The first of two monumental class-action lawsuits over broker commissions has made many headlines, but the home sellers behind it were largely unkown before their chance to take the stand.
The Sitzer/Burnett lawsuit is based on antitrust claims from Missouri home sellers who said they weren’t aware that commission rates were negotiable and called for buyers to compensate their own agents.
Five sellers are named as plaintiffs in the case, which has drawn 500,000 others facing off against the National Association of Realtors, Keller Williams and HomeServices of America and seeking $1.78 billion in damages.
The trial that started this week involves some of the biggest names in residential brokerage, including NAR’s CEO Bob Goldberg, HomeServices’ CEO Gino Blefari and Keller Williams co-founder Gary Keller.
But it was testifimony from the plaintiffs at the Kansas City trial on Wednesday and Thursday that laid bare the frustrations over the commission structure they’re looking to change.
Rhonda Burnett, for whom the case is named, took the stand to discuss her experience selling her home with an agent from HomeServices’ subsidiary, Reece Nichols, Inman first reported. Burnett sold her home for $250,000 — $25,000 under asking — and paid over $15,000 in commissions.
Burnett said that her listing agreement with the agent prompted her to select the commission rate she wanted to pay. The options included 7 percent, 8 percent 9 percent, 10 percent and a blank space where the agent had filled in 6 percent.
Burnett said she chose 6 percent because it was ”lower than the rest,” and she claimed the agent told her “nothing was negotiable.”
Though Burnett said she had no qualms about compensating the agent she hired, she pushed back against the idea that sellers should be on the hook for paying agents they didn’t hire.
“I paid the buyer’s broker to negotiate against me and my husband, which resulted in a lower sales price,” Burnett said.
During cross examination, Burnett told an attorney for HomeServices that she considered doing a for-sale-by-owner to avoid commission costs, but she worried that her home wouldn’t sell without a listing on the Realtor MLS.
Another plaintiff, Hollee Ellis, echoed Burnett’s frustration. The former high school English teacher said she paid a 6 percent commission on her home sale but the buyer’s agent’s portion worked out to more than 20 percent of the net equity of the sale.
“I’m not against buyers’ agents,” Ellis said. “The buyer who chose them and who they’re working for should pay them.”
Two other plaintiffs, Jeremy Keel and Jerod Breit, said they decided to join the case after their own experiences with the “unfair” commission structure. An attorney cross-examining for Keller Williams showed a purchase contract that included class action and jury trial waiver clauses, which Keel had crossed out before signing.
“I don’t know why these corporations feel they need to hide from juries, but they’re not going to be able to hide from this one,” Keel said.
— Sheridan Wall
Read more
Residential
New York
REBNY changes buyer’s agent commission rules
Residential
National
NAR warns of “Wild West” if plaintiffs win broker commission lawsuit