It appears to have become open season on buyer-broker commissions following the Burnett vs. NAR class action lawsuit in which the defendants were found to have conspired to inflate commissions in violation of federal law, with an award of $1.78 billion to the plaintiffs.
With another, larger lawsuit filed immediately after that trial, now two more have followed, with one in New York City and another in South Carolina.
On Nov. 8, Monty March, a New York City home seller, filed a class action lawsuit in the U.S. District Court in the Southern District of New York, with a jury trial demand, claiming that Real Estate Board of New York rules governing the multiple listing service (MLS) in Manhattan kept commissions high and violated state and federal antitrust laws.
Although the National Association of REALTORSⓡ (NAR) is not listed as a defendant, many real estate companies are, including Brown Harris Stevens, Christie’s International Real Estate, Coldwell Banker, Compass, Core Marketing Services, The Corcoran Group, Douglas Elliman, Elegran, Engel & Volkers, Fox Residential Group, Halstead Real Estate, Homesnap, Keller Williams NYC, Leslie J. Garfield & Co, Level Group, M.N.S. Real Estate, Modern Spaces, The Agency, The Modlin Group, Nest Seekers International, Oxford Property Group, R New York, RE/MAX, SERHANT., Sloane Square, and Sotheby’s International Realty Affiliates.
In the 105-page complaint, March alleges that REBNY’s Universal Co-Brokerage Agreement forced him to pay an inflated commission fee to the buyer’s broker.
Similar to what played out in Burnett vs. NAR, the new filing claims that “The inclusion of language concerning the commission to be paid by the Seller Broker to the Buyer Broker in the listing agreement, commonly known as the Buyers Broker Commission Rule, constitutes an antitrust violation under Section 1 of the Sherman Act and the Donnelly Act as there is no separate negotiation/competition concerning the commission paid to the Buyer Broker. The REBNY Listing Service’s commission rule fosters an environment in which brokers work co-operatively to split a total commission instead of open and separate negotiation. The anti-competitive nature of commission rule is clear when compared to other countries with competitive markets for residential real estate brokerage services.”
March’s lawsuit is seeking class action status, with the proposed class including Manhattan home sellers who worked with an agent from one of the defendants between Nov. 8, 2019, and the present.
On Nov. 6, Shauntell Burton filed a complaint against NAR and Keller Williams in U.S District Court in South Carolina’s Spartanburg division, alleging that the defendants are “conspiring to impose and enforce an anticompetitive restraint that requires home sellers to pay the broker representing the buyer of their homes, and to pay an inflated amount, in violation of federal antitrust law.
“The effect of these rules is not simply that the seller must pay the buyer broker’s compensation,” the complaint continues. “These rules effectively take the compensation structure out of the view of the buyers and sellers, masking who pays the buyer broker’s compensation.
“Indeed, a buyer broker may not even present an offer to a seller that is conditional on the seller reducing the buyer broker commission.”
Burton is also seeking class action status that would include homesellers across the state.