A federal judge has granted class action certification in the lawsuit against the National Association of Realtors (NAR), alleging that the organization and major real estate brokerages have conspired to inflate commission rates and limit competition. This has significant implications for the real estate industry and home sellers across the country. Let’s take a closer look at what you need to know.
Key Details
The lawsuit alleges that the NAR and major real estate brokerages, including RE/MAX, Anywhere, and Keller Williams, have conspired to inflate commission rates for home sellers. This alleged conspiracy has resulted in home sellers paying higher fees for real estate agents’ services. The lawsuit claims over $13 billion in damages, and it represents home sellers who paid a commission between March 2015 and December 2020 in several states, including Texas, Maryland, North Carolina, Ohio, Colorado, Michigan, Florida, Nevada, Wisconsin, Minnesota, Pennsylvania, Arizona, Virginia, Utah, and the District of Columbia.
The motion for class action status was partly based on an opinion by NYU economics professor Nicholas Economides, who has estimated total class damages in the case could come to $13.7 billion – or $41.1 billion. This estimate highlights the severity of the case and the potential impact on the real estate industry.
The lawsuit claims that sellers making “blanket unilateral offers of compensation” to buyer brokers, when a home is sold through multiple listing services, violates the law. This requirement allegedly pressures sellers into offering high commissions which bring in buyers’ brokers, resulting in inflated commission rates for real estate agents.
Potential Implications
If the plaintiffs are successful, it could lead to a significant reduction in commission rates for real estate agents. Such would result in a more open and competitive market, where real estate agents have to offer services at a lower price. However, the NAR and real estate brokerages may fight the lawsuit vigorously, and the outcome remains uncertain. This uncertainty creates a great opportunity for homeowners to research and select real estate agents who are transparent about fees.
What Home sellers Can Do
Home sellers who paid a commission between March 2015 and December 2020 in the aforementioned states may be eligible to join the class-action lawsuit. Consulting with a legal professional can help determine if you qualify and resolve other questions. In addition, home sellers should also seek out real estate agents with lower commission rates and transparent fees. Researching and comparing commission rates charged by different real estate agents will allow you to negotiate prices with your agent to ensure you are getting the best deal. The potential outcome of this lawsuit serves as a reminder to home sellers to do the research and be informed about all fees paid to real estate agents.