April 08, 2019

The National Association of Realtors (NAR) and the four largest national real estate broker franchisors violated federal antitrust laws by conspiring to require home sellers to pay inflated buyer broker commissions, according to a class action lawsuit filed by a group of home sellers.

The case is Christopher Moehrl v. The National Association of Realtors, Realogy Holdings Corp., HomeServices of America, Inc., Re/Max Holdings, Inc. and Keller Williams Realty Inc. (U.S. District Court, N.D. Illinois, 19-cv-01610).

Moehrl filed the suit on behalf of sellers who paid a broker commission in the last four years related to the sale of residential real estate listed on one of 20 Multiple Listing Services (MLS) across the country.

The alleged conspiracy centers around NAR’s Buyer Broker Commission Rule, which requires all brokers to make a blanket, non-negotiable offer of buyer broker compensation when listing a property on a MLS. The rule has led to home sellers being saddled with a cost that would be borne by the buyer in a competitive market, said plaintiff attorney Benjamin Brown, a partner at Cohen Milstein.

“Home buyers are now able to identify homes online that they are interested in touring and purchasing,” Brown told RESPA News. “Yet due to the defendants’ restraints on buyers negotiating their brokers’ rates, commissions have remained at inflated levels. This lawsuit could have profound effects on the real estate industry going forward, introducing true competition and ultimately saving people thousands of dollars when they sell their homes in the future.”

If the Buyer Broker Commission Rule didn’t exist, buyer brokers would be paid by their clients and would compete to be retained by offering a lower commission.

This hurts competition among buyer brokers because the buyer does not negotiate or pay his or her broker’s commission, according to the lawsuit. In addition, the seller’s inflated commission offer cannot be reduced by buyers or their brokers, as the rule also prohibits buyer brokers from making home purchase offers contingent on the reduction of the buyer broker commission.

The complete article can be accessed here.