A federal court ruling paved the way for homesellers to seek reimbursement on commissions paid to buyer agents, threatening to rock the residential real estate industry.
Judge Stephen Bough ruled on Friday that one of two federal commission lawsuits could receive class-action certification, Inman reported. The lawsuit started three years ago, when two homeseller plaintiffs Joshua Sitzer and Amy Winger filed a lawsuit against the National Association of Realtors, Realogy and others, claiming the sharing of commissions between listing and buyer brokers violated the Sherman Antitrust Act.
The lawsuit hoped to have homebuyers pay their brokers directly instead of having listing brokers pay buyer brokers from what the seller pays listing brokers. The lawsuit alleges the model inflates the costs to sellers.
The judge ruled that class-action certification is the “superior method for fairly and efficiently adjudicating the controversy.” With the decision, the Sitzer/Winger lawsuit can now represent any seller who paid a broker commission for a residential real estate deal across four Missouri MLSs, going back to April 2014.
The legal fallout could be massive. Hundreds of thousands of homesellers can now seek reimbursement on commissions paid to buyer agents in the last eight years, totaling more than $1 billion.
NAR and Realogy both said that they plan to appeal the decision. Keller Williams also said it was aware of the ruling without declaring whether or not it would appeal, but did note the court decision didn’t make mention of the merits of the plaintiffs’ case.
An even bigger federal case along the same lines is unfolding in Illinois. Should NAR and Realogy lose their appeals, it could set a precedent for other homesellers to challenge the broker commissions model across the country.
[Inman] — Holden Walter-Warner