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.

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Wood’s recent ruling certifies two classes in 20 MLS (Multiple Listing Service) markets across the country. This certification means that home sellers who paid a commission between March 6, 2015 and December 31, 2020, to a brokerage affiliated with a corporate defendant listed on a covered MLS and jurisdiction can now ask for reimbursement for billions in commissions paid to buyer agents. The ruling also makes “current and future owners of residential real estate in the covered jurisdictions or are presently listing or will in the future list their home for sale on a Covered MLS” eligible for reimbursement.

The Implications on Commissions and Industry Practices

However, it is still being determined when a trial for the Moehrl case would begin. The smaller of the two lawsuits, known as the Sitzer/Burnett case, was scheduled to begin in February but has been postponed indefinitely at Anywhere’s request.

The plaintiffs in the Moehrl case claim that the NAR and the franchisors have conspired by mandating the NAR’s “buyer broker commission rule” when listing a property on an MLS. According to attorneys for Cohen Milstein, this conspiracy has imposed a cost on home sellers that buyers should bear in a competitive market. They further argue that most buyer brokers will not show homes to their clients if the seller offers a lower buyer broker commission, incentivizing sellers to offer high commissions to procure buyer brokers’ cooperation.

Industry Response and Future Preparations

In a statement, NAR spokesperson Mantill Williams expressed disappointment with the ruling. Williams argued that pro-competitive, pro-consumer local MLS broker marketplaces ensure equity, efficiency, transparency, and market-driven pricing options for home buyers and sellers. The NAR maintains that the practice of listing brokers paying buyer brokers’ compensation saves sellers time and money by having more buyer brokers participate in the local marketplace, thus creating a larger pool of buyers for sellers.

Although the Moehrl certification is a setback for the industry, even if a jury finds in favor of the plaintiffs, it may be some time before any significant changes go into effect for agents and brokerages. According to Steve Murray, senior advisor for RealTrends, the case will likely go through appeals. Unless an injunction requires immediate action, it will be a while before the ruling is final. Despite the potential impact of the lawsuit, a recent RealTrends survey found that only 3.45% of brokers surveyed felt that the outcome of commission lawsuits posed a challenge or concern. When asked what they are doing to prepare for a worst-case scenario, 60% of respondents answered, “Nothing.” Other popular responses included implementing buyer representation agreements, fully disclosing client options, and more training on the value proposition.

The post BREAKING! Monumental NAR lawsuit gains class action certification: The Beginning of the War on Real Estate Agents first appeared on titlecapture.com.