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Bombshell US court ruling could see agents forced to reimburse sellers

An explosive court ruling in the US has opened the door for potentially millions of sellers to seek to be reimbursed for commissions paid to buyer’s agents between 2015 and 2020. 

A federal judge in Chicago has ruled that a group of home sellers accusing the National Association of Realtors (NAR) and a group of real estate brokerages of conspiring to inflate commission rates can move forward as a class action.

The lawsuit is taking aim at the requirement that sellers make “blanket unilateral offers of compensation” to buyer’s agents when a home is for sale via a multiple listing service.

The plaintiffs allege that the system puts pressure on sellers to offer high commissions to attract buyer’s brokers.

The lawsuit claims this violates the Sherman Antitrust Act by inflating seller costs, according to Inman.

Judge Andrea R. Wood, of the US District Court for the Northern District of Illinois, granted class certification in the larger of two federal commission lawsuits.

NYU economics professor and expert witness for the plaintiffs, Nicholas Economides, estimated damages could come to US$13.7 billion

Designation as a class means the seven plaintiffs can now pursue large-scale claims against the National Association of Realtors, RE/MAX LLC (RMAX.N), Long & Foster Inc and other corporate defendants as opposed to filing individual claims for monetary damages.

The class action is seeking monetary damages and includes home sellers who paid a commission between March 2015 and December 2020 in states including Texas, Florida, New Jersey, Ohio, Pennsylvania, Virginia, North Carolina and Colorado, court filings show.

The National Association of Realtors said it was “disappointed” in the decision and defended industry listing practices.

NAR spokesperson Mantill Williams said this practice saves sellers time and money by having so many buyer brokers participating in that local marketplace and thus creates a larger pool of buyers for sellers.

“Pro-competitive, pro-consumer local MLS broker marketplaces ensure equity, efficiency, transparency and market-driven pricing options for home buyers and sellers,” Mr Williams said in a statement.

“The practice of the listing broker paying the buyer broker’s compensation saves sellers time and money by having so many buyer brokers participating in that local marketplace and thus creates a larger pool of buyers for sellers. 

“For buyers, these marketplaces save them the burden of extra costs at closing, enable them to receive professional representation and make homeownership possible for more people. 

“In fact, the US model of independent, local broker marketplaces is widely considered the best value and most efficient model in the world, with no hidden or extra costs and with more complete, verified information compared to other countries.”

The lawsuit has been underway since March 2019, when home seller Christopher Moehrl filed a federal antitrust lawsuit against the National Association of Realtors and real estate franchisors Anywhere (formerly Realogy), HomeServices of America, RE/MAX and Keller Williams.

According to Inman, the plaintiffs’ motion for class certification relies on the opinions of two experts, NYU economics professor Nicholas Economides and Harvard law professor Einer Elhauge. 

The defendants tried to get the testimony excluded from the case but Judge Wood denied the request as part of the ruling.

Senior advisor for RealTrends, Steve Murray, said the case will go through appeals and unless there is an injunction requiring immediate action, it will be “a while before the ruling is final”.

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Rowan Crosby

Rowan Crosby is a senior journalist at Elite Agent specialising in finance and real estate.

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