More brokerages sued after $1.8B award in commissions case

Minutes after a landmark victory over two brokerages and the National Association of Realtors, the plaintiffs’ attorney filed another class-action lawsuit against other residential brokerages, also related to buyers’ agent commissions.

The complaint, filed by attorney Michael Ketchmark, names NAR, Compass, Douglas Elliman, eXp, Redfin, Weichert Realtors, United Real Estate and Howard Hanna Real Estate Services as defendants.

The suit is much like the Sitzer/Burnett case filed against NAR. It alleges that brokerages conspired to force sellers to pay buyers’ brokers, and inflated those commissions.

The complaint alleges the brokerages did so by following NAR’s rule requiring sellers to “make a blanket, unilateral and effectively non-negotiable offer.” That violates federal antitrust law, the plaintiffs say.

A jury in the initial case agreed, ordering NAR, Keller Williams and HomeServices of America to pay $1.78 billion in damages. Two other brokerages settled before the verdict for a combined $138 million.

Forced adherence to the law in exchange for access to the Multiple Listing Service prevents competition from “innovative or lower-priced alternatives,” according to the new suit, which says agents “steer” buyers to homes that offer higher commissions.

“Defendants’ conspiracy forces home sellers to pay a cost that, in a competitive market and were it not for defendants’ anticompetitive restraint, would be paid by the buyer,” the complaint argues. “It is well recognized in the industry that steering is used to scare homeowners into inflated or stabilized rates for fear that buyer brokers will not share homes.”

A spokesperson for eXp said in a statement, “We are committed to upholding fair and transparent practices compliant with law and we already have mechanisms and a plan in place that enables buyers and sellers to negotiate commissions.”

Elliman, Compass and Howard Hanna declined to comment. Redfin, NAR, Weichert and United did not immediately respond to requests for comment.

Stocks of some major public brokerages fell immediately Tuesday afternoon after the Sitzer/Burnett verdict, but some rebounded shortly after. 

Elliman’s share price fell to $1.65 before rebounding to $1.78, four cents over its previous close. Redfin’s fell to $4.30 from roughly $5 at the time of the verdict, then recovered to $4.68 to finish the day down 5.7 percent. Compass stock fell to $1.90 from $2.08, before closing at $1.98, down 6.2 percent on the day.

The judge has not issued a final ruling, which is needed before a verdict is finalized. Keller Williams raised the possibility of an appeal.

This story has been updated to include a statement from eXp.

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Anywhere Real Estate and RE/MAX were also defendants in the Sitzer/Burnett case, but settled, agreeing to pay $83.5 million and $55 million, respectively. The companies also agreed to change their policies related to buyers’ broker commissions and will no longer require their agents to be members of NAR.

Earlier in October, Redfin called on its agents to cancel their NAR memberships in areas where the local Realtor association does not control the MLS. The move followed Redfin’s decision to resign from its national board seat in June.