In March 2019 putative class actions were filed in Illinois and Missouri against The National Association of Realtors, et al, on behalf of several home sellers (Christopher Moehrl, Joshua Sitzer, and Scott/Rhonda Burnett, namely). The actions are antitrust in nature. The allegation is the NAR, et al, “have conspired to require home sellers to (1) pay the brokers representing the buyers of their homes, and (2) pay brokers’ commissions that are ‘inflated’ by comparison to allegedly comparable markets in other countries.” Additionally, “because most buyer brokers will not show homes to their clients where the seller is offering a lower buyer broker commission, or will show homes with higher commission offers first, sellers are incentivized when making the required blanket, non-negotiable offer to produce the buyer broker’s cooperation by offering a high commission.” Specifically, it’s the Buyer Broker Commission Rule the action targets, arguing “this method of setting the buyer broker commission is wholly different from the method that would exist absent the Buyer Broker Commission Rule.” More simply stated, the defendants allege the Buyer Commission Rule in the MLS directly impedes competition, violating antitrust laws.
While these class actions were filed in Illinois and Missouri, their target is nationwide in scope. In Moehrl v. NAR, Introduction Point 12 identifies “the Covered MLSs.” The five MLSs in the Mid-West, six MLSs in the Southwest (including Austin, Dallas, Houston, and San Antonio, TX), three MLSs in the Mountain West, and four MLSs in the Southeast are all included. Christopher Moehrl, himself, participates in this action over a November 2017 transaction using the Northstar MLS. He paid a total broker commission of 6% (2.7% of that going to the buyer broker).
In April 2022, a United States District Court Judge in Missouri granted class action certification to Sitzer/Burnett, et al v. NAR, et al. In March 2023, the same occurred in Illinois. United States District Court Judge Andrea Wood granted Damages Class certification status to home sellers who paid a commission between March 6, 2015, and December 31, 2020. She also granted Injunctive Relief Class to current and future owners of residential real estate in the covered jurisdictions who are presently listing or will in the future list their home for sale in a covered MLS. Essentially, this means the process is now open to more potential defendants to join the lawsuits as they progress.
The NAR has been vocal in their opposition to these allegations. Their belief is the Buyer Commission Rule in the MLS provides the greatest economic benefit and creates the greatest economic access, to promote competition. “Pro-competitive, pro-consumer local MLS broker marketplaces ensure equity, efficiency, transparency and market-driven pricing options for home buyers and sellers. The practice of the listing broker paying the buyer broker’s compensation saves sellers time and money,” stated Mantill Williams, NAR’s Vice President of Public Relations and Communication Strategy. He continued, “The U.S. Model of independent, local broker marketplaces is widely considered the best value and most efficient model in the world.”
The length of a class action lawsuit, if seen through to fruition, is important to note. We are at the very early stages of what would be, without an injunctive action, a tremendously long and arduous trial process. It would take several years for any resolution that involved the completion of a trial. However, as Mantill Williams noted, “Settlement is always an option for any party in litigation. NAR’s commitment to defend ourselves in court remains unchanged, and we are confident we will prevail in proving the lawfulness of the rules under attack.”
As a real estate agent, the ability to anticipate is paramount. In speaking with Marvin Jolly, Regional Senior Vice President for Berkshire Hathaway HomeServices PenFed Realty, he highlighted areas for agents to consider as we move forward. First, understand the situation. The news on the lawsuits will remain so we must focus our attention on serving our clients. He also stressed the Buyer Representation Agreement. It’s important for buyer’s agents to prioritize the Buyer Representation Agreement at the beginning of the home-buying process. Lastly, real estate agents should try to grow their listings business. As we adapt our skills to the market, the ability to speak the language of listings becomes key.