Class action cases over broker commissions pick up steam

An amended complaint ties "unlawful conduct" with an inquiry into MLS vendor CoreLogic

National /
Jun.June 18, 2019 03:14 PM
From left: HomeServices of America CEO Gino Blefari, Keller Williams CEO Gary Keller, Realogy CEO Ryan Schneider, NAR president John Smaby and Re/Max CEO Adam Contos

From left: HomeServices of America CEO Gino Blefari, Keller Williams CEO Gary Keller, Realogy CEO Ryan Schneider, NAR president John Smaby and Re/Max CEO Adam Contos

Two class action antitrust lawsuits that threaten central tenets of the U.S. real estate business have now joined forces with their allegations now tied to an ongoing investigation by the U.S. Department of Justice.

An amended class action complaint filed in a federal court in Chicago consolidates cases filed by Minnesota-based home seller Christopher Moehrl and Sawbill Strategic in March and April, respectively, while adding six more plaintiffs from across the country, Inman reported.

As with the original complaints, the amended version targets the National Association of Realtors (NAR) and the “Big Four” brokerages — HomeServices of America, Keller Williams, Realogy and RE/MAX — and focuses on an NAR rule requiring brokers to offer buyer-broker compensation when listing a property on a multiple listing service.

The so-called buyer-broker commission rule “creates tremendous pressure on sellers to offer a high commission that has long been maintained in this industry so that buyer-brokers will not ‘steer’ buyers to properties offering higher buyer-broker commissions,” states the amended complaint, arguing that such an arrangement violates the Sherman Antitrust Act by making home sellers pay inflated commissions on the sale of their homes.

The complaint further notes that “defendants’ unlawful conduct is also the subject of an active investigation by the Antitrust Division of the United States Department of Justice, which is examining practices in the residential real estate brokerage business.”

The Justice Department demanded last month that MLS vendor CoreLogic hand over data relating to buyer-broker commissions, and other vendors have also received similar requests, according to Inman. CoreLogic chief counsel Arnold Pinkston left the Irvine, California-based company a week after the demand was made.

Defendants in the antitrust actions have previously filed motions to dismiss the original Moehrl complaint, and are expected to similarly respond to the amended version. [Inman] — Kevin Sun


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