Politics & MoneyReal Estate

Anti-trust lawsuits contesting buyer broker compensation rules heat up

Plaintiffs join forces, strengthen allegations against NAR, MLS providers

In recent months, the National Association of Realtors and four leading multiple listings service providers have been hit with two class-action lawsuits taking aim at buyer broker compensation rules.

Both suits allege that NAR and the MLS providers – which include RealogyHomeServices of AmericaRE/MAX and Keller Williams – conspired to drive up seller costs and reduce competition by requiring a home seller to pay compensation to the buyer’s broker, even though their involvement in the transaction is minimal.

The allegations have prompted the Department of Justice to investigate anti-trust violations, sending a letter to CoreLogic – and likely others – requesting access to its MLS data regarding buyer broker compensation.

Now, the case appears to be heating up as the two plaintiffs have teamed together, filing an amended complaint in Chicago federal court that consolidates their cases, tosses six more plaintiffs into the mix, and elaborates on the allegations.

According to the amended complaint, NAR’s “Buyer Broker Commission Rule shifts a cost to the seller that would be paid by the buyer in a competitive market.”

This practice has effectively “maintained broker commission levels at remarkably stable and inflated levels for the past two decades, despite the advent of the Internet and the diminishing role of buyer-brokers,” the complaint continues.

The plaintiffs allege that the scenario can be appropriately labeled a conspiracy because of the close ties between NAR and the leading MLS providers.

“By participating in an association that prevents member institutions from allowing its employees and Realtors to compete with each other to offer lower commissions, requiring franchisees, groups and individuals to join and adhere to the anticompetitive agreement alleged herein, and taking numerous steps in furtherance of the conspiracy, the Corporate Defendants have agreed to participate in, facilitate, and implement the conspiracy,” it states.

The complaint also uses the DOJ’s antitrust investigation to boost its claims, noting that the DOJ’s Antitrust Division has served Civil Investigative Demands to companies including CoreLogic to investigate practices that may unreasonably restrain competition.

For its part, NAR has hotly contested the allegations, calling them “baseless” and replete with “false claims.”

“We are going to aggressively defend ourselves, along with the rights that enable home buyers and sellers to continue to have access to a highly efficient market,” wrote Katie Johnson, NAR’s general counsel and chief member experience officer, in an article on its website.

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