The Real Deal New York

A new class action lawsuit could upend the real estate business as we know it

A homeseller is suing NAR, Realogy, HomeServices of America, RE/MAX and Keller Williams for allegedly violating antitrust laws related to broker commissions
March 11, 2019 05:00PM

From left: NAR president John Smaby, Realogy CEO Ryan Schneider, Keller Williams CEO Gary Keller, HomeServices of America CEO Gino Blefari, and Re/Max CEO Adam Contos (Credit: Getty Images, Wikpedia, iStock, and Hitchcock + Associates)

It takes aim at some of the central tenets of the U.S. real estate business: Multiple Listing Services and buyer’s broker’s commissions.

A new class action lawsuit alleges that the National Association of Realtors, along with the “Big Four” — Realogy, HomeServices of America, RE/MAX and Keller Williams — violated federal antitrust law by conspiring to require home sellers to pay buyer’s broker’s commissions at inflated rates. The suit was first reported by Inman.

The complaint, filed March 6, takes aims at NAR rules that require all brokers to offer buyer broker compensation when listing a property on a MLS, saying this has driven up costs to the seller and stifled competition.

“Because most buyer brokers will not show homes to their clients where the seller is offering a lower buyer broker commission, or will show homes with higher commission offers first, sellers are incentivized when making the required blanket, non-negotiable offer to procure the buyer brokers’ cooperation by offering a high commission,” the complaint reads, “Absent this rule, buyer brokers would be paid by their clients and would compete to be retained by offering a lower commission.”

Filed on behalf of Christopher Moehrl, a homeseller from Minnesota, the lawsuit also says it will represent any home sellers who sold property and paid a broker commission in the last four years in specific geographic areas covered by different regional MLSs.

This includes areas in Texas, Maryland, North Carolina, Ohio, Colorado, Michigan, Florida, Nevada, Wisconsin, Minnesota, Pennsylvania, Arizona, Virginia, Utah and the District of Columbia.

If other homesellers joined the class action, the defendants could find themselves potentially liable for millions of dollars.

NAR responded by calling the lawsuit “baseless.”

“The U.S. Courts have routinely found that Multiple Listing Services are pro-competitive and benefit consumers by creating great efficiencies in the homebuying and selling process,” Mantill Williams, a spokesperson for NAR, told Inman. “NAR looks forward to obtaining a similar precedent regarding this filing.”

On its website, NAR argues that MLSs and their accompanying rules encourage both competition and cooperation among brokers to the benefit of the consumer.

“The real estate market is competitive, and the business is unique in that competitors must also cooperate with each other to ensure a successful transaction. MLS systems facilitate that cooperation,” NAR’s website states. “MLSs are a powerful force for competition. They level the playing field so that the smallest brokerage in town can compete with the biggest multi-state firm.”

[Inman] – Decca Muldowney