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This story was originally published in July 2022. It was updated on May 25, 2023.
After years of fighting, it looks like the battle is about to spill out into open court.
We’re talking, of course, about the high-profile commission lawsuits, which are years old at this point but which also loom bigger by the day. Inman has been reporting on such suits extensively since they began, and though there are multiple cases covering an array of different issues, the basic concept at their core is that some consumers don’t like the way agents get paid.
Two of the biggest cases, Moehrl and Sitzer/Burnett, are specifically a challenge to the practice of having homesellers pay buyers’ agents’ commissions.
These various suits have involved numerous legal salvos over the years. But recent months have seen a number of major developments, including the apparent cementing of the Moehrl case’s class-action status — meaning it could ultimately involve multitudes of consumers and billions of dollars.
What follows is a recap of Inman’s most significant commission suit coverage, beginning with the latest and most significant development. Scroll further down to get caught up on the background, and be sure to stay tuned; the legal fights in these cases strike at the core of what real estate is all about in the U.S., so there’s sure to be plenty more news to come.
Bombshell commission suit 1 step closer to trial after appeal rejected
The bombshell is inching closer and closer to court.
After a federal judge granted class-action status in the so-called Moehrl case, a group of real estate organizations, including the National Association of Realtors (NAR), Anywhere, Keller Williams and others countered with an appeal: They wanted the class-action status removed.
But the court rejected that request Thursday. The decision prevents NAR and various real estate franchisors from appealing the class certification decision. And it allows the case to proceed as a class action.
All of this means that the long simmering and closely watched case is likely headed to trial, though the court has not yet set a trial date.
Bombshell multibillion-dollar commission suit now a class action
It was late March when it started to look like the bombshell was finally about to explode.
After a lengthy period of legal wrangling, a federal judge on March 29 granted class-action status in the Moehrl case. The ruling meant that potentially millions of homesellers can ask to be reimbursed for billions in commissions they paid to buyer agents between 2015 and 2020.
The ruling also delivers a serious blow to the NAR and major franchisors, who have opposed the granting of class-action status since homeseller Christopher Moehrl filed the case in 2019. The suit ultimately alleges that some NAR policies violate the Sherman Antitrust Act by inflating seller costs.
The latest ruling certifies two classes in 20 multiple listing service (MLS) markets nationwide, the first of which seeks monetary damages and the second of which does not seek such damages but asks for an injunction barring the defendants from continuing to violate antitrust laws by maintaining and enforcing the challenged NAR rules.
Federal commission suit now a class action; NAR, Realogy vow to appeal
While the Moehrl case is the bigger and better-known of the two big bombshell suits, another known as Sitzer/Burnett also has the potential to be disruptive to the status quo. And significantly, it was granted class-action status last year.
Sitzer/Burnett was also filed in 2019. It names NAR, Realogy, RE/MAX, Keller Williams and HomeServices of America and its subsidiaries BHH Affiliates and HSF Affiliates. Like the Moehrl case, Sitzer/Burnett aims to have homebuyers pay their brokers directly.
4 commission charts that explain both sides of the Moehrl conflict
A key part of these cases is that the plaintiffs — the Moehrl team and its equivalent in the other suits — believe that the real estate establishment wants to keep costs to consumers high because they fill company coffers. Meanwhile, the defendants say those commissions are negotiable and set by the market, not them, for the value that agents provide.
This piece gets into what exactly the commission landscape looks like by reading the charts included in legal filings. Among other information, the charts suggest that the average buyer-broker commissions in 20 MLSs have risen 32 percent in the seven years between 2013 and 2020.
On the other hand, another chart suggests that median-agent income has remained stable for more than 20 years.
The point here is that it matters for these cases how much agents are getting paid, how much they split with their brokerages and where all of the money comes from.
‘Longstanding conspiracy’: Why the bombshell commission suit matters
This piece further explores the claims in the lawsuits. Among other items, it notes that the plaintiffs in the Moehrl case claim there has been “a longstanding conspiracy” to get consumers to pay higher commissions. The conspiracy allegedly involves the NAR and various big-name real estate franchisors.
The story also points out that there’s big money at stake. One expert for the Moehrl team estimates there could be as much as $41 billion in damages. And the Moehrl team ultimately argues that what happens today in real estate is “not the natural consequence of the free market.”
All of this consequently gets at the core argument for changing the status quo: The real estate industry is overcharging consumers and artificially manipulating the market.
‘Radical’ and ‘doomed’: The case against the ‘bombshell’ Moehrl suit
This piece explores a massive court filing in the Moehrl from last summer and lays out the defendants’ arguments against the case becoming a class-action suit — a battle that as of March 2023 they had lost.
While the case has since moved on from this particular filing, it’s still a pivotal document for understanding how the arguments progressed and what defense established industry players have mounted along the way.
What happens to buyers’ agents if the bombshell lawsuit explodes?
The piece from July 2022 explores a future in which some or all of the cases prevail in court.
Among other points, the cases raise the possibility that the future of real estate in the U.S. could inch toward what happens in other parts of the world, where far fewer homebuyers use agents. Or the sales market could look more like the rental market in New York where home seekers, not owners or sellers, are responsible for paying fees.
This piece also highlights the fact that while legal pressure mounts on commissions, a group of social media users is taking the case directly to consumers. In many cases, such users are telling consumers that real estate commissions are a “scam.” This hasn’t changed the industry yet, but over time it could influence real estate consumers’ willingness to pay fees.
It’s baaack! Homebuyer commission suit against NAR rises from ashes
The Moehrl and Sitzer/Burnett cases are the two best-known lawsuits over real estate commissions. But in a testament to just how controversial agent pay is becoming, they’re far from the only cases.
In another piece from 2022, Inman dove into yet another lawsuit in the commission genre. The case pits eight homebuyers — as opposed to sellers — against big names, such as NAR, Keller Williams, RE/MAX, HomeServices of America and Anywhere (formerly Realogy). Like the more famous cases, it claims a conspiracy is afoot that rips off consumers, and it could become a class-action case.
The case originally began in 2021 before being thrown out in 2022. However, later filings then resurrected the case.
More than 700 agent-steering calls suggest price-fixing, lawyers charge
Most of the lawsuits over agent commissions revolve around antitrust claims and alleged conspiracies. But how exactly do the plaintiffs in these cases think the conspiracies are working?
This story gets into those mechanics, citing hundreds of recordings from REX Real Estate in which agents from other brokerages either refused to show REX listings or simply hung up after learning the brokerage doesn’t offer a preset commission to buyer agents.
This is a practice known as “steering” and it’s generally verboten; it’s considered a violation of agents’ fiduciary duty to their clients under the law, and it breaks the Realtor Code of Ethics.
The recordings are now in the hands of the U.S. District Court for the Northern District of Illinois, and the Moehrl team believes they’re evidence of price-fixing. And that means they will play a key role in proving, or not, that the real estate establishment is inflating costs for consumers.
