National Association of Realtors Lawsuit over Traditional Commission Structure

MINNEAPOLIS A Minnesota man is the first plaintiff in a class-action, antitrust lawsuit that some experts say could change the way residential homes are bought and sold in the U.S.

The lawsuit, https://www.cohenmilstein.com/sites/default/files/Realtors%20Consolidated%20Amended%20Complaint%20June%2014%202019%20FINAL%20CLEAN%20COPY%20%28FILED%29.pdf claims homes sold by realtors since 2014 in most major metropolitan areas were part of a "conspiracy" between the National Association of Realtors (NAR) and four of the largest real estate companies including Realogy, Home Services of America, RE/MAX and Keller Williams.

At the heart of the lawsuit is the NAR's policy on the payment of realtors, known as the "Buyer Broker Commission Rule". It states all brokers who list a property on a Multiple Listing Service (MLS) must make a blanket, non-negotiable offer of compensation to the buyer's broker.

This means the seller and their agent are the ones who decide how much the buyer's agent will get paid during a sale. And most often, the seller typically pays for both agents, according to the lawsuit.

"It's a rigged system ultimately," said Marisa Katz, an attorney for lead plaintiff Christopher Moerhl, of Shorewood, MN. "Because of the system that's in place, Americans end up paying three to four percent more in real estate broker fees than consumers in other countries."

The rule,https://www.nar.realtor/sites/default/files/documents/2019-HMLP.pdf (page 34), allows sellers' brokers to offer higher commissions to entice more buyer brokersand in turn more buyersto a given property. This commission must be listed on each property in an MLS, but is not available for buyers to see. Katz says this process can lead buyer-brokers to only show their clients properties with higher commissions. This is an unethical practice known as steering.

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