US commission lawsuit takes aim at 35 agencies and industry groups

A major commission lawsuit has been filed in California that names more than 35 defendants, including the National Association of Realtors (NAR), alleging they violated federal and state antitrust laws by conspiring to inflate broker commissions.

The plaintiffs are seeking class-action status on behalf of anyone in Fresno, Merced, Madera and Mariposa counties, who used any of the companies as the listing broker in the sale of a property from January 17, 2020 through to today.

According to Inman, the suit was filed in the US District Court for the Central District of California and the defendants include the NAR, the California Association of Realtors, Greater Los Angeles Realtors, the California Regional MLS (CRMLS), Combined LA/Westside (CLAW) MLS, eXp World Holdings, Compass, HomeServices subsidiary BHH Affiliates, and First Team Real Estate, among others.

The complaint alleges the defendants violated the Sherman Antitrust Act, the California Cartwright Act and the California Unfair Competition Law.

This is the latest suit to go after the practice of requiring listing brokers to share commissions with buyer brokers following the Sitzer | Burnett case, which awards nearly US$5.4 billion in damages to the defendants.

NAR has sought a complete reversal of the decision.

In this latest case, the plaintiffs are seeking a jury trial and awards for damages and/or restitution and costs of the suit.

Additionally, the suit seeks a permanent injunction banning the defendants “from (1) requiring that sellers pay the buyer broker, (2) continuing to restrict competition among buyer brokers and seller brokers, and (3) engaging in any conduct determined to be unlawful.”

First Team Real Estate Chief Executive Officer Michele Harrington told Inman it was a shame that greedy, unscrupulous lawyers were trying to shake down our industry.

“Real estate agents are not the problem in this country,” Ms Harrington said.

“Our agents often work seven days a week and all hours of the day and night to walk people through the biggest financial decision of their lives and sometimes never get compensated.

“The problem we have in this country is there are people who will compromise their ethics, morals and values in an effort to enrich themselves by exploiting hard working people.”

The suit challenges a NAR rule that requires listing brokers to offer compensation to buyer brokers in order to submit a listing to a Realtor-affiliated MLS, known as the Participation Rule or the Cooperative Compensation Rule.

NAR spokesperson Mantill Williams said the cooperative compensation practice makes efficient, transparent, and accessible marketplaces possible.

“Sellers can sell their home for more and have their home seen by more buyers while buyers have more choices of homes and can afford representation,” he told Inman.

“The National Association of Realtors will respond to this complaint in court.”

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Rowan Crosby

Rowan Crosby is a freelance journalist specialising in finance and real estate.