

One reason the Sitzer case felt so explosive in other parts of the country is because those states didn’t have California’s level of structure or disclosure.

In many areas, commission arrangements were loosely defined, and written buyer’s agency agreements weren’t the norm. Here in California, though, we’ve had decades of layered consumer protections. Our Residential Purchase Agreement (RPA) is one of the longest and most detailed in the nation — a reflection of the complexity of real estate here, but also of our state’s commitment to transparency.

California agents are trained from day one to disclose, explain, and document. So while national news headlines might suggest chaos, in our state, it’s more of a fine-tuning than a revolution.

What It All Means for You

For sellers, this is the time to be strategic, not reactionary. Offering compensation to buyer’s agents still makes practical sense if your goal is to attract the widest pool of qualified buyers. It’s a marketing choice, not a mandate. And just like setting your list price, it’s part of your overall strategy for positioning your home in the market.

For buyers, this is an opportunity to clarify expectations and establish a professional relationship with your agent early in the process. Having an upfront agreement doesn’t limit you. On the contrary, it empowers you. You’ll know exactly what your agent provides, how they’re compensated, and how their fiduciary duty protects your interests.

And for everyone, it’s a reminder that real estate is not one-size-fits-all. The headlines may be national, but the way these rules play out depends entirely on your local market, your property, and the expertise of the people guiding you.

The Bottom Line

The Sitzer/Burnett lawsuit has undeniably changed the way real estate is discussed in the U.S. But in California — and especially here on the Monterey Peninsula — the fundamentals remain the same.

Transparency, disclosure, and fiduciary duty have always been cornerstones of how good agents operate. What’s shifting now is simply how those principles are communicated.

At The Ruiz Group, we believe that clarity builds confidence. Whether you’re buying your first home or selling one you’ve loved for decades, we’re here to help you understand your options and make informed decisions. Never out of fear, but from a place of full empowerment.