Big Brokers Hit with New Antitrust Lawsuit Over Buyer Broker Commissions

The residential real estate industry is facing yet another antitrust lawsuit targeting the long-standing practice of home sellers paying the commissions of buyer’s agents. Filed on December 27th in Missouri federal court, Daniel Umpa v. National Association of Realtors alleges the NAR and large national brokerages like Compass and Keller Williams conspired to maintain inflated buyer agent commissions through anticompetitive practices.

This latest suit comes on the heels of the Department of Justice’s ongoing investigation into potentially anti-competitive industry practices related to real estate commissions and access to MLS listings. It also follows similar buyer broker commission lawsuits brought in the past two years by home sellers against NAR and large brokerages. The new complaint alleges the defendants worked together to enact NAR policies like the ‘Buyer Broker Commission Rule’ which required listing brokers to make blanket, non-negotiable commission offers to buyer brokers. This rule allegedly discourages lower commissions and impedes market competition to the detriment of home sellers.

If successful, the plaintiff seeks injunctive relief under antitrust laws forcing changes to current industry practices, as well as damages related to overcharges paid by class members stretching back to late 2019. With the DOJ investigation ongoing and buyer broker commissions under continued legal scrutiny, pressure mounts for transparency and reform in how real estate agents are compensated. Though the industry justifies maintaining the status quo to ensure access to listing data critical for buyers and sellers, critics argue new technologies make this argument increasingly dubious. One thing is clear – more antitrust litigation is brewing which could profoundly reshape residential brokerage.

Umpa vs The National Association of REALTORS, et al

(click on image to view entire complaint)

Umpa vs The National Association of REALTORS, et al

NAR Aims to Dismiss Moehrl Suit: Summary Judgment Motion Marks Latest Turn in Landmark Real Estate Case

Earlier this week, on Tuesday, December 19, 2023, the Moehrl v. National Association of Realtors (NAR) lawsuit saw a flurry of activity.  Motions for summary judgment were filed by the remaining defendants, including the National Association of REALTORS® (NAR), Keller Williams Realty, Inc., BHH Affiliates, LLC, The Long & Foster Companies, Inc., HSF Affiliates, LLC and HomeServices of America, Inc. Notably, two other defendants, Realogy (now known as Anywhere) and Re/Max, had previously reached a settlement agreement with the plaintiff, which is currently pending court approval.

With the exception of Keller Williams Realty, Inc., all of the real estate brokerage defendants jointly filed a single motion for summary judgment. In contrast, Keller Williams Realty, Inc. submitted their own separate motion, which, while distinct, shares similarities with the collective motion of the other brokerages in its arguments and legal stance.

  • The National Association of Realtors defended its model rules and policies, asserting they’re not conspiratorial and are instead standard practice in the industry, aiming to facilitate transparency and efficiency in real estate transactions.
  • Keller Williams Realty, Inc. focused on their lack of involvement in the alleged conspiracy, emphasizing no direct role in NAR’s Cooperative Compensation Rule.
  • BHH Affiliates, LLC, The Long & Foster Companies, Inc., HSF Affiliates, LLC, HomeServices of America, Inc. similarly argued for their non-participation in any actions related to the NAR rule they’re accused of conspiring to adopt.

As I’ve mentioned in many previous articles, this legal battle, along with other similar cases across the country, is poised to have significant implications for the real estate industry and profession. At the heart of these challenges lies a foundational method of conducting residential real estate transactions, including the compensation of agents (particularly buyer’s agents). Regardless of the outcomes of these lawsuits, the industry is set to undergo significant changes. This is partly due to the heightened attention these cases have attracted, which will likely lead to a better understanding of the transaction process by home buyers and sellers, as well as greater transparency, especially in terms of the roles and compensation of real estate agents involved. Personally, I believe these developments are positive. They will benefit dedicated, professional agents and their clients, and may disadvantage those who are underperforming or, frankly, should not be in the business in the first place.

Find complete information on this lawsuit as well as all the other related lawsuits as well as a wealth of information on the St Louis real estate market at the MORE Resource Center by clicking this link or the button below.

Indications Lean Towards DOJ in NAR Legal Battle: Insights from Appellate Court’s Oral Arguments

In yet another pivotal moment for the real estate industry, oral arguments were made yesterday before a three-judge panel at the United States Court of Appeals for the District of Columbia Circuit in the ongoing battle between the National Association of REALTORS (NAR) and the Department of Justice (DOJ).   The panel, consisting of Circuit Judges Henderson, Walker, and Pan, will now deliberate and make a ruling in the future, a decision that could significantly impact the industry.

The case centers on NAR’s attempt to prevent the DOJ from reopening an investigation into the organization’s commission-sharing policies. The dispute revolves around a 2020 closure agreement, which NAR interprets as barring any future investigations. However, this interpretation faced scrutiny from the judges, particularly Judge Florence Pan, who questioned the permanence of the agreement.

Representing the DOJ, Frederick Liu argued that there was never an intention to indefinitely halt the investigation. He emphasized that during the negotiation process, the DOJ’s antitrust division did not make explicit commitments to end the probe permanently.

This legal showdown is crucial for NAR, an association with more than 1.5 million members. Just last month, NAR, along with other defendants, lost a nearly $1.8 Billion anti-trust lawsuit here in Missouri (Sitzer v NAR) and NAR is currently facing multiple other antitrust lawsuits, including a substantial class-action suit in Illinois, potentially leading to damages of $40 billion.

NAR’s attorney, Christopher Michel, stressed the significance of the closure agreement, arguing that reopening the investigation would render it meaningless. Judge Justin Walker, however, highlighted the inherent risk NAR took in depending on the continuity of the DOJ’s personnel after the election.

The decision by this appellate court will be closely watched, as it could herald significant changes in how real estate transactions are conducted, affecting agents, buyers, and sellers alike. Stay updated with St Louis Real Estate News for the latest on this critical legal development.

New Class Action Lawsuit Targets Major Real Estate Players Following Sitzer Verdict

In a remarkable turn of events, just minutes after the jury sided with the homeseller-plaintiffs in the landmark Sitzer | Burnett trial, attorney Michael Ketchmark wasted no time in launching another legal salvo against the real estate industry. This new class action lawsuit, filed on behalf of three new homesellers, aims to further scrutinize the practices surrounding agent commissions.

The Defendants

This new lawsuit expands the list of defendants to include: Compass, eXp World Holdings, Redfin, Weichert Realtors, United Real Estate, Howard Hanna, and Douglas Elliman. Notably, the National Association of Realtors is once again named as a defendant, marking its continued entanglement in legal challenges related to commission structures.

The Allegations

The plaintiffs in this new case echo the grievances aired in the Sitzer | Burnett lawsuit, claiming they have been adversely affected by a “real estate industry conspiracy” that artificially inflates agent commissions. The suit alleges that this practice has a cascading effect, ultimately driving up costs for homesellers.

Legal Venue

The lawsuit has been filed in the United States District Court for the Western District of Missouri, the same jurisdiction that recently saw the Sitzer | Burnett plaintiffs awarded $1.785 billion in damages.

What This Means for the Industry

The filing of this new lawsuit so swiftly on the heels of the Sitzer | Burnett verdict could signal a wave of legal challenges aimed at traditional real estate commission models. Industry stakeholders will undoubtedly be watching closely as this new case unfolds, given its potential to further disrupt established practices and financial structures within the real estate market.

Update: Jury Returns Verdict in Sitzer Lawsuit, Awards $1.785 Billion in Damages

In a groundbreaking development, the jury in the Sitzer v National Association of REALTORS®, et al, lawsuit has returned a verdict in favor of the plaintiffs. According to reports by Inman News, the jury found against all defendants and awarded a staggering $1.785 billion in damages. This decision could have far-reaching implications for the real estate industry, potentially reshaping commission structures and business practices.

The lawsuit, which has been closely followed since its filing in 2019, questioned the legality of certain real estate commission practices. The verdict is likely to send shockwaves through the industry, prompting legal reviews and potentially setting the stage for further litigation.

It remains to be seen how this verdict will impact the real estate market in the long term, but it is clear that the decision marks a significant moment in the ongoing debate over real estate commissions and transparency.

Stay tuned for more updates and in-depth analysis on what this verdict means for the future of the real estate industry.

Sitzer vs NAR (National Association of REALTORS) – Good or bad for consumers?

In an article published yesterday, I referenced the Sitzer vs National Association of REALTORS law suit and said I would have a more in-depth discussion about that suit and here it is.  The lawsuit was filed by Joshua Sitzer, Amy Winger, Scott and Rhonda Burnett and Ryan Hendrickson on June 21, 2019 against the National Association of REALTORS® and the parent companies of major real estate companies and franchises including Coldwell Banker, ReMax, Keller Williams and Berkshire Hathaway Homeservices.

The Sitzer lawsuit was filed in the United States District Court for the Western District of Missouri sought to be certified as a class action lawsuit on behalf of “all persons and entities who listed properties on one of four Multiple Listing Services…and paid a broker commission from at least April 29, 2015 until the Present…“.   The four MLS’s listed in the suit that this applies to are:

  • Heartland MLS (Kansas City, MO)
  • MARIS MLS (St Louis, MO)
  • Southern Missouri Regional MLS (Springfield, MO)
  • CBOR MLS (Columbia, MO)

Last Friday, April 22, 2022, Stephen R. Bough, a Federal Judge for in the Western District of Missouri, issued an order granting the class action status for the lawsuit the Plaintiffs sought.

What does the class action ruling change?

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Appellant Court Overturns Lower Court Dismissal of Anti-Trust Lawsuit Against the National Association of REALTORS®

The past several days have not been good for the National Association of REALTORS® (NAR) from a legal perspective at least.

First, last Friday, April 22, 2022, Stephen R. Bough, a Federal Judge for in the Western District of Missouri, certified a lawsuit against NAR as a class action suit.The suit, known as the “Sitzer” suit as the original plaintiffs were Joshua Sitzer and Amy Winger, alleges that the defendant, the National Association of REALTORS®created and implemented anticompetitive rules which require home sellers to pay commission to the broker representing the home buyer“.  The plaintiffs in the suit also allege that the other defendants, which include Realogy Holdings Corp, Homeservices of America, Inc.,  Re/MAX LLC and Keller Williams Realty, Inc., “enforce those rules through anticompetitive practices.”  I believe this action by the court was expected and likely did not come as a surprise to anyone but it was not good news for NAR or the other defendants.  In the coming days I’ll be doing an in-depth article on this one.

Then, yesterday, the United States Court of Appeals for the 9th Circuit delivered another and this time, a likely unexpected, blow to the National Association of REALTORS® in the form of a reversal of a suit against NAR that had been dismissed previously by a lower court.  The suit, v. the National Association of REALTORS®, is another suit alleging anti-trust violations by NAR and the other defendants which are all MLS’s.  The suit was brought originally by as a result of NAR enacting its “Clear Cooperation Policy” which for all intents and purposes, dictates to agents and brokers how and when they can market their listings.  I’ve written several articles specifically on this policy in the past which can be found using the following links:

Continue reading “Appellant Court Overturns Lower Court Dismissal of Anti-Trust Lawsuit Against the National Association of REALTORS®