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Just minutes after a jury sided with a group of homeseller plaintiffs Tuesday in the bombshell Sitzer | Burnett trial, attorney Michael Ketchmark filed a new class action lawsuit accusing another batch of big-name real estate companies of engaging in a conspiracy.
Ketchmark, of the law firm Ketchmark and McCreight, filed the case in the U.S. District Court for the Western District of Missouri on behalf of homesellers Don Gibson, Lauren Criss and John Meiners.
The case echoes the Sitzer | Burnett suit in challenging the practice of having homesellers pay sales commissions to buyers’ agents, which the plaintiffs allege violates the Sherman Antitrust Act. Both suits, as well as the high-profile Moehrl case in Illinois, describe this practice as the result of an industry conspiracy that inflates both agent commissions and costs to consumers.
The new complaint names seven defendants: Compass, eXp World Holdings, Redfin, Weichert Realtors, United Real Estate, Howard Hanna Real Estate, Douglas Elliman, and the National Association of Realtors.
Fresh off the Sitzer | Burnett jury verdict, Ketchmark told Inman, “Today we also filed a nationwide lawsuit against the other major corporate real estate companies who are involved in this, along with NAR, across the country.
“Our hope and goal is to free the grip they have on homesellers across the United States. It’s time that the free market and the internet is allowed to do its work and to bring the savings to homeowners that they’re so entitled to when they sell their homes.”
The suit promises to be much bigger than either Sitzer | Burnett or Moehrl in terms of scope. Filed Oct. 31, the suit seeks class action status on behalf of “all persons who listed properties on a Multiple Listing Service in the United States using a listing agent or broker affiliated with” the corporate defendants and who paid a buyer broker commission from October 31, 2019 until the present.
The complaint seeks class certification, a jury trial, a damages award, and a permanent injunction preventing the defendants from “(1) requiring that sellers pay the buyer broker, (2) continuing to restrict competition among buyer brokers and seller brokers, and (3) engaging in any conduct determined to be unlawful,” among other relief.
Like the other cases, the Gibson suit targets NAR’s cooperative compensation rule, also known as the Participation Rule, which requires listing brokers to make an offer of compensation to buyer brokers in order to submit a listing to a Realtor-affiliated MLS.
“Corporate Defendants — by virtue of compelling and/or encouraging their franchisees, brokers, and agents to belong to NAR and adhere to its rules — adopt, implement, and enforce the Mandatory Offer of Compensation Rule,” the complaint says.
The complaint claims the defendants’ alleged conspiracy inhibits “competition from innovative or lower-priced alternatives” and forces sellers “to pay a cost” that without the rule “would be paid by the buyer.”
If buyers paid for their own agents, “[b]uyer brokers would thus have to compete with one another by offering a lower commission rate,” the complaint adds.
The complaint contends that “real estate commission rates have persisted and remained steady in a range of 5% to 6%,” despite transaction costs declining “dramatically” in other industries.
The complaint alleges “many other local Realtor associations and real estate brokers participated as co-conspirators,” including MLSs who’ve adopted the rule, “nearly all who own, operate, and participate” in such MLSs, and “the franchisees and brokers of Defendants” who “agreed to, complied with, and implemented” the rule.
“Defendants are jointly and severally liable for the acts of their co-conspirators whether named or not named as a defendant in this Complaint,” the complaint says.
The complaint includes public statements made by the defendants in which they admit to following NAR’s policies. This includes statements made by tech-focused brokerage Redfin, which earlier this month announced it was leaving NAR and requiring its agents to do the same in markets where Realtor membership is not a requirement to join an MLS.
“According to Redfin’s statement, the company had ‘already been uncomfortable with the NAR’s positions on commissions …’ and it objected to the fact that ‘NAR still blocks sellers from listing homes that don’t pay a commission to the buyer’s agent …’,” the complaint says.
“Through its statement, Redfin admits that NAR’s policies were anti-consumer, and that Redfin continued to adhere to them even after it grew ‘uncomfortable.'”
The complaint acknowledged that Redfin had called for NAR to “decouple” MLS access from Realtor membership, but added, “Redfin’s position, though, ignores the fact that it adhered to, implemented, and enforced those same anti-consumer rules for years through its membership to NAR.
“Simply put, despite its recent change of heart, Redfin has been part of the conspiracy throughout the Class Period and must now account for its historic role in the conspiracy outlined herein.”
Inman reached out to the defendants in the new case Tuesday.
“We are currently reviewing the new filing, and it appears to be a copycat lawsuit,” NAR spokesperson Mantill Williams told Inman in an emailed statement Wednesday.
“We continue to assert that the practice of listing brokers making offers of compensation to buyer brokers is best for consumers. It gives the greatest number of buyers a chance to afford a home and professional representation, while also giving sellers access to the greatest number of buyers.”
Howard Hanna and Compass both declined to comment. In a statement, eXp said that “while we are still studying the formal complaint, we have been closely observing the ongoing antitrust litigation against our competitors in recent years.”
“We are committed to upholding fair and transparent practices compliant with law and we already have mechanisms and a plan in place that enables buyers and sellers to negotiate commissions,” the statement added. “Our agile business model allows us to make adjustments seamlessly and effectively, no matter the jurisdiction.”
Redfin referred Inman to a blog post from CEO Glenn Kelman Tuesday. The post concluded that “structural change is coming” in the wake of Tuesday’s verdict. It also described the new case as a “copycat lawsuit.”
“As a company that exists to give real estate consumers a better deal, Redfin is proud of our unwavering consumer advocacy. Redfin has saved our clients more than $1.5 billion in fees,” the post added.
Weichert, United Real Estate and Douglas Elliman did not respond to requests for comment. Inman will update this story with any additional comments the defendants provide.
Update: This post was updated after publication with additional details from the suit, background information, and statements from the various parties involved.
Read the complaint:
