BAM Key Details:
- On Wednesday, a federal judge granted class action status to home sellers accusing NAR, Anywhere, HomeServices of America, RE/MAX and Keller Williams of inflating seller costs.
- This is the second commissions lawsuit to turn into a class action—and has the potential to change how real estate agents are paid.
Nearly a year after the Sitzer/Burnett commissions lawsuit turned into a class action, the larger Moehrl lawsuit was granted class-action status by U.S. District Judge Andrea Wood.
Wednesday’s decision will allow home sellers to collectively pursue their claims against the National Association of Realtors and four real estate broker franchisors rather than filing individual claims.
The plaintiffs are accusing the defendants of inflating commission rates, and in doing so, resulting in higher costs for the sellers. As the case proceeds as a class action, it could have significant implications for the real estate industry—including how agents are compensated for their services.
Moehrl v. NAR
In 2019, Christopher Moehrl filed a federal antitrust suit against NAR, Anywhere (formerly Realogy), HomeServices of America, RE/MAX and Keller Williams. There are now seven plaintiffs, all home sellers who take issue with NAR policies, including the policy that requires listing brokers to offer buyer brokers a commission in order to list a property on the MLS.
The suit alleges that actions taken by the defendants violate the Sherman Antitrust Act—specifically commission sharing between the listing side and buyer side of real estate transactions—by increasing seller costs.
Yesterday’s decision certifies two classes for the Moehrl v. NAR case:
- Damage Class — “Home sellers who paid a commission between March 6, 2015, and December 31, 2020, to a brokerage affiliated with a Corporate Defendant in connection with the sale of residential real estate listed on a Covered MLS and in a covered jurisdiction. Excluded from the class are (i) sales of residential real estate for a price below $56,500, (ii) sales of residential real estate at auction, and (iii) employees, officers, and directors of defendants, the presiding Judge in this case, and the Judge’s staff.”
- Injunctive Relief Class — “Current and future owners of residential real estate in the covered jurisdictions who are presently listing or will in the future list their home for sale on a Covered MLS. Excluded from the class are (i) sales of residential real estate for a price below $56,500, (ii) sales of residential real estate at auction, and (iii) employees, officers, and directors of defendants, the presiding Judge in this case, and the Judge’s staff.”
The class seeking money damages includes sellers who paid buyer commissions between 2015 and 2020 across 20 MLSs in states including Texas, Florida, New Jersey, Ohio, Pennsylvania, Virginia, North Carolina and Colorado.
What the Ruling Means for the Real Estate Industry
Now a class action lawsuit filed by home sellers, the case can potentially make millions of home sellers eligible for reimbursement of billions of dollars in buyer agent commissions paid between 2015 and 2020.
This lawsuit may also bring changes to how buyer agent commissions are paid in the future. Essentially, it seeks to challenge the current practice of home sellers paying commissions to buyer agents. If successful, it may influence how real estate transactions are conducted in the future.
In an email statement to Inman, NAR spokesperson Mantill Williams expressed disappointment over the court decision.
“Pro-competitive, pro-consumer local MLS broker marketplaces ensure equity, efficiency, transparency and market-driven pricing options for homebuyers and sellers. The practice of the listing broker paying the buyer broker’s compensation 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.
“For buyers, these marketplaces save them the burden of extra costs at closing, enable them to receive professional representation and make homeownership possible for more people. In fact, the U.S. model of independent, local broker marketplaces is widely considered the best value and most efficient model in the world, with no hidden or extra costs and with more complete, verified information compared to other countries.”
As more emerges from the case, we will continue to keep you updated.