Class Action Accuses Nationwide Real Estate Groups of Manipulating Market
A nationwide putative class action lawsuit accuses the country's largest trade association and four leading broker franchisors of developing practices that stifle competition and allow for hiked commission prices. But the companies call the allegations "baseless."
March 11, 2019 at 03:52 PM
4 minute read
Florida, Texas, Philadelphia, Ohio, North Carolina and Nevada are among 14 states affected by an alleged price-fixing conspiracy, according to a putative class action lawsuit filed in the Northern District of Illinois Wednesday.
The lawsuit accuses the National Association of Realtors and four of the country's leading real estate brokerage companies of violating the Sherman Act, a federal antitrust law aimed at blocking monopolies.
The National Association of Realtors is the country's largest trade association, with 1.3 million members, according to its website.
The complaint takes issue with a rule in association's handbook — the Buyer Broker Commission Rule — which instructs brokers to make a blanket, non-negotiable offer for compensation when listing properties on its Multiple Listing Service, known as MLS.
The four brokerage companies — Realogy Holdings Corp., HomeServices of America Inc. RE/MAX Holdings Inc. and Keller Williams Realty Inc. — allegedly used their collective market power to inflate commission rates, snuffing out competition and cheating home sellers out of thousands of dollars per sale, according to the suit.
The complaint claims the problem stretches across the country, and points to 20 different real estate listing applications, including My Florida Regional MLS and the Bright MLS, which covers multiple states including Maryland, Virginia and Washington, D.C.
NAR's ice president of communications, Mantill Williams, denied the claims.
“The complaint is baseless and contains an abundance of false claims,” Williams said. “The U.S. courts have routinely found that Multiple Listing Services are pro-competitive, and benefit consumers by creating great efficiencies in the home-buying and selling process. NAR looks forward to obtaining a similar precedent regarding this filing.”
Trey Sarten, a spokesman for defendant Realogy, also denied the allegations.
“We believe this case has no merit and will not be commenting further,” Sarten said.
Keller Williams spokesperson Darryl Frost and RE/MAX spokesperson Jennifer Armbruster declined to comment.
|Read the full complaint:
Plaintiffs lawyer Steve Berman, managing partner of Hagens Berman in Seattle, was unavailable before deadline but told the Associated Press Monday he's compared commission rates in affected housing markets to rates in countries that have a competitive market and found, “the numbers tell a very clear story.”
“We believe the NAR and the Big Four have devised a series of checks on broker commission rates to all but guarantee their goal of price-fixing, costing home sellers thousands in excessive commissions paid on each sale,” Berman said.
The complaint said if a class member sold a house for $500,000, for example, they'd have paid an extra $12,500 to $15,000 extra in commission.
But the suit points out that sellers in countries without the Buyer Broker Commission Rule — like Germany, Australia and the United Kingdom — don't have to use brokers, and if they do they'll pay them less than half the amount sellers pay in the U.S.
The lawsuit asks for damages, interest, attorney fees and a permanent injunction barring the defendants from requiring sellers to pay a set commission fee.
More class action stories:
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View All830 Brickell is Open After Two-Year Delay That Led to Winston & Strawn Pulling Lease
3 minute readThe Canadian Influx: How Migration to Florida Is Shaping the South Florida Real Estate Market
6 minute readYear-End Tax Planning: How Real Estate Investors Can Leverage Qualified Opportunity Funds
5 minute readTrending Stories
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250