An Illinois real estate broker filed an antitrust lawsuit against several real estate brokerage companies accusing them of engaging in a group boycott and other retaliatory actions after the broker advertised lower-than-typical commission rates for his real estate services.
Filed on behalf of Gregory Hackman and his real estate company, Gregory Hackman Realtors, the lawsuit also charges that the brokerage companies acted with the encouragement of the Rockford Area Association of Realtors, a local Realtor trade group. In all, the complaint names six real estate brokerage companies, seven individuals, and a local and state Realtor association.
Most of the companies and Realtor associations named in the complaint did not offer any comment about the allegations, and the owner of one of the named companies said that to his knowledge, Hackman “has never been treated differently” than other real estate agents.
Several other real estate companies and individuals contacted by Inman News in the Rockford area also did not comment about the lawsuit.
The lawsuit was filed Nov. 30 in U.S. District Court for the Northern District of Illinois, and Hackman’s lawyer said that all of the parties named in the lawsuit should have received a copy of the complaint, along with a request for response, by Dec. 15.
David G. Sigale, a lawyer who is representing Hackman, said, “Real estate is a very competitive field and certainly there is nothing wrong with being competitive. There is nothing wrong with trying to outdo competitors in terms of service or price,” Sigale said. “But … there are rules to be followed — there are boundaries that you can’t step outside of,” adding that the actions alleged in the lawsuit have “devastated” Hackman’s business.
The brokerages named in the complaint allegedly sought to illegally “control the real estate broker commission scheme in the Rockford area by attempting to intimidate (Hackman and his company) into charging a higher commission rate for his real estate listings,” the lawsuit states.
Also, the lawsuit alleges that several brokerage companies refused to show properties to clients of Hackman’s company, refused to offer Hackman the advertised commission rate in the multiple listing service, initiated “trumped-up ethics complaints … in an effort to tarnish his record and reputation,” and affected client relationships “by interference and by false statements … to its agents and clients.” Further, the case charges that Hackman now runs the brokerage business from a home office because the actions of others “have effectively run Hackman out of everywhere else it has tried to set up.”
The “going rate” for real estate commissions in the sale of existing homes in the Rockford, Ill., area is 6-7 percent of the sale price of the home, the lawsuit states. Problems between Hackman and the brokerage companies allegedly began about six years ago, when Hackman opened an office in the Rockford area and advertised that his company would charge a 5 percent commission to list new clients’ homes for sale, according to the complaint.
Real estate commissions are typically divided into roughly equal shares when there is an agent also involved on the buy-side of the transaction, so that a 7 percent commission would mean a 3.5 percent commission for both the listing agent and the buy-side agent and a 5 percent commission represents a 2.5 percent commission for either side of the deal.
In response to “this new competitive threat” of a total commission lower than 6 percent, the lawsuit alleges that the six companies, with the encouragement of the Rockford Area Association of Realtors, “entered into an agreement whereby they would, by and through their agents and/or employees, retaliate against Hackman in every facet of their business.” The companies allegedly refused and “continue to refuse to present offers on their own listings from potential purchasers represented by Hackman” and “further discouraged their seller clients from accepting offers from Hackman’s purchaser clients, by disparaging Hackman.”
The companies named in the lawsuit include Dickerson & Nieman Realtors, Whitehead Realtors, Coldwell Banker Premier, Century 21 Country North, Prudential Crosby Realtors, and Tom McKiski Realtors.
Tom McKiski, owner-broker for a company named in the suit, said in a statement, “To my knowledge, Greg Hackman has never been treated differently than any other agent.”
Hackman is seeking $500,000 in compensation for damages through the legal action, according to the complaint. He also has sought an injunction against the Rockford association and the Illinois Association of Realtors related to an ethics complaint that was filed against him in August 2004. The lawsuit alleges that the Realtor groups did not properly follow their own procedures in considering the ethics complaint.
Steve Bochenek, chief legal counsel for the Illinois Association of Realtors, said Tuesday that the association had no comment on the complaint and that the ethics hearing has been postponed.