A group of recent home sellers filed a class action antitrust lawsuit against multiple realty agencies in federal court in Chicago Wednesday, alleging the agencies conspired to develop a commission scheme that significantly inflated the cost of selling their homes.
The 30-page complaint claims the defendants, including The National Association of Realtors, Realogy Holdings and RE/MAX Holdings, conspired “to require home sellers to pay the broker representing the buyer of their homes, and to pay at an inflated amount, in violation of federal antitrust law.”
The plaintiffs allege that the conspiracy has centered around The National Association of Realtors’ “adoption and implementation of a rule that requires all brokers to make a blanket, non-negotiable offer of buyer broker compensation…when listing a property on a Multiple Listing Service,” or MLS.
This makes the market noncompetitive, according to the complaint, since the cost of paying a commission to the buyer broker is a cost that would normally fall on the home buyer in an ordinary, competitive market. And since the defendants have control of the local MLS, which is the key database of region-specific property listings on which most homes in the United States are sold, this gives them unfair leverage and market power.
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Plaintiffs’ attorney Benjamin Brown, with the Washington, D.C. branch of the Cohen Milstein Sellers & Toll firm, said in a statement that “For years, economists have been sounding the alarm that American home sellers are paying inflated broker commissions.”
“This stems from that fact that to list a home for sale on an MLS, sellers need to agree to play by a set of rules that distort and destroy competition, including requiring home sellers to pay the buyer’s broker,” Brown said.
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