(Getty Images)
Real estate agents have been inundated with class-action lawsuits that threaten to upend the traditional real estate compensation system, with 16 cases following a massive $1.78 billion judgment handed down last October against a top industry group. A “copycat” lawsuit has been filed.
Two California lawsuits filed this month, one in Los Angeles and one in Sacramento, bring to 20 the number of lawsuits in federal court seeking to eliminate home sellers' obligation to pay buyers' agents. .
The lawsuit names the National Association of Realtors and more than 200 other trade associations in 11 states as defendants. Since the Oct. 31 ruling against NAR and the two real estate brokerages, new lawsuits have surfaced in New York, Pennsylvania, Illinois, Georgia, South Carolina, Texas, Arizona, and Nevada.
At least four of the lawsuits were filed on behalf of home sellers or buyers nationwide. A state lawsuit has also been filed in the Florida Panhandle, according to news reports.
The lawsuit alleges that real estate industry organizations conspire to keep agents' compensation artificially high by requiring sellers to make payments as a condition for listing their homes on the agent-related database (MLS). He blames it.
Law firms have used terms like “anti-competition” and “conspiracy” to argue that real estate agents are pocketing higher fees due to soaring home prices, even as technology lowers sales costs. It is accused of being
See also: Real estate agents accused of price manipulation speak of change at annual conference in Anaheim
The latest California lawsuit, filed on behalf of Sacramento home sellers, alleges that “defendants suppress transactions by making[homeowners]pay higher buyer agent fees and home sales commissions. They have conspired to do this and continue to do so.” “As home prices have increased significantly, buyer brokers have less work to do, and at the same time their commission amounts have increased.”
Typically, the home seller pays commissions to all agents in the transaction, and the buyer pays no compensation. If the lawsuit is successful, the buyer will have to pay the agent directly.
Additionally, the New York Times predicts that NAR, the nation's largest industry group, could be forced into bankruptcy as damages in the Missouri lawsuit could triple to $5.3 billion. is increasing.
consumer benefits
NAR has vowed to appeal the Missouri ruling, arguing that its current practices are in the best interest of its customers and adding that all fees are negotiable.
“Collaborative compensation practices enable efficient, transparent, and accessible markets,” Mantil Williams, NAR's vice president of communications, said in an email. “Sellers can sell their homes for more, get more buyers to see their homes, and buyers have more home options and can afford to have an agent. ”
Agents who attended NAR's annual meeting in Anaheim last November said first-time buyers and minority buyers who are already struggling to cover deposits and closing costs are paying fees. Without it, he argued, he would not be able to hire an agent.
Meanwhile, plaintiffs' lawyers are asking that all cases be consolidated before a single judge, preferably Judge Stephen R. Baugh, U.S. District Judge for the Western District of Missouri. Mr. Baugh presided over a trial that resulted in a $1.78 billion verdict.
Lawyers for NAR responded on Tuesday, January 23, saying they hope the case will be heard in Chicago, where NAR is based.
“The Northern District of Illinois is not only the district where the first lawsuits were filed, but also the district with the highest number of lawsuits,” the trade group's motion states. Four of the 20 federal lawsuits were filed in Illinois.
CALIFORNIA CASE
On December 8, Marin County home seller Christina Grace sued NAR, several local real estate agent associations, and multiple listing services on behalf of sellers from five Bay Area counties.
On January 17, a second California lawsuit filed charges against NAR and about 30 real estate agents on behalf of home sellers in Los Angeles, Fresno, and Madera counties.
According to the complaint, plaintiffs Gael Fierro and Patrick Thurber paid $51,300 in fees for the sale of Fierro's home in Hollywood and $27,000 in commissions for the sale of Thurber's home in the Sierra Nevada foothills. Paid 6%. Half of that amount was paid to agents working for the buyers.
In addition to NAR, their lawsuit names 20 local real estate associations as defendants, including the California Association of Realtors and real estate agent groups in Los Angeles, the South Bay, Pasadena, the San Gabriel Valley and the San Fernando Valley.
“We believe these allegations are unfounded,” Melanie Barker, president of the Central African Party, said in a statement. “We plan to present these claims in court and have retained an experienced antitrust attorney to do so.”
See also: National president of real estate agency resigns over extortion charges
On January 18, Sacramento home seller Wilsim Latham LLC sued Metrolist Services, a multi-listing service that serves 12 counties in Northern California. In addition, 18 local real estate agent associations and brokerages are being sued to compensate those who list homes for sale on the MetroList MLS.
Although not a defendant in the Sacramento case, NAR is named as a “co-conspirator.”
The Sacramento lawsuit, like others across the country, cites a 2015 study commissioned by NAR by Orange County-based industry analyst Stephen Swanepoel that Fees were found to be high compared to countries such as the UK and Australia.
“Currently, agents' total compensation in the United States typically averages 5% to 6% of the home sale price,” the complaint states. “According to the[Swanepoel]report, in countries such as the UK, Singapore, the Netherlands, Australia and Belgium, the average total fees range from 1% to 3%.”
