In a hearing Oct. 5 in U.S. District Court, a judge denied motions brought by the National Association of Realtors asking to dismiss a lawsuit that seeks to end the practice of sellers paying buyers’ broker commissions.
This is the third such lawsuit filed against NAR about buy-side commissions, although this one zeroed in on NAR’s buyer broker commission rule requiring “all brokers to make a blanket, non-negotiable offer of buyer broker compensation” in order to list the property on the Multiple Listing Service.
The plaintiffs in the class-action suit are two Connecticut homeowners who say NAR’s policies force sellers to pay buyer commissions at an inflated amount.
The lawsuit, which alleges racketeering and conspiracy, also names four brokerages: Keller Williams, Berkshire Hathaway HomeServices of America, RE/MAX Holdings and Realogy Holdings.
Responding to NAR’s motion to dismiss the suit, Judge Andrea Wood agreed with the plaintiffs’ contention that they were forced to pay higher commissions because of the rule.
“The Court finds that plaintiffs have sufficiently pleaded that they suffered an antitrust injury from defendants’ conspiracy,” Wood wrote. “Each plaintiff was a home seller required to pay a commission to the buyer-broker for the person who purchased their home. But-for defendants’ conspiracy, each plaintiff would have paid substantially lower commissions.”
Although disappointed in the ruling, a NAR spokesperson told Chicago Agent magazine that as the case moves forward, they intend to demonstrate how the MLS system creates competitive, efficient markets that benefit homebuyers and sellers as well as small business brokerages.
“The MLS fosters cooperation between brokers providing the best and greatest number of options for buyers and sellers,” NAR said. “The broker commission structure also ensures greater access for first-time, low-income and many other home buyers who otherwise couldn’t afford a home purchase. We are confident that when the case is ultimately decided, we will prevail.”