LegalReal Estate

Newest commission lawsuit doesn’t seek class-action status

Filed in New York, the newest commission suit names NAR, REBNY and major brokerages as defendants

The real estate industry is facing yet another commission lawsuit, but this time the plaintiff is not seeking class-action status.

In a lawsuit filed Thursday in the U.S. District Court for the Southern District of New York, Hao Zhe Wang accused real estate industry players of “agreeing, combining and conspiring to impose, implement and enforce anticompetitive restraints and the cause Plaintiff to pay inflated commissions on the purchase and sale of his homes in violation of federal and state statutes.”

An attorney himself, according to the court docket, Wang appears to be representing himself in the lawsuit.

Defendants in the lawsuit include the National Association of Realtors (NAR), the Real Estate Board of New York (REBNY), HomeServices of America, Compass, eXp World Holdings, Douglas Elliman, Halstead Real Estate, Brown Harris Stevens Residential Sales and Realty One Group.

NAR and Compass have entered into nationwide settlement agreements for the commission lawsuits.

While it may not be seeking class-action status like other commission lawsuits, the Wang suit takes aim at NAR’s Participation Rule, which requires listing brokers to make a blanket offer of compensation to buyer’s brokers in order to list a property on a Realtor-affiliated MLS. Although REBNY is not affiliated with a Realtor association, it did previously have a rule in place with the same compensation requirement.

From 2014 to the present, Wang reportedly bought several homes in Massachusetts, New York, New Jersey and Washington, D.C., according to the complaint. Wang claims that he found the properties on his own via searches on Zillow and StreetEasy, but when he expressed interest in submitting offers, listing agents refused to engage because he was an unrepresented buyer.

“Plaintiff has thus contacted hundreds of listing brokers, and the conversations they have with him always turned into their professional ‘ethics’ of not taking offers from unrepresented buyers and about Plaintiff’s need to use the listing broker as a dual agent or a colleague or employee of the broker as his buyer agent,” the complaint states.

Additionally, Wang wrote in his complaint that as a repeat buyer, he did not rely on his agents for advice or recommendations on inspectors, contractors, mortgage brokers or electricians. He added that during price negotiations he “rarely solicited advice from the buyer brokers, nor did he trust unsolicited advice that he received from them, because the brokers were either the listing brokers themselves or their employees whose loyalty may be divided.”

The plaintiff also claimed that the agents and brokers he worked with falsely advertised that they would represent him for free as a buyer.

“The reality is, of course, that buyer brokers, just like the mortgage brokers, lawyers, home inspectors, were all paid by the Plaintiffs on the day of closing,” the complaint states. “Yet because of the elaborate lie and ruse, Plaintiff, like most other home buyers, were given to believe that he was not paying for anything.

“These misrepresentations and false advertising misled Plaintiff and denied him the chance to set terms of his relationship with these buyer or dual agents, and caused him to miss out on possible savings from negotiated rates of services he received from the buyer or dual agents.”

Wang is demanding damages and a jury trial.

In an emailed statement, a spokesperson for eXp wrote that the firm’s “agile business model” will allow it to make the necessary adjustments to succeed in the changing real estate environment.

“We are committed to upholding fair and transparent practices compliant with law and we already have mechanisms and a plan in place that enables buyers and sellers to negotiate commissions,” the spokesperson wrote.

Other defendants in the suit either did not return a request for comment or did not wish to comment.

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