Real estate franchisor Keller Williams has issued a subpoena to discount brokerage REX Real Estate to produce audio recordings in a multibillion-dollar class-action case over commissions.
Keller Williams obtained permission from the U.S. District Court for the Western District of Missouri to issue the order after the plaintiffs in the case deposed Will Fried, a former REX employee and current REX consultant, at the end of April.
According to a May 10 legal filing from Keller Williams, REX, which is not a party to the lawsuit, voluntarily provided the plaintiffs with recordings of phone conversations between real estate brokers and REX representatives purporting to show that rival brokers steer buyers away from REX-listed properties. Steering is generally considered a violation of agents’ fiduciary duty to their clients under the law as well as the Realtor Code of Ethics.
In his deposition, Fried discussed how he found the recordings REX shared with the plaintiffs among all of the calls that REX recorded, according to a legal filing from Keller Williams. So now, through its subpoena, Keller Williams is demanding a copy of all transcriptions of the recordings of all in-bound calls to REX that REX recorded, had transcribed, and were used by Fried to identify the recordings that REX provided to the plaintiffs, as well as copies of all such recordings.
“Mr. Fried selectively picked and shared with Plaintiffs only certain of the calls that REX recorded and transcribed and, if Plaintiffs seek to use these recordings in this case, Defendants deserve an opportunity to discover the contents of other recorded calls and evaluate how they might bear on the issues in this case,” attorneys for Keller Williams wrote.
REX publicly released some of its recordings a little over a year ago. At the time, the discount brokerage credited the recordings with contributing to the U.S. Department of Justice’s interest in taking on some of the National Association of Realtors’ rules. NAR is currently under DOJ investigation.
In the released recordings, after agents call REX about a REX listing and are told that REX either expects buyers to pay their own agents or that REX doesn’t offer buyer agents a preset commission, the agents refuse to show the listing. The agents’ responses are:
- “Don’t worry about it; I won’t bother to show it. Who’s your local agent though because I’ll make sure to tell people not to work with them.”
- “Are you kidding me? Forget it. Bye.”
- “I’ll tell [my buyers] that the property sold. Thank you.”
An example:
Gary Keller
Keller Williams co-founder Gary Keller has been singled out by plaintiffs’ attorneys in the lawsuit, known as Sitzer/Burnett, as the alleged head of a conspiracy between defendants Keller Williams, the National Association of Realtors, Realogy, RE/MAX and HomeServices of America to inflate homeseller costs.
The suit, first filed by Missouri homesellers in 2019, accuses the defendants of violating the Sherman Antitrust Act by enforcing an NAR policy, sometimes known as the buyer broker commission rule or the participation rule, that requires listing brokers to offer a blanket, unilateral offer of compensation to buyer brokers in order to submit a listing to a Realtor-affiliated multiple listing service.
The suit, like a bigger federal case in Illinois brought by homeseller Christopher Moehrl, seeks to have homebuyers pay their broker directly, rather than having listing brokers pay buyer brokers from what the seller pays the listing broker.
The plaintiffs have previously called out Keller Williams’ training scripts for encouraging steering and discouraging sellers from reducing buyer broker commissions.
Image of a Keller Williams training script
Sitzer/Burnett won class-action status in April, meaning that hundreds of thousands of homesellers in four MLS markets in Missouri can ask to be reimbursed for $1.3 billion in commissions they paid to buyer agents in the past eight years — plus potential treble damages. The defendants in the case are currently seeking permission to appeal that class certification, though they face long odds.
Asked whether REX had complied with Keller Williams’ subpoena, Keller Williams declined to comment, citing pending litigation. REX did not respond to emailed requests for comment. REX has undergone upheaval lately, pivoting to serve institutional buyers in the single-family rental market after reported mass agent layoffs and office closures.
Read Keller Williams’ subpoena:
