Lawyer grills brokerage CEOs as NAR commissions trial begins

Keller Williams, HomeServices, RE/MAX executives testify in landmark antitrust case

Broker Commissions Lawsuit Hinges On Training Materials
Keller Williams’ Gary Keller, HomeServices' Gino Blefari, RE/MAX's Nick Bailey (Keller Williams, CC BY-SA 4.0 via Wikimedia CommonsHomeServices, RE/MAX, Getty)

The legal battle over buyer’s agent commissions went back to the basics, spending its first days of testimony focused on how brokerages train their agents.

The lawsuits center on NAR’s policy requiring listing brokers to offer buyer’s agent compensation in listings on Realtor-controlled MLSs. The plaintiffs claim the trade group — considered the largest in the U.S. with over 1.5 million members — conspired with brokerages to drive up agents’ pay.

The attorney, Michael Ketchmark, began presenting his case in Kansas City on Tuesday. The trial in the Sitzer/Burnett case is the first of two class-action lawsuits against the National Association of Realtors and some of the nation’s largest brokerages centered on rules dictating how the trade group controls access to listing platforms and how agents are paid.  

The plaintiff’s attorney in a landmark antitrust lawsuit argued that Keller Williams and HomeServices of America provided training materials to agents instructing them on the amount of commission to charge sellers, Inman first reported

Ketchmark played a video deposition of Keller Williams CEO Gary Keller, in which he questioned Keller about whether he discussed commissions at company events, in training materials or in his book, The Millionaire Real Estate Agent.

“Nowhere in that book do I talk about commissions except to explain the flow of money. And I say average,” Keller said.

In the deposition, Ketchmark asked Keller about a training script for new agents, which appears to suggest that buyer’s agents discourage their clients from viewing listings offering lower commissions. 

The script — also mentioned in the other antitrust case known as Moehrl — is an example conversation between a seller and a listing broker in which the seller asks the listing broker to reduce their commission. 

During the exchange, the agent tells the seller, “First of all, half the commission usually goes to a cooperating agent. When you reduce the commission, you reduce the incentive for that agent to bring a buyer to your house.”

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Later on in the conversation, the agent asks the seller, “You’re putting yourself at a disadvantage competitively when you reduce your commission, wouldn’t you agree?”

Keller denied ever seeing the document and brushed it off as a demonstration rather than instruction on how commissions should be negotiated.

Keller Williams’ antitrust policy bars executives from discussing commissions, but the firm’s leadership presented slideshows at company events that referred to a “standard 6 percent commission” to be split in half with the buyer’s agent, according to materials Ketchmark presented in court.

In video testimony, senior director of Keller Williams University Meredith Maples said the slides were just models for agents and that the scripts provided were strictly hypothetical.

Ketchmark played another training video that shows HomeServices of America CEO Gino Blefari telling agents that he automatically adds a 6 percent commission into his contracts. 

Blefari argued that at the time, he was working for an agent that required at least a 6 percent commission and pushed back against Ketchmark’s suggestion that his statement amounted to “price-fixing.”

Ketchmark also questioned RE/MAX CEO Nick Bailey in recorded testimony on the company’s training materials. 

RE/MAX was originally named as a defendant in both lawsuits, but the company agreed to pay $55 million and change some of its policies related to buyer’s agent commissions to settle the cases.

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