Steve Berman of Hagens Berman in Chicago filed a putative class action against the National Association of Realtors and four of the nation's leading real estate broker franchisors. Steve Berman of Hagens Berman in Chicago. Photo: Jason Doiy/ALM.

Florida, Texas, Philadelphia, Ohio, North Carolina and Nevada are among 14 states affected by an alleged price-fixing conspiracy, according to a putative class action lawsuit filed in the Northern District of Illinois Wednesday.

The lawsuit accuses the National Association of Realtors and four of the country’s leading real estate brokerage companies of violating the Sherman Act, a federal antitrust law aimed at blocking monopolies.

The National Association of Realtors is the country’s largest trade association, with 1.3 million members, according to its website.

The complaint takes issue with a rule in association’s handbook — the Buyer Broker Commission Rule — which instructs brokers to make a blanket, non-negotiable offer for compensation when listing properties on its Multiple Listing Service, known as MLS.

The four brokerage companies — Realogy Holdings Corp., HomeServices of America Inc. RE/MAX Holdings Inc. and Keller Williams Realty Inc. — allegedly used their collective market power to inflate commission rates, snuffing out competition and cheating home sellers out of thousands of dollars per sale, according to the suit.

The complaint claims the problem stretches across the country, and points to 20 different real estate listing applications, including My Florida Regional MLS and the Bright MLS, which covers multiple states including Maryland, Virginia and Washington, D.C.

NAR’s ice president of communications, Mantill Williams, denied the claims.

“The complaint is baseless and contains an abundance of false claims,” Williams said. “The U.S. courts have routinely found that Multiple Listing Services are pro-competitive, and benefit consumers by creating great efficiencies in the home-buying and selling process. NAR looks forward to obtaining a similar precedent regarding this filing.”

Trey Sarten, a spokesman for defendant Realogy, also denied the allegations.

“We believe this case has no merit and will not be commenting further,” Sarten said.

Keller Williams spokesperson Darryl Frost and RE/MAX spokesperson Jennifer Armbruster declined to comment.

Read the full complaint:

Plaintiffs lawyer Steve Berman, managing partner of Hagens Berman in Seattle, was unavailable before deadline but told the Associated Press Monday he’s compared commission rates in affected housing markets to rates in countries that have a competitive market and found, “the numbers tell a very clear story.”

“We believe the NAR and the Big Four have devised a series of checks on broker commission rates to all but guarantee their goal of price-fixing, costing home sellers thousands in excessive commissions paid on each sale,” Berman said.

The complaint said if a class member sold a house for $500,000, for example, they’d have paid an extra $12,500 to $15,000 extra in commission.

But the suit points out that sellers in countries without the Buyer Broker Commission Rule — like Germany, Australia and the United Kingdom — don’t have to use brokers, and if they do they’ll pay them less than half the amount sellers pay in the U.S.

The lawsuit asks for damages, interest, attorney fees and a permanent injunction barring the defendants from requiring sellers to pay a set commission fee.

 

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