Just minutes after a federal jury ruled the National Association of Realtors and two major real estate companies had conspired to inflate buyers’ agent commissions, the plaintiffs attorney filed another class-action lawsuit against NAR and new residential brokerages.
The complaint, filed by attorney Michael Ketchmark, names NAR, Compass, Douglas Elliman, ExP, Redfin, Weichert Realtors, United Real Estate and Howard Hanna Real Estate Services as defendants, according to The Real Deal.
The suit is much like the Sitzer/Burnett case filed against NAR, and alleges the agencies conspired to make sellers pay buyers’ agents and increased those commissions.
The complaint alleges the brokerages did so by following NAR’s rule requiring sellers to “make a blanket, unilateral and effectively non-negotiable offer.” That violates federal antitrust law, the plaintiffs say.
The plaintiffs say that violates federal antitrust laws.
The case comes immediately after a federal jury ruled unanimously against the National Association of Realtors (NAR), Keller Williams and HomeServices of America and its subsidiaries HSF Affiliates and BHH Affiliates.
The eight-person jury, after 2.5 hours of deliberation, delivered a verdict in the Missouri antitrust class action lawsuit that could result in damages of up to $5.356 billion.
The lawsuit represented about 500,000 Missouri sellers who sought reimbursement for $1.78 billion in commissions paid to buyer brokers, according to Inman.
At the heart of the case was the NAR policy known as the cooperative compensation rule, which mandates that listing brokers offer compensation to buyer brokers for listings on Realtor-affiliated MLS services.
Mr Ketchmark, the plaintiffs’ lead counsel, stated: “It’s been a long four and a half year fight. But the truth has come out. The jury heard all the evidence and today’s the day of accountability.”
He added that the message sent was “loud and clear from Missouri that what’s happening in the real estate market is wrong”.
The jury laid responsibility for the conspiracy at the feet of every one of the defendants: NAR, Keller Williams and HomeServices of America and its subsidiaries HSF Affiliates and BHH Affiliates.
Anywhere (formerly Realogy), and RE/MAX were also initially defendants in the case but they settled their lawsuits and were not participants in the trial.
In response, NAR spokesperson Mantill Williams said they planned to contest the verdict.
“NAR rules prioritise consumers, support market-driven pricing and promote business competition,” he said.
“This matter is not close to being final as we will appeal the jury’s verdict.”
HomeServices of America also expressed its intention to appeal.
“Today’s decision means that buyers will face even more obstacles in an already challenging real estate market and sellers will have a harder time realising the value of their homes,” a spokesperson said,
Keller Williams spokesperson Darryl Frost also said it wasn’t the end of the matter.
“We disagree with the verdict but respect the jurors who decided the case based on the issues in front of them,” he said.
“This is not the end. Keller Williams followed the law regarding cooperative compensation and stands by the evidence presented on the 100-year-old practice of sellers’ agents offering commissions to other agents who help market and sell homes.”
After the verdict, shares in multiple publicly traded real estate firms plummeted.
By mid-afternoon, both Anywhere and RE/MAX were down by more than four per cent, while Compass and Redfin were down by more than six per cent and five per cent, respectively.
During the two-week trial, the defendants repeatedly argued that there was insufficient evidence to prove the conspiracy.
Ethan Glass, NAR’s lead counsel, told jurors, “The plaintiffs’ lawyer has utterly failed to prove that a conspiracy to follow and enforce the rule even exists.”
Keller Williams’ co-founder, Gary Keller, testified that the six per cent commission was a “myth.”
Mr Ketchmark fired back during his rebuttal.
“Did I ever say at one time that 1.6 million realtors are part of this conspiracy?” he said.
“It’s a deliberate attempt to confuse you.”
He emphasised that the law says the defendants “can’t do that,” referring to forcing homeowners to pay a buyer-broker commission to list on the MLS.