On October 31, 2023, a federal jury in the Western District of Missouri found that the National Association of Realtors (NAR) and multiple other real estate brokerages violated antitrust laws by conspiring to inflate the broker commission costs for residential home sales. The jury awarded $1.78 billion in damages to the class members, who include sellers of more than 260,000 residential homes in Missouri, Kansas and Illinois from 2015 through 2022.
While NAR has indicated that it will appeal the verdict, it is nonetheless a very significant blow to the organization, which is one of the largest real estate trade associations in the country. In total, NAR represents over 1.5 million members, including real estate brokerages like the defendants in this case, i.e., Keller Williams Realty; HSF Affiliates, LLC; RE/MAX LLC; BHH Affiliates, LLC; Realogy Holding Corp.; and HomeServices of America. According to the plaintiffs' allegations in the complaint,1 through NAR's dominance in the marketplace, it has long become an accepted practice in residential home sales for the listing brokers to include commission fees at a typical rate of 6% of the purchase price, to be paid by the sellers and shared with the buyers' brokers.
As a further sign of NAR's influence, the majority of residential home sales and purchases occur on Multiple Listing Service (MLS) marketplaces, which are governed by NAR guidelines. At issue in this case are Section 2-G-1 and the related provisions of NAR's MLS Listing Handbook, which mandate that the listing brokers make offers of compensation for the broker commission fees. The plaintiffs in this case argue that given the limited platforms available for sellers to post listings, sellers are forced to use MLS and abide by its guidelines. The required offers of broker fees are effectively nonnegotiable and thus unfairly fix the commission fees that sellers must pay to the buyers' brokers. NAR and the defendants argue that despite the mandatory offers, there is no minimum rate required. Ultimately, the jury sided with the plaintiffs, finding that NAR and the defendants have the ability to raise, inflate and/or stabilize broker commission rates, thus resulting in higher costs for the sellers, which constitutes an unreasonable restraint on trade.
The court will issue a final ruling before the jury verdict is finalized. Under federal antitrust laws, the court will likely triple the total damages award to over $5.3 billion.2
To learn more about this case (and others that are currently pending against NAR) and/or the potential implications of the verdict for the real estate industry as a whole, please contact the authors.
1. Sitzer v. Nat'l Ass'n of Realtors, 420 F. Supp. 3d 903 (W.D. Mo. 2019). The class action complaint was filed on April 29, 2019, in the U.S. District Court for the Western District of Missouri.
2. 15. U.S.C. § 15 ("any person who shall be injured ... shall recover threefold the damages ... sustained, and the cost of suit, including a reasonable attorney's fee").
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