An Arizona real estate broker has filed a lawsuit against the National Association of Realtors as well as his state and local Realtor associations, alleging antitrust violations over rules regarding listing broker attribution.
In the Sep. 6 complaint, the broker, Grady Hillis of Grady Hillis Realty in Lakeside, Arizona, names NAR, the Arizona Association of Realtors, the White Mountain Association of Realtors, lockbox company Supra and multiple listing service vendor FBS as defendants. Hillis, who is also a real estate investor, alleges that since about 2005, the defendants began redacting information about the listing agent and/or broker out of his sales listings when an emailed copy is sent to a potential buyer.
“This also occurs with all other listings dessemenated [sic] by other brokers and agents who are members of WMAR,” the complaint says. “There is no way for a broker or agent to override this. The primary information redacted is the agent and or broker information. This makes all listings appear to be the broker or agents listing that sends it and tends to reduce competition and infringes on advertising. This practice has occurred for at least the past 16 years.”
The complaint also objects to rules that don’t allow “the disclosure of personal broker or agent information in the public remarks of listings including, but not limited to, names, phone numbers, social media accounts.” “Public remarks” refer to the listing description displayed in online listing pages.
“In practice, this also includes information a broker or agent has about their financial interest in a property,” the complaint says. “Further, these rules limit engaging in transactions to only brokers and agents who are members of the MLS instead of all brokers and agents licensed in Arizona. These rules even prohibit an owner/seller of their home from placing their own for sale sign on their property.
“This chills competition, restricts the ability of an agent or broker to get new buyers or sellers and misrepresents to potential buyers an agent or broker’s financial interest. There are extreme sanctions for failing to follow these rules (including a $15,000.00 fine and/or expulsion) and, ultimately, it is referred to AAR to impose the discipline.”
In an emailed statement, Mantill Williams, NAR’s vice president of communications, told Inman, “We believe the lawsuit is meritless and we will vigorously defend against it. We are confident the guidance we provide to local broker organizations ensures a fair and competitive real estate market for home buyers and sellers.”
FBS, Supra and the White Mountain Association of Realtors declined to comment. The Arizona Association of Realtors did not respond to requests for comment.
The lawsuit comes as discussions regarding listing broker attribution are heating up in the industry. In January, on an Inman Connect panel, broker-owner Courtney Poulos warned that multiple listing services need to either meet agent needs and help them compete against tech giants like Zillow or lose them to something like a national MLS. At the time, she said she’d been lobbying for an MLS change that would allow listing agents to put “If you’re an unrepresented buyer, please contact listing agent information” in listing descriptions.
“So that when it goes out to the IDX feed and it’s populated on Zillow, Redfin etc., a buyer can now know ‘Oh, that person that’s on that isn’t the listing agent’ and the consumer can make the choice,” Poulos said then.
“This is nearly impossible to get this pushed through with my local MLS, even though I’m on the board.”
While Poulos is based in Los Angeles, MLSs across the country have similar rules in place.
Big industry players are taking a different tack on listing attribution. California Regional MLS (CRMLS) put in place a new listing credit rule last week that required listing displays to be clear enough so that a “reasonable real estate consumer” understands who the listing agent, listing broker and advertising agent are and how to contact the listing agent or broker.
And last week, NAR’s MLS advisory board reviewed a proposal from Realogy that would require that the contact information for listing agents and brokers be displayed on website listing pages at least as prominently as that of any advertising agent on a site.
Hillis’s complaint also alleges that the defendants require that Supra lockboxes be used on homes for sale and that only members of WMAR can use the lockboxes.
“This eliminates the ability for the rest of the brokers and agents in Arizona from having easy access to homes that are for sale which reduces the exposure and accessibility of the home and the likelihood of the broker or agent being able to sell the home on behalf of the seller,” the complaint says.
Hillis is not alone in this allegation either. In November 2020, the U.S. Department of Justice filed an antitrust lawsuit against NAR alleging the 1.4 million-member trade group’s rules are illegal restraints on Realtor competition, including a rule limiting agents who are not association members from accessing property lockboxes. NAR and the DOJ filed a proposed settlement at the same time as that lawsuit was filed, but the DOJ pulled out of that deal in July, saying it wanted to broaden its investigation into the trade group’s rules.
Discount brokerage REX Real Estate, which eschews MLSs, has also complained that some Realtor associations do not allow REX access to lockboxes because the brokerage is not a member.
In his complaint, Hillis alleged that an Arizona Realtors ethics hearing panel attempted to sanction him and his investment company with a $1,000 fine, but that he appealed the decision and another hearing is scheduled for December. The complaint did not elaborate on the charges against Hillis.
“The Plaintiffs intend to seek injunctive relief prior to this hearing due to the Defendants having no right to interfere with the contractual relatioships [sic] between the Plaintiffs and their clients,” the complaint says.
The complaint alleges violations of state and federal antitrust laws, Arizona Administrative Code regarding a broker’s supervision of agent advertising, the First Amendment and the Interstate Commerce Clause of the U.S. Constitution.
The complaint itself appears to have been hastily put together, including allegations from what appears to be an entirely different lawsuit. When reached by phone, Hillis told Inman that he himself has a law degree and that, in order to meet a statute of limitations deadline, he’d had a friend file the lawsuit before Hillis went out of town for a few weeks. Hillis acknowledged that the complaint needed to be “cleaned up” and said he plans to file an amended complaint in a month or two, but said that the allegations against the defendants would stand.
The attorney who filed the lawsuit, Eduardo H. Coronado of Coronado Law Firm P.L.L.C., received sanctions in May from the Arizona Bar: an admonition and probation. His profile on the Bar’s website does not elaborate on the charges against him. Asked whether he was aware of the discipline, Hillis asked Inman to send him the Bar information, which Inman did. Hillis did not respond.
Coronado did not respond to an emailed request for comment.
Read the complaint: