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Texas commission lawsuit names real estate teams and individual broker as defendants

QJ Team and Five Points Holdings filed an antitrust lawsuit on Monday accusing large and small industry players of colluding to inflate agent commissions

The commission lawsuits have arrived in Texas, but the QJ Team suit, named after its lead plaintiff, isn’t like your Moehrl, Sitzer/Burnett, March, Gibson or Batton 2 commission lawsuits. While the lawsuit does name large corporate brokerage firms as defendants, including Keller Williams, Side, HomeServices of America, and Fathom Realty, the robust defendant list also includes real estate teams, such as The Loken Group and Hexagon Group, as well as an individual broker, Mark Anthony Dimas.

The lawsuit was filed on Monday by plaintiffs QJ Team, LLC., a Texas-based homebuilder, and Five Points Holdings, LLC., a holding company headed by DS News founder Mark Hulme, in the U.S. District Court for the Eastern District of Texas Sherman Division. The lawsuit accuses its 29 defendants of colluding to artificially inflate real estate agent commissions.

At the center of the plaintiffs’ complaint is the National Association of Realtors’ cooperative compensation rule, which requires listing brokers to make a blanket offer of compensation to buyers’ brokers in order to list the property on the MLS.

“In the absence of NAR’s Mandatory Offer of Compensation Rule, the expense of buyer broker commissions would be incurred by the clients (homebuyers),” the filing states. “This would lead to competition among buyer brokers to offer lower commission rates. Consequently, the Mandatory Offer of Compensation Rule stifles price competition among buyer brokers because the actual party retaining the buyer broker— the homebuyer—doesn’t negotiate or pay the commission for their broker.”

Despite NAR being identified in the complaint as the creator of the alleged conspiracy, the trade group is not named as a defendant in the lawsuit. (It is, however, named as a co-conspirator along with Anywhere and RE/MAX.) Instead, the Texas Association of Realtors, as well as local Realtor group the Austin Board of Realtors, MetroTex Association of Realtors, Houston Association of Realtors are named.

According to the complaint, the “anticompetitive measures” put in place by NAR and perpetuated by the defendants “impose charges on home sellers beyond competitive thresholds and thwarting competition from innovative or lower-cost alternatives.”

The filing also outlines three “illogical, harmful, and anticompetitive effects” the alleged conspiracy has had, including: “requiring sellers to pay overcharges for services provided by buyer brokers to the buyer; maintaining, fixing, and stabilizing buyer broker compensation at levels that would not exist in a competitive market; and promoting steering and actions that hinder innovation and entry by new, lower-cost real estate brokerage service providers.”

Like the other commission lawsuits this suit is seeking class action status, with a class definition of all persons who listed properties on an MLS in Texas using a listing agent or broker affiliated with one of the defendants and paid a buyer broker commission from Nov. 13, 2019, to the present.

The plaintiffs are demanding a jury trial, as well as damages, which have yet to be set.

HousingWire reached out to the defendants in the suit for comment, however only Keller Williams and Compass, the parent company of Realty Austin, responded stating that they did not wish to comment.

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