Dallas MLS One Area Impacted in Suit Against NAR, Major Broker Franchisors

It was the shot heard round the real estate world, but if you’re not a Realtor, you may not have heard about it — a group of home sellers has filed suit against the National Association of REALTORS® and four major real estate broker franchisors.

Why? Because of buyer broker commissions and the requirement to use the Multiple Listing Service, or MLS.

The suit, filed last week in Chicago, claims that the NAR and top brokerages Realogy, HomeServices of America, RE/MAX, and Keller Williams Realty violated federal antitrust laws by requiring home sellers to pay a broker to represent the buyer of their homes and to pay for this service to the tune of at least a three percent commission.

“Defendants’ conspiracy has centered around NAR’s adoption and implementation of a rule that requires all brokers to make a blanket, non-negotiable offer of buyer broker compensation (the ‘Buyer Broker Commission Rule’) when listing a property on a Multiple Listing Service (‘MLS’),” the suit reads.

“Defendants and their co-conspirators collectively possess market power in local markets for real estate broker services through their control of the local MLS. An MLS is a database of properties listed for sale in a particular geographic region and the marketplace in which the vast majority of homes in the United States are sold.”

“Brokers must list a property for sale on an MLS to effectively market that property to prospective buyers, and in any event, are required to list all properties on the MLS if they are members of the MLS,” the suit continues. “The conspiracy has saddled home sellers with a cost that would be borne by the buyer in a competitive market.”

The word conspiracy is at the heart of the claim — with the defendants insisting that a commission for a buyer broker who has a “reduced” role in the age of readily available online listing sites for consumers is unfair.

“Defendants’ conspiracy has kept buyer broker commissions in the 2.5 to 3.0 percent range for many years despite the diminishing role of buyer brokers,” the suit said. “A majority of home buyers no longer locate prospective homes with the assistance of a broker, but rather independently through online services.”

“Buyer brokers increasingly have been retained after their client has already found the home the client wishes to buy. Despite their diminishing role, buyer brokers continue to receive 2.5 to 3.0 percent of the sales price due to Defendants’ conspiracy.”

Several MLS areas are named as being impacted by the class action suit, saying that the suit is on behalf of home sellers who paid a broker commission for the sale of residential real estate  in the last four years to several MLSs in what they termed the “Covered MLSs.” They include the MLSs in Austin, Dallas, San Antonio, and Houston.

The NAR has taken issue with the claims in the suit.

“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,” said NAR VP of Communications Mantill Williams. “NAR looks forward to obtaining a similar precedent regarding this filing.”

This story is developing. Tomorrow, we’ll look closer at the reaction to the suit, and talk to one of the plaintiff’s lawyers.

ECF No. 1, Class Action Complaint 3.6.19 by Bethany Erickson on Scribd