Bigger. Better. Bolder. Inman Connect is heading to San Diego. Join thousands of real estate pros, connect with the Inman Community and gain insights from hundreds of leading minds shaping the industry. If you’re ready to grow your business and invest in yourself, this is where you need to be. Go BIG in San Diego!
Yet another broker is targeting the National Association of Realtors over the so-called three-way agreement, saying that fees that are required to do business in the real estate industry are being used for luxurious perks and salaries by the trade organization.
That’s according to a new antitrust lawsuit filed this week by a Maryland agent and broker who alleges the requirement that real estate professionals must become members of local, state and national Realtor organizations to access the multiple listing service is anticompetitive.
Jerome E. Milko joined a growing list of real estate brokers and agents who have filed similar lawsuits in recent months.
“Defendant NAR’s requirement of triple membership to meaningfully participate in the real estate market encourages discrimination between sellers, buyers, consumers, agents, and brokers, and the Defendant will continue protecting their cash flow from their fees obtained through compulsory membership,” Milko’s complaint reads.
Milko is an agent in Ocean City, Maryland, and holds licenses in that state as well as in Delaware and in Georgia, where the case was filed. He is a resident of Georgia, according to his complaint, which was filed in U.S. District Court for the Northern District of Georgia in Atlanta.
He said that in his 37 years as a licensed agent, he’s paid just over $26,000 to NAR, in addition to fees he’s paid to state and local Realtor organizations over that timeframe.
Milko cited a report from The New York Times in November that outlined the various perks and payments received by NAR leadership and members of their families.
“‘Volunteers’ with Defendant NAR have used membership ‘fees’ collected from the Plaintiff and other real estate market participants to pay for excessive salaries for volunteer positions, for ‘perks’ such as hotel resort stays for volunteers and spouses, golfing outings, wine, dinners, Broadway tickets, pet-care, and flights which constitute free luxury vacations for said ‘volunteers’ and their relatives,” Milko wrote in the complaint.
The Times article found NAR’s volunteer leaders are paid lavish stipends and other benefits that may skirt U.S. tax laws for nonprofits. In addition to former CEO Bob Goldberg’s $2.6 million annual salary, NAR agreed to cover the cost of private clubs in Chicago and Washington along with up to $75,000 of the initiation fee plus dues at a country club near his home in Maryland and may still be remunerating him as a paid consultant, according to the report.
NAR, the sole defendant targeted by the Milko’s lawsuit, has defended the three-way agreement, which requires agents and brokers to join a local, state and national Realtor association in order to qualify for membership in any of those NAR affiliates.
In response to the complaint, an NAR spokesperson said that becoming a member with NAR was “optional.”
“Similar to other national membership organizations, NAR’s federated ‘three-way’ structure connects members at every level, giving them a unified voice on policy issues, access to business tools, professional development opportunities and a uniform Code of Ethics,” the spokesperson said. “State and local associations set their own dues for members, but when agents opt to become a Realtor®, they’re not just joining a local association—they’re becoming part of a nationwide partnership that includes their state and the National Association of Realtors®, which helps to fund advocacy at all levels of government, as well as legal and economic research, consumer advertising, and the technology platforms that support the entire Realtor® community. We believe this structure delivers real value to help our members thrive in their careers—and we will respond to the Plaintiff’s claims in court.”
Milko’s suit alleges the agreement constitutes an illegal restraint of trade and unjust enrichment. He has requested a jury trial, damages and an injunction barring the agreement.
Editor’s Note: This story was updated to include comment that came in after the story was initially published.
