A Clive, Iowa-based Keller Williams franchise has filed suit against the largest brokerage in Iowa over the latter’s refusal to split commissions with Keller Williams’ buyer’s agents. The suit alleges unfair competition, breach of contract, and libel among other charges.
The Keller Williams franchise has also filed ethics complaints with the Iowa Real Estate Commission and the Des Moines Area Association of Realtors for alleged "false statements" concerning both itself and the Keller Williams franchise.
Golden Circle Real Estate Group LLC, which does business as Keller Williams Realty Greater Des Moines filed a seven-count complaint against Des Moines-based Iowa Realty, a subsidiary of Berkshire Hathaway affiliate HomeServices of America Inc., Wednesday in Polk County District Court.
Before affiliating with Keller Williams in March, Keller Williams Greater Des Moines was Burnett Realty, an independent, 37-agent firm founded in 2000.
According to a letter included in the complaint, Iowa Realty, which has more than 65 offices and 1,000 agents, informed Keller Williams Realty in 2006 that it would not share commissions with Keller Williams agents should the franchisor open an office in the Des Moines market.
In the letter, Iowa Realty accused Keller Williams of "damaging" and "unwanted" recruiting efforts, including "attempted clandestine efforts of Keller Williams to recruit an Iowa Realty agent to act as a ‘mole’ who in turn is to recruit other Iowa Realty agents to sign non-disclosure agreements to hear the pitch why they should leave Iowa Realty and become Keller Williams agents."
In January 2012, Iowa Realty warned Burnett Realty, which was in the process of becoming a Keller Williams franchise, that their position had not changed. On March 23, Iowa Realty informed the newly converted franchise that, as of March 24, "Iowa Realty will pay Golden Circle Real Estate Group LLC … agents upon the sale of an Iowa Realty, resale property listing, 0 percent of the commission posted on the multiple listing service."
The policy does not apply to new construction or certain real estate-owned (REO) properties whose sellers or servicers require commission sharing.
"Iowa Realty has created a situation that does not represent the best interests of the Des Moines consumers, and we want to resolve this matter," said Brian Wentz, team leader of the Keller Williams Des Moines office, in a press release announcing the lawsuit.
"The reasons for the zero split are rooted in the arrival of new competition in the market, and the impact an inter-dependent model will have on on a traditional broker. It is not the result of any actions on our part," Wentz said in commenting on an Inman News story about the dispute. "We intend to continue to do the right thing for our consumers, and represent their interest on any home purchase that fulfills their needs. This is a non-negotiable in our culture, and in the end will prevail over scare tactics."
"We want to be great competitors in the marketplace, but want to do so in a cooperative, consumer friendly environment," Wentz said in an interview. "We are paying their associates, when they sell one of our properties, and we feel it would be win-win for them to do the same."
In a written statement, Kim Walker, a partner with Faegre Baker Daniels, LLP and outside counsel to Iowa Realty said the brokerage "intends to vigorously contest the claims … in its formal legal response."
Mike Knapp, president and CEO of Iowa Realty, also provided a written statement, saying Iowa Realty "has been the leader in Iowa’s real estate industry for more than 60 years. Our success is the result of working diligently in tandem with our agents to deliver the best possible real estate and marketing services to our customers. This is our mission and our focus."