On October 31, 2023, a federal jury in the Western District of Missouri found that the National Association of Realtors (NAR) and several other real estate brokerages violated antitrust laws by conspiring to increase commissions on home sales. It was determined that this was the case. A jury awarded $1.78 billion in damages to class members, including sellers of more than 260,000 homes in Missouri, Kansas, and Illinois from 2015 to 2022.
Although NAR has indicated it intends to appeal the ruling, it is still a significant blow to NAR, one of the nation's largest real estate industry associations. In total, NAR represents more than 1.5 million members, including real estate brokerage firms like the defendants in this case, Keller Williams Realty. HSF Affiliates, LLC; RE/MAX LLC; BHH Affiliates, LLC; Realogy Holdings, Inc.; and HomeServices of America. According to the plaintiffs' allegations in the complaint,1 Because of NAR's dominance in the market, it has long been accepted practice for home sellers to include a commission on home sales, typically 6% of the purchase price, paid by the seller and shared with the buyer. broker.
Further demonstrating NAR's influence, the majority of home buying and selling takes place on the Multiple Listing Service (MLS) marketplace, which is governed by NAR guidelines. At issue in this lawsuit is Section 2-G-1 and related provisions of NAR's MLS Listing Handbook, which require listing brokers to offer compensation for broker commissions. Plaintiffs in the case argue that sellers are forced to use the MLS and follow its guidelines because of the limited platforms available to sellers to list their products. The required amount of the broker's commission is effectively non-negotiable, thus unfairly locking in the commission that the seller must pay to the buyer's broker. NAR and defendants contend that despite the mandatory offer, there is no minimum fee required. Ultimately, the jury sided with the plaintiffs, finding that NAR and defendants have the ability to increase, inflate, and/or stabilize brokerage commission rates, resulting in higher costs for sellers and an unreasonable restraint on transactions. Certified.
The court will issue a final verdict before the jury's verdict is finalized. Under federal antitrust law, the court could triple the total damages to more than $5.3 billion.2
If you would like to learn more about this lawsuit (and other lawsuits currently pending against NAR) and/or the potential impact of this decision on the real estate industry as a whole, please contact the author.
1 Sitzer v. National Association of Realtors, 420F. supplement. 3d 903 (W.D. Mo. 2019). The class action complaint was filed on April 29, 2019 in the United States District Court for the Western District of Missouri.
2 15. USC § 15 (“The injured person…shall be compensated three times the damages sustained, plus the costs of litigation, including reasonable attorney's fees.'').
