A pair of lawsuits could upend how compensation works, but NAR believes the cases “are wrong on the facts, wrong on the economics and wrong on the law.”
The National Association of Realtors has asked a judge to throw out a pair of lawsuits that accused the trade organization of breaking antitrust laws, and which, if successful, could upend the way compensation works in real estate.
The request to dismiss Moehrl vs. NAR and Sitzer vs. NAR was made last week, with the organization arguing in a statement that both cases failed to show how its rules “inhibit competition or cause the plaintiffs any harm.” NAR also said in it statement that the lawsuits misrepresent its rules regarding multiple listing services (MLSs).
“Throwing around a few anti-trust buzzwords doesn’t change the fact that MLSs have contributed to an orderly, efficient and pro-consumer marketplace for well over 100 years,” NAR President John Smaby added in the statement. “We continue to believe the lawsuits are wrong on the facts, wrong on the economics and wrong on the law.”
The Moehrl suit was filed earlier this year. It alleged that NAR, along with big name real estate brands such as Realogy and Keller Williams, were violating antitrust laws by requiring listing brokers to make a “blanket, non-negotiable offer of buyer broker compensation” when listing a property on the MLS. The lawsuit refers to this requirement as the “Buyer Broker Commission Rule.”
The suit argues that the requirement has inflated costs for sellers by requiring them to pay a higher commission than they would if, instead, buyers paid their agents directly.
The complaint ultimately dubs the situation a “conspiracy.”
Minnesota resident Christopher Moehrl filed the lawsuit after selling a home in 2017.
However, NAR immediately hit back at Moehrl and his legal team, saying in May that the suit’s claims were “baseless” and included “an abundance of false claims.” The trade organization also previously asked a judge to dismiss the case in May.
NAR also argued last month that the case could be “disastrous” for both buyers and sellers. And despite the legal wrangling, the suit has been debated as a potential bombshell for the industry that could, if it prevails, shake up the way agents get paid.
The Sitzer case has received less media attention, but was filed in April and similarly accuses NAR and various major real estate firms of violating antitrust laws by requiring sellers to pay “an inflated amount” to buyers’ agents.
As it has previously, NAR continued this week to take issue with that argument.
“The essence of the plaintiffs’ argument is based on a flawed interpretation of the NAR Handbook on Multiple Listing Policy and Code of Ethics,” the organization said in its statement.
Among other things, NAR argued the plaintiffs in the cases never said they tried to negotiate lower commissions, which the rules allow. They also “have totally ignored the long antitrust scrutiny of the MLSs and the repeated judicial conclusion that MLSs and the rules that govern them are pro-competitive,” according to NAR’s statement.
However, Brandon Boulware — an attorney for the plaintiffs in the Sitzer case — disagreed with NAR and said that he and his team plan to fight the motion to dismiss the case.
“We do not think much of their motion and are surprised the defendants even bothered to file it,” Boulware told Inman.
NAR did not respond to Inman’s request for additional comment.
However, in his statement, Smaby repeatedly defended the MLS system and his organization.
“The MLS system creates highly competitive, efficient markets with increased transaction volume,” he argued, “and superior customer service that benefit home buyers and sellers.”
Update: This post was updated after publication with additional comment from Brandon Boulware, and attorney representing the plaintiffs in the Sitzer case.