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U.S. real estate brokerages must face home sellers’ class action over commissions

By:
Reuters
Updated: Mar 29, 2023, 22:30 GMT+00:00

By Mike Scarcella (Reuters) - A federal judge in Chicago on Wednesday ruled that home sellers accusing the National Association of Realtors and a group of real estate brokerages of conspiring to inflate commission rates can move forward as a class action.

Men work on a construction site for a luxury apartment complex in downtown Los Angeles

By Mike Scarcella

(Reuters) – A federal judge in Chicago on Wednesday ruled that home sellers accusing the National Association of Realtors and a group of real estate brokerages of conspiring to inflate commission rates can move forward as a class action.

U.S. District Judge Andrea Wood’s decision grants class-action status to past home sellers seeking more than $13 billion in damages and creates a separate class of current and future sellers who want a court injunction that bars subsequent violations of U.S. antitrust law.

The plaintiffs are seven home sellers. The judge’s order said membership in each class “can be expected to number in the thousands, at minimum.”

Designation as a class means the plaintiffs’ can pursue large-scale claims against the National Association of Realtors, RE/MAX LLC, Long & Foster Inc and other corporate defendants as opposed to filing individual claims for monetary damages.

The judge’s order was not a ruling on the merits of the allegations, which can still be contested at a later stage. The defendants have denied the conspiracy allegations.

In a statement, The National Association of Realtors said it was “disappointed” in the decision and defended industry listing practices.

The lawsuit challenges a requirement that sellers make “blanket unilateral offers of compensation” to buyers’ brokers when a home goes on sale via a multiple listing service. That system puts pressure on sellers to offer high commissions to attract buyers’ brokers, the sellers claimed.

NAR spokesperson Mantill Williams said this practice “saves sellers time and money by having so many buyer brokers participating in that local marketplace and thus creates a larger pool of buyers for sellers.”

A RE/MAX spokesperson said the company did not comment on pending litigation. Long & Foster declined to comment.

The class seeking money damages includes certain home sellers who paid a commission between March 2015 and December 2020 in states including Texas, Florida, New Jersey, Ohio, Pennsylvania, Virginia, North Carolina and Colorado, court filings show.

The case is Moehrl et al v. The National Association of Realtors et al, U.S. District Court for the Northern District of Illinois, No. 1:19-cv-01610.

(Reporting by Mike Scarcella; editing by Leigh Jones and Cynthia Osterman)

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