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Second copycat commission lawsuit filed against REBNY

Major brokerages including Douglas Elliman, Compass, SERHANT., The Agency and Anywhere were also named as defendants

The Real Estate Board of New York is now fighting a second copycat commission lawsuit.

Like the March suit, filed in early November, just days after a Missouri jury found the National Association of Realtors, Keller Williams, and HomeServices of America liable for colluding to artificially inflate real estate agent commissions, the Friedman suit, named after its lead plaintiff, takes aim at REBNY and several local and national brokerage firms.

The suit was filed in late December in U.S. District Court in New York by Robert Friedman, a resident of Brooklyn who sold a property in Park Slope in May 2021 with the help of a Douglas Elliman agent.

In addition to REBNY and Douglas Elliman, the complaint names Christie’s International Real Estate, Brown Harris Stevens, SERHANT., Compass, The Agency, Elegran, Engel & Völkers, R New York, Terra Holdings, Leslie J. Garfield & Co., and Anywhere, as well as some of its affiliates, as defendants.

While REBNY is not affiliated with NAR, when Friedman sold his Park Slope property, the trade group had a rule similar NAR’s Participation Rule, requiring the listing broker to split the commission they earned in a home sale transaction with the buyer’s broker.

“Defendants’ conspiracy has artificially inflated broker commissions to a range of 5-6% of the sale price in nearly all residential real estate transactions in REBNY Brooklyn—half of which automatically goes to the Buyer Broker—an overcharge that is borne entirely by the home seller,” the complaint states. “In a competitive market, the home seller negotiates and pays a fee to the Seller Broker, while the home buyer that employs the services of a broker negotiates and pays a fee to the Buyer Broker. In a market unrestrained by the Broker Commission Allocation Rules, brokers would be forced to compete on price, and home sellers would pay substantially less in broker fees when selling residential real estate.”

Since Friedman sold his property in May 2021, REBNY announced changes to its rules, including a rule preventing listing agents from paying or offering to pay buyers’ agents compensation. Instead, if a seller wishes to compensate the buyer’s agent, they must pay the agent themselves. It is not required for a seller to compensate a buyer’s agent. The rule went into effect on the first of this year.

Similar to the other commission lawsuits, Friedman is demanding a jury trial and seeking damages, a permanent injunction preventing the defendants from entering into any other conspiracy or adopting a policy or practice that has a similar effect to the rule at issues, and class action status.

The proposed class for the suit includes all persons that sold residential real estate in REBNY Brooklyn using the services of one of the defendants and paid a buyer broker commission from Dec. 29, 2019, to the present.

A spokesperson for REBNY wrote in an email that the group was still reviewing the complaint.

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