The big residential brokerage franchisors and holding companies filed a motion on May 17 to dismiss the class action lawsuit filed by homeseller Christopher Moehrl seeking to upend the traditional commission structure in the real estate industry.
Realogy, Keller Williams, HomeServices of America and RE/MAX filed a motion on May 17 to dismiss the class action lawsuit filed by homeseller Christopher Moehrl seeking to upend the traditional commission structure in the real estate industry.
Realogy, Keller Williams, HomeServices of America and RE/MAX along with the National Association of Realtors (NAR) were all named as co-defendants in the lawsuit. NAR announced over the weekend it asked a judge to dismiss the lawsuit, which accused the defendants of conspiring to determine buyers’ agents’ compensation in violation of the Sherman Antitrust Act.
“The premise of plaintiff’s complaint reflects a fundamental misunderstanding of the rules of defendant The National Association of Realtors and the roles of defendants,” the memorandum accompanying the motion states. “As a result, the Complaint fails to state a claim against any of the defendants for a violation of the antitrust laws.”
The motion to dismiss bluntly states the “Buyer Broker Commission Rule,” upon which the lawsuit was filed, simply does not exist.
It further notes that there is no “anti-competitive” agreement in place, just separate companies independently participating in lawful industry activities.
The complaint, filed on March 6, says the defendants are violating U.S. antitrust law, specifically the Sherman Antitrust Act, by requiring listing brokers to make a “blanket, non-negotiable offer of buyer broker compensation” when listing a property on the MLS, which the suit refers to as the “Buyer Broker Commission Rule.”
That rule, the suit alleges, has inflated costs for sellers by requiring sellers to pay a higher commission than they otherwise would if, instead, buyers paid buyer’s agents directly.
“The conspiracy has saddled home sellers with a cost that would be borne by the buyer in a competitive market,” the complaint reads. “Moreover, because most buyer brokers will not show homes to their clients where the seller is offering a lower buyer broker commission, or will show homes with higher commission offers first, sellers are incentivized when making the required blanket, non-negotiable offer to procure the buyer brokers’ cooperation by offering a high commission.”
The complaint also alleges that the defendants use control of multiple listing services and franchisors use their agreements with local franchisees and influence among Realtor leadership to require brokers to adhere to the rule.
The initial complaint has since brought on similar lawsuits from homesellers.
Keller Williams also filed a motion on May 17 to stay discovery and defer compliance with mandatory discovery proceedings pending the resolution of both motions to dismiss, according to court records.
This week, it was revealed that the U.S. Department of Justice is currently investigating real estate brokerage practices after MLS vendor CoreLogic received a wide-ranging civil investigative demand. It’s not clear yet if the two have any connection, but the DOJ is reportedly interested in MLS searches by buyer broker commission.
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