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National Association of Realtors and MLS Control Antitrust Class Action

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How did realtors manage to band together to take anticompetitive actions? The complaint for this class action alleges that the National Association of Realtors (NAR) banded together with four national real estate broker franchises—HomeServices of America, Inc., Keller Williams Realty, Inc., Realogy Holdings Corp., and Re/Max Holdings, Inc.—to set rules for buyer broker commissions. It claims that the arrangement violates antitrust laws.

The class for this action is all persons and entities in the US who, between April 15, 2015 and the present, paid a broker commission for the sale of residential real estate on one of the MLSs in this case. Those include the following:

  • The five MLSs for Minneapolis, Milwaukee, Detroit, Columbus, and Cleveland.
  • The six MLSs for Austin, Dallas, Houston, San Antonio, Las Vegas, and Phoenix.
  • The three MLSs for Colorado Springs, Denver, and Salt Lake City.
  • The four MLSs for Fort Myers, Miami, Charlotte, and Raleigh.
  • The Bright MLS for Baltimore, Philadelphia, Richmond, and Washington, DC.

The complaint claims that the foundation of the conspiracy was “NAR’s adoption and application of a rule requiring all brokers to make a non-negotiable offer of buyer broker compensation (the ‘Commission Rule’) when a broker lists a property on a Multiple Listing Services (‘MLS’).”

MLSs are services listing properties for sale in a particular area. The complaint says, “A majority of homes in the United States are sold on such MLSs.” 

Because of the importance of MLSs, realtors want to list properties there. The complaint claims that the defendants in this case, particularly NAR, had control of a number of MLSs, giving them power in certain areas. Brokers who want access to their local MLS, the complaint says, must follow “all mandatory rules set out in NAR’s Handbook on Multiple Listing Policy, including the mandatory Commission Rule.”

The complaint points out that without the Commission Rule, in a competitive market, buyer brokers would negotiate commissions with their clients, the buyers, and would likely compete by offering lower rates. The non-negotiable rates mean that buyers cannot negotiate lower rates, nor can realtors offer them.

It also means that realtors cannot make offers to buy properties where the sale requires a reduction of the commission. 

The complaint claims that in other countries, “home buyers pay their brokers less than half the rate paid to brokers in the United States, and in these comparable markets (including the United Kingdom, Germany, Israel, Australia, and New Zealand), buyer brokers are paid by home buyers, rather than sellers.”

Furthermore, the complaint claims that many people find their homes online now and only engage a buyer broker after they have found what they want, meaning that the broker has a diminished role. Despite this, the complaint alleges that broker commissions have been kept high by the Commission Rule.

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