Real Estate

Class-action lawsuit takes aim at buyer broker compensation rules

Home seller claims NAR, MLS providers have conspired in violation of anti-trust laws

A class-action lawsuit filed last week by a Minnesota home seller is taking aim at the big four multiple listing services that have transformed the real estate business.

The suit alleges that the National Association of Realtors has driven up costs to sellers and has stifled competition by requiring brokers to offer buyer broker compensation when listing a property on an MLS site.

Filed against the NAR, Realogy, HomeServices of America, RE/MAX and Keller Williams, the suit alleges that the MLS providers conspired with NAR to require sellers to pay buyer’s broker’s fees at inflated rates in violation of anti-trust laws.

“The conspiracy has saddled home sellers with a cost that would be borne by the buyer in a competitive market,” the complaint states. “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.”

The suit goes on to allege that the conspiracy has kept buyer brokers’ commissions in the 2.5-3% range despite their diminishing role in the transaction, as “a majority of homebuyers no longer locate prospective homes with the assistance of a broker, but rather independently through online services.”

The suit states that it will represent any sellers who paid a broker commission during the sale of their property in the last four years in areas covered by regional MLS sites, which includes sellers in Texas, Maryland, North Carolina, Ohio, Colorado, Michigan, Florida, Nevada, Wisconsin, Minnesota, Pennsylvania, Arizona, Virginia, Utah and Washington, D.C.

A spokesperson for NAR told HousingWire that suit was unfounded.

“The complaint is baseless and contains an abundance of false claims. 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,” The spokesperson said. “NAR looks forward to obtaining a similar precedent regarding this filing.”

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