BAM Key Details:

  • The plaintiffs in the Sitzer/Burnett class action lawsuit took the stand on Wednesday and Thursday (October 18-19) to challenge the real estate industry’s commission structure. 
  • The primary issue for the plaintiffs is the tacit requirement that sellers pay the commission for the buyer’s agent as well as their own. 
  • The four plaintiffs who took the stand had experiences that led them to join the suit to contest a policy they see as “unfair” to sellers. 

For the first time since the trial began on Monday, October 16th, the real estate industry heard from Missouri home sellers leading the charge for the Sitzer/Burnett class action lawsuit

As of day’s end Thursday, October 19, 2023, four of the five plaintiffs have testified:

  • Rhonda Burnett
  • Jerod Breit
  • Jeremy Keel
  • Hollee Ellis

The fifth plaintiff, Frances Harvey, may be called to the stand either today (Friday) or Monday as the plaintiffs’ attorneys, led by Michael Ketchmark, wrap up their case. The five Missourians represent a class of about 500,000 home sellers claiming $1.78 billion in damages. 

The plaintiffs filed the suit to challenge a NAR policy known as the Participation Rule, which requires listing brokers to include an amount or commission rate for the buyer agent before submitting a listing to a Realtor-affiliated MLS. 

All four of the above-named plaintiffs testified before a nine-person jury (before one of the jurors was dismissed Thursday afternoon). 

All four, when asked by the defendants’ attorney, said they were happy with the services of the listing agent they worked with, according to Inman reports. That agent tended to be a family friend or acquaintance.

Hollee Ellis

On Wednesday afternoon, Hollee Ellis testified she’d paid a 6% total commission on the home sale referenced in this case. In selling her home, she ended up with a net equity of $18,295—before paying commissions to her Coldwell Banker listing broker and the buyer’s Keller Williams agent. 

Ketchmark noted that the buyer agent’s commission added up to 20.55% of Ellis’s net equity, and commissions for both agents took up 40%. 

It was a hard pill to swallow that we would walk away with so little.

Hollee Ellis

Before she learned about the Sitzer/Burnett lawsuit, Ellis thought sharing the commission with the buyer agent was “standard practice.” She wasn’t told and “never knew” the commission was negotiable. She testified that, had she known this, she would have gone in a different direction. 

In one of her statements, Ellis made it clear she’s not against buyer agents; she just doesn’t believe it should be her responsibility as the seller to pay for one.

The buyer who chose them and who they’re working for should pay them.

Hollee Ellis

Rhonda Burnett

One of the plaintiffs from whom the lawsuit takes its name, Rhonda Burnett, testified that she’d hired a listing agent from HomeServices subsidiary Reece Nichols to help sell her home. The contract with this agent asked her to “circle” the commission rate she was willing to pay; her options were 7%, 8%, 9%, 10% or a blank—which had 6% written in it. 

That 6% was obviously lower than the rest, but Burnett took issue with the fact that she was given no other option. She said her agent even told her, “nothing was negotiable.”

She listed her home for $275,000, ended up selling it for $250,000, and paid a total of $15,298 in agent commissions. 

I paid the buyer’s broker to negotiate against me and my husband, which resulted in a lower sales price. She did a good job for him [the buyer], but I had to pay her commission.

Rhonda Burnett

Attorney Robert MacGill cross-examined Burnett for HomeServices of America. He asked if she’d considered selling her home as a for-sale-by-owner (FSBO). She answered that she had initially considered it but had ultimately decided to work with an agent. 

You have to be on MLS to sell a house.

Rhonda Burnett

Burnett also testified that she’d considered working with “discount broker,” Your Future Address, who charged a 1% listing broker commission but still required sellers to pay the buyer agent a 3% commission. To Burnett, that seemed backwards. 

Speaking for herself and her husband, Burnett said, “We had no problem paying for an agent to sell our house.” What they were “not happy” about was having to pay the buyer’s agent.

MacGill then asked Burnett if the discount broker Your Future Address had recommended a list price of $250,000 rather than the $275,000 Burnett and her husband had chosen. She confirmed that they had. 

Ketchmark, on redirect, confirmed that Burnett did not object to paying her listing agent a 3% commission—and that Your Future Address had told her she still had to pay the buyer agent a 3% commission because the firm used the MLS. 

At no time was the plaintiff told that the commission rate was negotiable. 

Jeremy Keel

Keel’s home sold for $205,000 and he paid a 6% commission—3% to the Keller Williams agent he hired and 3% to the buyer’s Reece Nichols agent. 

After going through the home selling process, Keel thought it unfair that he was paying for the agent whose job it was to help the buyers get a better deal (i.e., reduce the amount Keel would make from the sale). 

Attorney Barack S. Echols cross-examined Keel for Keller Williams, pointing out that Keel did not pay commission when he was a buyer, adding that, in one purchase, Keel paid only a 5% commission and asking if he’d negotiated that rate. Keel answered— 

No, I didn’t know you could negotiate commission.

Jeremy Keel

Keel added that the commission figures in the contracts he’d signed were already filled in. 

Echols then presented a purchase contract that Keel had signed after crossing out arbitration clauses and class action and jury trial waiver clauses, perhaps to argue that Keel hadn’t hesitated to alter a contract to suit his preferences. Keel confirmed he’d crossed out those clauses. 

NAR and HomeServices declined to cross-examine Keel. And on redirect, Ketchmark pointed out that Keel had crossed out those clauses after the Sitzer/Burnett suit was filed. 

Ketchmark also criticized HomeServices’ use of such waivers in their contracts, likely to prevent cases like this one from being decided by juries. He told Inman

I’m glad it didn’t work in this case. I don’t know why these corporations feel they need to hide from juries, but they’re not going to be able to hide from this one.

Michael Ketchmark

Lead attorney for the plaintiffs

Jerod Breit

When Jerod Breit purchased his first home, he was a “cash-strapped buyer,” but he was helped by a down payment grant from a state first-time buyer program. 

Asked why he’d joined the Sitzer/Burnett lawsuit as a class rep, Breit answered— 

After my first experience selling a home, I was exposed for the first time to how it works and I didn’t think necessarily that it was fair.

Jerod Breit

A friend told him about the suit, and he offered to join. He testified that, while he was satisfied with the service he received from his RE/MAX agent, he learned, after joining the lawsuit, that he’d ended up paying more than the 5.5% he’d agreed to (with 2.7% going to the buyer agent). When he reviewed the sale’s settlement statement, and his attorneys did the math, he learned he’d actually been charged 6%. Asked how that made him feel, Breit said— 

It made me feel stupid… It was preloaded on the contract, and I thought I was signing what I needed to sign.

Jerod Breit

In what seems like a missed opportunity to highlight how compensating a buyer agent can actually work in sellers’ favor, MacGill used his shot at cross-examining Breit to get him to openly acknowledge that he was fully aware he would be paying a commission and that his listing agent would be paying the buyer agent. “Sure, it’s still my money,” Breit said.

At one point, MacGill summed up his approach with the words, “A deal’s a deal.” 

On redirect, Ketchmark addressed MacGill’s statement that “a deal’s a deal.” 

There were two parties to that handshake: Breit and RE/MAX. And those contracts spell out obligations for both sides—including the corporation’s duties toward Breit. By signing, RE/MAX had agreed to follow all applicable laws. 

Ketchmark asked Breit if he had every expectation that RE/MAX would follow the law, and Breit said yes. He asked if Breit suspected RE/MAX was involved in a conspiracy “designed to pick your pocket” and Breit answered, “No.”

Finally, he asked Breit if he was asking RE/MAX to act in good faith and fulfill their side of the deal by complying with federal antitrust laws. Breit answered, “Yes.”

Stay tuned for more updates as they come.