For the second time in a month, a lawsuit has been filed in Texas claiming the state’s real estate industry is engaged in a “conspiracy” related to broker commissions.
The new putative class action lawsuit – Martin, et al., v. Texas Association of Realtors, Inc., et al. – calls out the Texas Association of Realtors and more than 40 local-level realtor trade groups and Texas-based brokerages.
“In the realm of Texas real estate lies a concealed conspiracy that has adversely impacted countless home buyers and sellers,” the lawsuit stated. “Plaintiffs, who have listed their homes on Multiple Listing Services (MLS) in Texas, stand as the voice of those who have borne the brunt of the Defendants’ unlawful collaboration and anticompetitive practices. This conspiracy centers around the enforcement of an anticompetitive restraint that compels home sellers to provide an inflated fee to the broker representing the buyer of their properties, thus violating federal antitrust regulations. Notably, the United States Department of Justice’s Antitrust Division is currently conducting a thorough investigation into the residential real estate brokerage sector, with a specific focus on broker compensation and related practices.”
The lawsuit, which was filed on Dec. 14, insisted the National Association of Realtors was the “creator of the conspiracy,” although it is not among the organizations being sued.
“The alleged conspiracy compels home sellers to bear a cost that, in a competitive market and in the absence of the Defendants’ anticompetitive restraint, would typically be borne by the homebuyer,” the lawsuit. “Further, this has led to an industry-recognized practice called ‘steering,’ where homeowners are pressured into accepting inflated or stabilized rates out of fear that buyer brokers will not show their home to prospective buyers.”
“In the absence of NAR’s Mandatory Offer of Compensation Rule, the expense of buyer broker commissions would be incurred by the clients (homebuyers),” the lawsuit added. “This would lead to competition among buyer brokers to offer lower commission rates. Consequently, the Mandatory Offer of Compensation Rule stifles price competition among buyer brokers because the actual party retaining the buyer broker—the homebuyer—doesn’t negotiate or pay the commission for their broker.”
The plaintiffs are seeking class-action status for their lawsuit and are looking to add Texas home sellers who listed properties on an MLS since Nov. 13, 2019.
Last month, a similar lawsuit – QJ Team et al v Texas Association of Realtors et al – was filed, with 29 defendants cited in the litigation. Other lawsuits challenging broker commission structures have been filed across the country while a Missouri court last month found NAR and the brokerage firms Homeservices of America and Keller Williams Realty were liable for $1.8 billion in damages for allegedly colluding to inflate commissions.
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This a pure socialist move. If like this lawsuit, will your industry or good paying job be next?
I hope they pull all the free data they steal from our mls. These people filing know exactly what they signed in the listing agreement. This goes for all states. I hope Texas stuffs this
You are so right, when a seller signs a Listing Agreement they know what they are signing, that is an agreement that they enter into by CHOICE> NO ONE HAS to us a REALTOR, People are free to market their homes as they want! REALTORS are NOT a requirement for you to sale, but OUR MLS IS OUR Product and people should not be allowed to use it without belonging . No other business would allow you to take your self into their place of business and sit around waiting to grab up the clients that come thru the door. Again Listing a property is an Option not an requirement and people are free to negotiate what they are willing to pay in a commission! This is such a waste of the taxpayers month to even allow this to go to court!
In Texas our agreements that brokers and sellers sign to work with one another it is disclosed how much the Broker will charge as their profession fee for handling the transaction for the seller. Later in the agreement it is disclosed how much, if at all, the Broker.. not the seller ..will pay through the sharing of their professional fee with someone who brings and represents the buyer. It is all upfront, disclosed and yes commissions are negotiable as stated in the agreement. Each Broker sets the terms with the seller so there is no price fixing, collusion or set rates. If there was no cooperation between brokers then buyers would have to pay an additional fee along with their down payment and closing costs and since this can not be rolled into the loan it would cripple the dream of homeownership for many.
Very well said!
Well said… They should go after the PI Attorneys and their 33% plus fees…
This has been one of my particular thoughts for sometime. Do any of these plaintiffs stop to think about what they’re being charged in attorney fees inflated they are? Has anyone stopped to think about the fact that attorneys take approximately 1/3 of the cases that they win and this is a standardized practice? Does this mean that all attorneys are colluding with each other to keep fees artificially inflated?
Should the American Bar Association be sued by everyone who’s used a Should the American Bar Association be sued by everyone who’s used an attorney in the last five years? The same could be said for so many other profession’s which all have associations behind them, just like our NAR. Unfortunately, it took one lawsuit to get everyone and their brother to decide to jump on the bandwagon. At this point, I feel it’s just a case of monkey see, monkey do. Throw everything against the wall and see what sticks. The bottom line is that no one is forced to list their property with a broker in the first place. When they do, they know what they’re signing, and they know about cooperation amongst brokers. If this is ‘collusion’, then think about all the other professions in business, that must also be colluding. Jurors need to be a little smarter!
WELL SAID!!!!!
Extremely well stated! I don’t understand what is so unclear or “collusional” (delusional collusion).
Exactly my thoughts – and after 26 yrs selling real estate I know it’s been this way for many years – nothing has changed!Commissions are negotiable – and if they do this it will remove many buyers from the market as they can’t afford to pay their down payment, closing costs and now commissions! Especially first time buyers who may already need down payment assistance – and Realtors cant work for nothing – buyers agents have much more involvement in a sale than do listing agents – but we all work hard for our clients!! It is the same old thing that they don’t think we really “do” anything till they try to sell it themselves without us!
As is the american swamp, lawyers getting rich off the backs of regular tax payers. Nothing new here. The real results will be the whole sector of 1st time & low income buyers will be discluded from the dream of homeownership.
I am in total agreement with the above three commenters which is why I’m so perplexed as to why these suits are being brought. It will definitely have a negative effect on buyer affordability and the real estate industry as a whole. Something is afoot.
Well said all of you above!
Maybe a defamation of character class action suit on behalf of Realtors is warranted to put a halt to this madness. Buyers and sellers will pay dearly if this is allowed to continue.
The future plan of the people in control is to keep the rest of the people in rentals increasing the personal wealth of those that own them and never allowing the “normal” people to build their own wealth. The middle class is being winnowed out, sadly, and this is just one more chink in the foundation that has built our country.
It is purely a money grab by lawyers. Too bad they don’t have to disclose what % they get. I heard the industry standard is 30%. They know this most likely will be settled out of court. California has been negotiation with sellers and in some cases with buyers for years.
I’ll be odd man out. I’m ready for change…something this industry isn’t known for and often fights like heck to keep the status quo. This is the only industry where I’m expected to pay someone to negotiate against me. Fortunately, I’m finding a way around much of the time. The system is broken and needs to change. Perhaps this litigation will put the onus for payment of representation where it belongs…on the consumer who uses those services.