A trifecta! NAR sued again over buyer-broker commissions

Suit alleges racketeering and conspiracy

Clockwise from left: NAR CEO Bob Goldberg, HomeServices of America CEO Gino Blefari, Realogy CEO Ryan Schneider, Keller Williams CEO Gary Keller and Re/Max CEO Adam Contos
Clockwise from left: NAR CEO Bob Goldberg, HomeServices of America CEO Gino Blefari, Realogy CEO Ryan Schneider, Keller Williams CEO Gary Keller and Re/Max CEO Adam Contos

UPDATED: June 8, 5:10 p.m.: It’s Round 3 for the National Association of Realtors, which is being sued for a third time over policies related to buy-side commissions. But this one is different.

The class-action-seeking lawsuit was filed on behalf of two Connecticut homeowners and alleges that NAR policies have inflated buyer broker commissions. The lawsuit also names the so-called Big Four of residential brokerage: Realogy Holdings, Berkshire Hathaway’s HomeServices of America, Re/Max Holdings and Keller Williams.

Echoing two previous suits — which focused on antitrust claims — the latest complaint focuses on a NAR rule that requires brokers to offer buyer-broker compensation when listing a property on a multiple listing service. Unlike previous litigation, however, the complaint focuses on the buyer’s financial burden, not the seller’s. “Absent this rule, buyer brokers would be paid by their clients and would compete to be retained by offering a lower commission,” the complaint states.

The latest suit alleges the rule is a violation of federal racketeering laws.

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According to the suit, NAR’s policies have kept buy-side commissions at 2.5 percent to 3 percent for years, despite a diminishing role for buyer representation. “A majority of home buyers no long[er] locate prospective homes with the assistance of a broker, but rather independently through online services,” the suit said.

In a statement, NAR said the MLS system helps to streamline real estate searches. “The pro-consumer, pro-competitive MLS system creates a competitive market for buyers and sellers and has been upheld by courts many times over,” said Mantill Williams, vice president of communications.

The trade organization, which has some 1.4 million members, has strenuously fought back two class-action antitrust lawsuits last year. The plaintiffs in those suits, which also took aim at buyer broker commissions, later joined forces and tied their allegations to an ongoing investigation by the U.S. Department of Justice.

NAR’s lawyers have said if the plaintiffs get their way, the impact could be “disastrous” for buyers and sellers. And the trade group has filed motions to dismiss the two lawsuits on the grounds that it has no role in determining the buyer broker’s fee. “And, contrary to what the class action law firms allege, the commission is subject to negotiation,” Katie Johnson, NAR’s general counsel, wrote on the trade group’s website.

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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
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