A recent jury verdict in a landmark consumer rights case brought justice to rampant price fixing in the real estate industry. But justice would be insufficient if the National Association of Realtors chooses to appeal instead of changing its ways.
For years, the National Association of Realtors (NAR) has imposed rules requiring home sellers to offer a certain commission to buyers' agents involved in the sale of a home. This policy allowed major brokerages like HomeServices of America and Keller Williams to jack up fees, costing homeowners billions of dollars a year in losses on their home equity.
But homeowners fought back. More than 500,000 plaintiffs filed a class action lawsuit alleging that the NAR rule violates federal antitrust laws by allowing price fixing. The stakes were enormous, given NAR's political influence as America's largest trade association with more than 1.5 million members.
Many legal experts doubted whether a group of homeowners could prevail against such a real estate giant. But they won.
In court, we called some of the world's most influential people in real estate to the stand in Kansas City, Missouri. After considering clear evidence of collusion, the jury found NAR and a major real estate corporation guilty of conspiring to fix fees and awarded the plaintiffs a historic $1.8 billion in damages.
This clear ruling confirmed that anticompetitive conduct in housing sales amounted to illegal price fixing. However, NAR continues to maintain that this illegal pricing scheme protects consumers. This absurd argument is an insult to American intelligence, and the jury was wise to see through the deception. This ruling sent an unmistakable rebuke to the NAR. Your unethical conduct means you harmed home sellers in order to enrich your industry. No industry association is above the law.
Verdict shows the need for reform in the real estate industry
So where does NAR go from here? The group quickly announced plans to appeal the judgment and damages. But prolonging the legal battle will only further damage the NAR's battered reputation and waste resources denying the undeniable. The point is that it distracts from reforms that would rectify the problems this incident has exposed.
The wise way forward is humility and honesty. NAR should agree to change its ways and focus its energies on taking transparent steps to return funds and restore trust to the victims of this scheme. This system requires consumer protections, a fair fee model, and an end to NAR's monopoly power over home sales.
This class action lawsuit exposed systemic corruption in the real estate industry. However, the underlying disease remains untreated. And it continues to harm American homeowners through outdated and high fees that hinder the dream of affordable homeownership.
Homeownership and the American Dream:For millennials like me, buying a home was a dream. For many people, that would be impossible.
So far, the NAR has been mired in a posture of denial, unwilling to confront the gravity of the crime. In a public statement, the group expressed confidence that the appeal would vindicate them.
Rather than engage in lengthy and fruitless appeals, NAR should address the critical issues it faces: the lack of transparency, fairness, and competition in real estate practice. Join regulators and lawyers to discuss new consumer protections, antitrust compliance, and transparency around fees and services. We use per-service pricing and variable fees. To protect brokerage fees, stop clinging to outdated models that harm consumers.
Technology has changed the way we buy and sell homes.
Importantly, the real estate industry needs to adapt to how technology has transformed the way we buy and sell homes.
Americans are increasingly buying homes online with minimal help from agents. However, they are still being charged high fees under the guise of “full service.”
Housing shortages have a negative impact on workers.Would you like to enjoy the luxury that Sedona, Arizona has to offer, knowing that your “help” is sleeping in your car?
Why should consumers have to pay for services they don't want or use? This is similar to having to pay travel agent fees when booking flights directly online. It's something.
This ruling is the perfect springboard for NAR to modernize real estate and align it with the way people buy and sell homes today.
The public expects meaningful reforms in exchange for an end to this disgraceful incident. This could be a transformative moment for the industry to do away with its insular practices and refocus on the people it claims to serve.
Michael Ketchmark is an attorney with Ketchmark and McCreight PC. He was lead counsel in a class action lawsuit against the National Association of Realtors and real estate brokerage companies.
