A group of home sellers from across the U.S. is suing over the way realtors negotiate their fees, and the plaintiffs are represented by the same lawyers who won against big tobacco companies in the past.
What are the details?
Claimants who listed properties from 21 Multiple Listing Services ranging in location from Detroit to Dallas have filed suit, saying the National Association of Realtors is engaged in price-fixing, Forbes reported. The class-action complaint was filed on behalf of anyone who has sold a home in the listing services over the past five years, arguing that brokerages conspire by requiring listers to pay "inflated" rates to buyer's agents.
The way things currently stand, sellers are strapped with the realtor fees on both sides of a transaction, thanks to the NAR's "Buyer Broker Commission Rule." While listers can negotiate with their selling agent regarding the standard 3 percent fee, they're also encouraged to pay the buyer's agent another 3 percent, according to the suit.
The plaintiffs say the requirement by the NAR demanding a set-price commission fee from buyers' agents is a scheme that violates antitrust law.
Michael Walsh, the CEO of Exclusively Buyers real estate firm, told Forbes, "This is no garden variety lawsuit. Potential damages are estimated at $54 billion. The plaintiffs allege collusion, hidden payments and anti-competitive practices designed to maintain real estate commissions at artificially high levels."
Where's the Big Tobacco link?
Given the law firms behind the suit, realtors should be shaking in their boots, according to MarketWatch. Cohen Milstein Sellers & Toll, and Hagens Berman Sobol Shapiro represent the plaintiffs. Between the two firms, they've tackled giants like BP Oil, Boeing, and Mercedes-Benz, and won either in court or through settlements.
Most notably, Steve Berman of HBSS served as special assistant attorney general for 13 states against tobacco companies in the late 90s, recovering $206 billion in "the largest civil settlement in history."
Analysts say having such heavy hitters taking on the case means the firms have done their homework and see blood in the water regarding the realtor agencies' defense.
How did the NAR respond?
In response to the complaint, the NAR told MarketWatch:
The complaint is baseless and contains an abundance of false claims. 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.