A class action lawsuit was filed today in Chicago on behalf of anyone who sold a home through one of 20 of the largest listing services in the country over the past five years. Link to Complaint: Moehrl v. National Association of Realtors. It charges that the National Association of Realtors, as well as the four largest national real estate brokerages, and the Multiple Listing Services they use, have conspired to require anyone selling a home to pay the commission of the broker representing their buyer “at an inflated amount,” in violation of federal antitrust law.
This isn’t the first time commission structure has been challenged, but the players involved could force the industry to take note. The Plaintiff law firms, Cohen Milstein Sellers & Toll, and Hagens Berman Sobol Shapiro, have a long history of prevailing over weighty entities like Volkswagen, for its emissions scandal, Apple, for its e-book collusion, and Exxon, after the Valdez spill.
The lawsuit alleges the current structure forces seller to conform to the “Buyer Broker Commission Rule.” The system was created to put the total cost of commission on the seller, with the buyer’s agent receiving a split of the commission for representing the buyer. In order to place a listing on the MLS, an agent must follow the Buyer Broker Rule.
“The conspiracy has saddled home sellers with a cost that would be borne by the buyer in a competitive market,” the lawsuit says. “Moreover, 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 procure the buyer brokers’ cooperation by offering a high commission.”
Commentators have noted this suit was filed four month after a Department of Justice consent decree expired against the National Association of Realtors. The DOJ spent several years unsuccessfully investigating NAR for anti-competitive behavior against web based real estate companies and reached the settlement in 2008.