Federal Judge’s Ruling Deals Blow to NAR, Realogy, RE/MAX, Keller Williams, and HomeServices of America and its subsidiaries BHH Affiliates and HSF Affiliates. After hearing oral arguments, Judge Stephen R. Bough of the US District Court in Western Missouri granted class certification in one of two federal commissions lawsuits. NAR and Realogy plan on appealing the decision, however, consensus among experts is that an appeal is not likely to succeed and the suit will proceed to trail.
Potential damages could reach $5B to $6B (remember that in restraint of trade suits the actual damages are multiplied by 3) and if this suit is combined with other pending lawsuits the damages will only increase. Agents should be concerned about the very real possibility that if the plaintiffs prevail the verdict could upend the real estate industry as we currently know it. Imagine that the cooperation rule is overturned and the seller will no longer determine the compensation of the buyer’s agent. Anyone working as a buyers agent will have to negotiate their commission with the buyer directly. You don’t have to imagine the impact simply look to Australia and the UK, where this is already standard operating procedure. Buyers agents have seen dramatic decreases in commission dollars. Australia is prominently mentioned in the lawsuit. So if 70% of your business is a result of buyer representation how will you handle the outcome? While no one knows how the suit could be settled many legal experts think the lawsuit is strong. Potentially we could see an outcome as early as 2023. Of additional concern to NY licensees is the recent class action certification of the Houlihan Lawrence dual agency lawsuit by a New York State Supreme Court Judge.
The vast majority of New York agents operate as independent contractors and are Members of the Association of REALTORS and one or both of these court proceedings could have a major impact on your business and income. You can be sure that the franchisers and brokers are closely following these proceedings and planning how they will position their businesses if the lawsuits are decided in favor of the plaintiffs, the same is true for the Associations (National, State, and Local). We don’t have a position one way or the other, but we believe that agents should be aware of what has just become a hot issue and could impact their independent contractor businesses within the foreseeable future. Being informed and planning ahead maybe key to a successful real estate career.
We have come across several excellent articles regarding this suit, recent court decisions and potential impact on the real estate industry. Some of the articles may require subscription.
Notorious Rob’s article provides great insight into the case and predictions on possible impacts. A copy of the Court Decision is included in the article. Follow this link to read his article: Reading Tea Leaves: Class-Action Status In Sitzer v NAR
Inman News has been providing consistent complete coverage of the lawsuit from the first filing, often with copies of relevant court filings. Follow this link to read the Iman article: https://www.inman.com/2022/04/25/federal-commission-suit-now-a-class-action-nar-realogy-vow-to-appeal/
HousingWire has a informative article on the recent decision. Follow this link to read the HousingWire article: https://www.housingwire.com/articles/judges-ruling-its-heartland-homeowners-v-nar/
Link to our blog article on the NY Class Action Lawsuit involving Houlihan Lawrence and Dual Agency: https://www.procareercenter.com/blog/ny-court-certifies-dual-agency-lawsuit-as-class-action/ the article includes links to many of the court filings
We will continue to post updates as we become aware of activity in these lawsuits and others. If you have a moment, please take 2 minutes to complete our confidential poll on this lawsuit. We will post the results in about I week.