Judge gives initial approval to $418M inflated broker fees settlement

Update:

• A federal judge in Missouri gave preliminary approval to a $418 million settlement from the National Association of Realtors (NAR) over broker commission rules that allegedly caused home sellers to pay inflated fees.
• U.S. District Judge Stephen R. Bough certified a variety of classes, including anyone who sold a home listed on a multiple listing service and paid a brokerage fee in a variety of markets and date ranges beginning April 29, 2014, and from all remaining homes listed between Oct. 31, 2019, and the class notice.
• Per the settlement, NAR will pay $418 million plus interest and change its rules.

Home seller commissions class action lawsuit overview: 

• Who: A group of home sellers have filed a class action lawsuit against the National Association of Realtors (NAR), Keller Williams and HomeServices of America and two of its subsidiaries. 
• Why: The home sellers argue the NAR and the real estate companies work together to artificially fix the price of commissions they pay to buyer’s agents. 
• Where: The class action lawsuit was filed in Missouri federal court. 
• How can I find help: Consumers who purchased a house in the last four years and used a buyer’s broker may qualify to participate in a class action lawsuit.

(Oct. 26, 2023)

The National Association of Realtors and several real estate companies worked together to raise, inflate, and stabilize residential real estate commissions paid by home sellers to buyers agents, a class action lawsuit that went to trial last week alleges. 

A group of Missouri home sellers argue the NAR and real estate companies Keller Williams and HomeServices of America — along with two of its subsidiaries — violated federal antitrust laws by allegedly placing “overt anticompetitive restraints” on their real estate commissions. 

The home sellers are taking aim at what is referred to in the industry as the “buyer broker” rule, which requires a home seller to pay the commission of the buyer broker, a person whose job it is to try and negotiate a lower home sales price. 

“This setup defies basic economic commonsense and would not (and does not) exist in a market free of anticompetitive restraints,” the home seller class action states. 

NAR’s buyer broker rules cost sellers more than $1.3B in commissions, class action says

The home sellers argue that expert testimony from a Dr. Craig Schulman will show that the NAR rules have anticompetitive effects that cause a seller to to pay their adversary, which, if not for the “conspiracy, a seller would not” do. 

“Dr. Schulman’s analysis and testimony will also show that the NAR Rules have an observable effect of keeping and stabilizing commission rates at anticompetitive levels,” the home seller class action states. 

The home sellers are requesting more than $1.3 billion in damages as compensation for the NAR and the real estate companies allegedly “siphoning off” that amount in “economically irrational and unlawful commissions from the Class.” 

In another case involving the real estate industry, mortgage lender Hometrust Mortgage agreed to a class action settlement earlier this year that resolved claims the company failed to prevent a 2022 data breach. 

What are your thoughts on the allegations against the National Association of Realtors? Let us know in the comments. 

The plaintiffs are represented by Michael S. Ketchmark and Scott A. McCreight of Ketchmark & McCreight PC; Eric L. Dirks and Matthew L. Dameron of Williams Dirks Dameron LLC; and Brandon J.B. Boulware, Jeremy M. Suhr and Erin D. Lawrence of Boulware Law LLC. 

The Home seller commissions class action lawsuit is Burnett, et al. v. The National Association of Realtors, et al., Case No. 4:19-cv-00332, in the U.S. District Court for the Western District of Missouri.

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