New Commission Lawsuit Scrutinizes Buyer Agents

Utah is the latest state to be on the receiving end of a Burnett copycat commission lawsuit, as recent homesellers joined the ongoing parade of class-actions accusing the National Association of REALTORS® (NAR) and big brokerages of conspiring to fix commission prices.

Filed late last week in federal court, the lawsuit offers little new in terms of accusations or information. It names NAR, along with Keller Williams, Anywhere, RE/MAX, HomeServices and seven Utah-based affiliates of those companies as defendants, and is seeking to certify a class of recent homesellers going back four years.

Four MLSs are designated as “Subject MLSs,” which are not defendants but are used to define the area where the allegedly anticompetitive rules were enacted and enforced.

Notably, however, this suit makes a more explicit assault on the value of buyer agents, using some of the arguments utilized effectively by the Burnett plaintiffs during the jury trial and arguing that buyer agent commission should be reflective of both individual agent ability—as well as a new internet-driven world of real estate shopping.

“Whether a home purchased by their client costs $250,000 or $2,500,000, the buyer broker’s costs are roughly similar. But the sum received by the buyer broker as a commission is significantly greater for the more costly property,” the lawsuit reads. “The commission overcharges imposed on homesellers bear little relation to the quantity or quality of the services or value allegedly provided by the brokers who are paid the commissions.”

“Many homebuyers no longer search for prospective homes with the assistance of a broker, but rather, independently through online services…despite this diminishing role for buyer brokers, their percentage of commission has remained steady, due to Defendants’ conspiracy,” the plaintiffs claim.

With the number of federal class-action cases approaching two dozen, the prospect of consolidating all the proceedings together appears more and more likely, even as defendants spar with plaintiffs—and with each other—over the best way to do so. At least one proposal would proactively incorporate newly filed copycat suits like the Utah litigation with similar complaints filed across the country.

This suit also names three companies (Anywhere, RE/MAX and Keller Williams) that have already settled commission suits filed by sellers. Although those companies have said they are confident that they remain protected from copycat litigants, a judge has not yet ruled on how far those protections go.

Other lawsuits filed by homebuyers might still proceed against these companies, even though they make broadly the same allegations regarding the same NAR rules. A majority of the copycats, however, have been filed on behalf of sellers, and adhere closely to the path laid out by Burnett—in which plaintiffs won a $1.8 billion verdict against NAR and big real estate companies.

This Utah lawsuit falls firmly into the latter category, citing the same evidence as Burnett, including scripts used by Keller Williams, the now infamous NAR “danger report,” studies of the Australian real estate market and data allegedly showing the effects of “steering” (when buyer agents discourage clients from viewing properties with lower commission offers).

It also cites a currently dormant DOJ investigation and a 75-year-old Supreme Court case which ruled that REALTOR® organizations had engaged in illegal price fixing.

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