Resi brokerages, NAR embroiled in litigation and scandal

Two big residential brokerages spent their week in court, one settling two class action lawsuits for eight figures and the other being sued for alleged discrimination.

RE/MAX agreed to pay $55 million to settle two class-action lawsuits claims filed in Kansas City and Chicago over agent commission payments, according to a document filed with the Securities and Exchange Commission.

The settlements would remove RE/MAX from the landmark lawsuits without holding the company responsible for claims outlined in them. A judge still needs to approve the agreements. Continued large settlements for the plaintiffs will likely change the way real estate agents are paid, potentially reshaping the entire industry,Jasen Edwards, chair of real estate agent consulting firm AgentAdvice.com’s Agent Editorial Board, told The Business Journals over the summer. 

The lawsuits, known as Sitzer/Burnett and Christopher Moehrl, allege the brokerages violated federal antitrust law by colluding with the National Association of Realtors to inflate commissions paid by home sellers.

Under the terms of the settlement, RE/MAX also agreed to change some business practices, including no longer requiring sellers to pay buyer’s’ agents’ commissions, one of the lead attorneys in the Sitzer/Burnett case told Inman.

A spokesperson for the company denied the allegations in the lawsuits and noted that the agreement was reached “after carefully considering the significant risks and costs associated with continued litigation,” according to an emailed statement.

Other brokerages named as defendants include Keller Williams, Anywhere Real Estate and HomeServices of America, along with the National Association of Realtors.

Anywhere, the parent company of Corcoran, Coldwell Banker, Century21 and Sotheby’s International Realty, agreed this month to pay $83.5 million to settle the lawsuits. The firm also agreed to stop mandating sellers pay commissions for the buyers’ agents.

In addition to the antitrust lawsuits, the NAR is mired in the fallout from allegations of misconduct and sexual harassment by former president Kenny Parcell following an investigation by the New York Times.

The U.S. Court of Appeals also ruled last month to bring back a lawsuit related to pocket listings. The lawsuit claims the trade group and two other associations violated antitrust laws by mandating listing brokers submit a property to their MLS within one day of marketing a home.

Earlier this summer, the Department of Justice took steps to relaunch its probe into NAR. 

The agency filed an appeal brief in June arguing against a January court decision that barred it from reviving its investigation into the trade group’s policies on pocket listings and broker commissions.

As those cases played out, another began. Douglas Elliman and some of the biggest names in New York City residential real estate were sued by a woman claiming the luxury agents violated discrimination statutes in the Fair Housing Act.

The agents, the lawsuit alleges, either failed to respond — or failed to provide adequate help — to Shaniqua Newkirk when she sought Section 8 housing.

The lawsuit says that Newkirk, who is Black, tried to find agents to help her use her voucher to find a home in spring 2021. She was unsuccessful, and in June of that year she found a list of New York City’s most successful agents and brokers, whom she contacted to enlist their help with finding a suitable unit.

But “Newkirk was unable to secure alternative housing prior to the expiration of her voucher,” the complaint says, and she was “forced to remain in a decrepit rodent and vermin-infested apartment.”

Among the brokers the suit says failed to assist Newkirk are Noble Black, Holly Parker, Tamir Shemesh, Frances Katzen, Lauren Muss and Tal and Oren Alexander — all names that have appeared in The Real Deal’s rankings of the city’s residential brokers in recent years. 

Fair housing has been a hot-button issue for years in New York state, which passed legislation in 2020 allowing the government to revoke real estate licenses in cases of discrimination. That followed a Newsday investigation on fair housing violations on Long Island, of which Elliman was a subject. That triggered a state probe into the matter. This year, Gov. Kathy Hochul’s administration expanded an undercover tester program.

Elliman, for its part, disputed the claims. 

“We will be challenging the merits of these predatory and baseless claims,” a spokesperson for the company said in a statement.