BAM Key Details:

  • On Day 3 of the Sitzer/Burnett trial, lead attorney Michael Ketchmark questioned RE/MAX CEO Nick Bailey, former Coldwell Banker CEO M. Ryan Gorman, and Keller Williams University executive Meredith Maples. 
  • Using slides and training materials, Ketchmark alleged the defendants violated their own antitrust policies, essentially making NAR’s Participation Rule mandatory for Realtors. 

On Day 3 of the Sitzer/Burnett trial—the second day of witness testimony—attorney Michael Ketchmark continued his presentation of the plaintiffs’ case, focusing on training materials and presentation slides the defendants use with their agents. 

He questioned the following on how they train agents on commissions: 

Is the Participation Rule mandatory?

The Participation Rule (also known as the cooperative compensation rule) requires listing brokers to include buyer-broker compensation in every listing agreement submitted to a Realtor-affiliated MLS. 

According to Inman reports, Ketchmark pointed out that, according to NAR’s “Antitrust Compliance Guide,” brokers should “establish fees unilaterally without consultation or discussion with competitors” and that Realtors should never use statements like “I’d like to lower the commission, but then no one would show your house.” Video deposition testimony from NAR Head of Engagement Rodney Gansho confirmed this. 

Agent Training & Scripts Focus of Day 3

Keller Williams

Ketchmark then called Michelle Figgs, a former senior industry analyst at Keller Williams, to the stand via a recorded video deposition. Her testimony alluded to an email she’d sent to Ruben Gonzalez, KW’s chief economist, sharing a 2003 study on fixed commissions that suggested the possibility that uniform commission rates could be the result of collusion among real estate brokers.

Figgs told Ketchmark she’d “largely dismissed” the study. Ketchmark then referenced notes Figgs had taken from a May 2015 meeting, where someone at the meeting mentioned the “collusion theory” as a reason for stable commissions. Figgs couldn’t recall whether Keller or someone else at the meeting had made that statement. 

From there, Ketchmark called recorded testimony from the senior director of Keller Williams University, Meredith Maples, who testified that she never received guidance from KW in regards to antitrust compliance, nor had she been trained to comply with NAR’s Antitrust Compliance Guide in regards to commissions. 

Ketchmark showed her KW’s antitrust compliance guidelines—which prohibit discussions on commissions, including at industry events. He then presented slides for the KW Family Reunion events that clearly show 3% commissions for each side of a real estate transaction and that refer to a “standard 6% commission.” 

As Ketchmark noted, these events attract about 18,000 KW agents and roughly 500 agents from other real estate companies. 

Maples had this to say regarding the use of specific percentages in the slides: 

In the context of models, not in the context of direction. If you were to, from a training perspective, change the numbers, it would be confusing.

Meredith Maples

In response, Ketchmark quoted KW’s definition of a model: 

“A pattern of something to be made; an example for imitation; serving as or capable of serving as a pattern to be imitated.” 

He stated training materials imply, if not explicitly state, that following the model means adhering to the specified commission rates. 

Asked whether she talked about commission rates in the presentation slides—despite KW’s antitrust policies—Maples replied, 

In the context of models, not in the context of direction. If you were to, from a training perspective, change the numbers, it would be confusing.

Meredith Maples

When Ketchmark pointed out a slide where, in fact, the numbers had changed, presenting a scenario where agents earned 2.5% instead of 3%, Maples insisted that the slides presented models agents could modify to suit their own businesses and that KW differentiates between scripts and agent training. 

Anything we include from a script perspective is a hypothetical situation. We don’t tell people what to charge.

Meredith Maples

RE/MAX

Nick Bailey, RE/MAX CEO, was also called to testify in a recorded video deposition.

Bailey confirmed that RE/MAX requires its franchisees to be NAR members, and therefore follow its policies and code of ethics. RE/MAX did reach a settlement in this case before the trial began, and no longer requires any of their brokerages or agents to belong to NAR or adhere to its Code of Ethics. 

He stated that if the cooperative compensation rule were no longer mandatory, RE/MAX does not think it would significantly change the outcome of transactions. 

Whether or not the rule exists or not, I don’t believe it changes anything.

Nick Bailey

RE/MAX CEO

As far as RE/MAX’s training materials, Bailey stated that the commission rates mentioned are examples and make it clear that commissions are negotiable. After repeated questioning, he stated that training materials show examples of how to address objections, including objections about lowering the commission. He emphasized that agents always have the option to cut their commission. 

Coldwell Banker (Anywhere)

Later in the day, former Coldwell Banker CEO M. Ryan Gorman took the stand, also in a recorded video deposition. He too, stated that Coldwell Banker affiliates were required to comply with NAR’s Code of Ethics and encouraged to become NAR members. 

Coldwell Banker is part of the Anywhere franchise, which also reached a settlement in September, part of which states agents do not need to be NAR members. 

Gorman reiterated Anywhere’s stance that NAR’s mandatory cooperative compensation rule should be rescinded, as Anywhere announced in 2022. He mentioned that Anywhere had submitted a proposal to NAR in the spring of 2022, but it didn’t progress beyond the committee to which it was submitted.

Ketchmark presented various training materials from Anywhere’s brands, including Coldwell Banker, which contained similar scripting when responding to a seller’s objection about commissions: “I cannot cut my commission because I would never offer you less than my best.

When asked about examples of commission rates, Gorman mentioned having seen training documents with 5 percent and 7 percent examples, but the majority remained blank.

Stay tuned for more updates. And shoutout to Inman’s Andrea V Brambila for her daily coverage of the trial.