Judge gives preliminary approval to Re/Max, Anywhere settlement

Update:

• A federal judge in Missouri granted preliminary approval to a settlement involving real estate franchise companies Re/Max and Anywhere that resolves a class action lawsuit involving an alleged conspiracy to fix buyer-broker fees. 
• Re/Max and Anywhere were part of a group of brokerages accused of setting minimum commissions that were allegedly anticompetitive and forced home sellers to pay higher costs when selling homes. 
• Re/Max agreed to pay $55 million to a now-certified class of home sellers in Illinois and Missouri while Anywhere agreed to pay $83.5 million, for a combined settlement total of nearly $140 million. 
• Also as part of the settlement, Re/Max and Anywhere agreed to stop setting minimum broker commissions and filtering home listings by the amount brokers are compensated.

(March 27, 2019)

A home seller lodged a class action lawsuit over the 6% real estate fees assessed upon the sale of most homes in the United States alleging they are too high and a violation of federal antitrust law.

According to the class action lawsuit, the 6% fee charged by most realtors on the sale of a home is dictated by the National Association of Realtors and the four largest national real estate broker franchisors, including Realogy Holdings Corp., HomeServices of America Inc., RE/MAX Holdings Inc. and Keller Williams Realty Inc.

Plaintiff Christopher Moehrl says the fee represents a conspiracy by these groups to extort money from homeowners in order to access the local market through the Multiple Listing Service, or MLS.

The MLS is a database of properties listed for sale in each real estate market.

The plaintiff claims he and other current and prospective home sellers are held hostage by a fee the defendants required real estate agents or brokers to assess.

“For example, a class member who sold a house for $500,000 paid in the range of $12,500 to $15,000 in additional commissions due to the conspiracy,” the real estate class action lawsuit contends.

“In a competitive market, the seller would pay nothing to the buyer broker, who would be paid instead by the buyer, and the commission paid by the seller would be set at a level to compensate the seller broker only.”

“Brokers must list a property for sale on an MLS to effectively market that property to prospective buyers, and in any event, are required to list all properties on the MLS if they are members of the MLS,” the real estate class action lawsuit notes.

However, in order to use the MLS database, brokers must make “a blanket, non-negotiable offer of buyer broker compensation,” — the 6% fee, according to the plaintiff.

“The conspiracy has saddled home sellers with a cost that would be borne by the buyer in a competitive market,” alleges the real estate fee class action lawsuit.

“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 real estate class action lawsuit contends that proof of the unfairness of broker fees can be found by looking at what is done in other countries without the arrangement.

In countries such as Australia, Germany, Israel and the United Kingdom, real estate fees are half of what they are in the United States, according to the plaintiff.

“Defendants’ conspiracy has kept buyer broker commissions in the 2.5 to 3.0 percent range for many years despite the diminishing role of buyer brokers,” the class action lawsuit argues.

“A majority of home buyers no longer locate prospective homes with the assistance of a broker, but rather independently through online services. Buyer brokers increasingly have been retained after their client has already found the home the client wishes to buy. Despite their diminishing role, buyer brokers continue to receive 2.5 to 3.0 percent of the sales price due to Defendants’ conspiracy.”

The real estate fee class action lawsuit is seeking damages as well as a court order against the antitrust agreement between the defendants.

What do you think of the Re/Max and Anywhere class action lawsuit settlement? Let us know in the comments below.

The plaintiffs are represented by Carol V. Gilden, Daniel A. Small, Kit A. Pierson, Benjamin D. Brown and Courtney A. Elgart of Cohen Milstein Sellers & Toll PLLC; Steve W. Berman, Elizabeth A. Fegan, Jeff D. Friedman and Rio S. Pierce of Hagens Berman Sobol Shapiro LLP; George Farah and William H. Anderson of Handley Farah & Anderson PLLC; Benjamin David Elga and Brian Shearer of Justice Catalyst Law; Monte Neil Stewart and Russell E. Marsh of Wright Marsh & Levy; and Vildan A. Teske and Marisa C. Katz of Teske Katz Kitzer & Rochel PLLP.

The real estate fee class action lawsuit is Moehrl v. The National Association of Realtors, et al., Case No. 1:19-cv-01610, in the U.S. District Court for the Northern District of Illinois.

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