Proposed Class Action Lawsuit Alleges Realtor Conspiracy to Inflate Commissions

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A U.S. judge in Chicago, U.S. District Judge Andrea Wood, has ruled that The National Association of Realtors along with several corporate home brokerages will face a proposed class action lawsuit. Home buyers accuse them of conspiring to artificially inflate real estate commissions, violating U.S. antitrust law and increasing the cost of homes for sale nationwide.

Allegations and Legal Proceedings

The lawsuit, representing home buyers from 35 states including Florida, Nevada, Tennessee, and Massachusetts, seeks unspecified monetary damages under antitrust and consumer protection laws. Judge Wood’s ruling declined the dismissal of claims against the National Association of Realtors (NAR), Keller Williams, Re/Max, and others involved.

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While denying the plaintiffs’ request for a nationwide court order, which would permanently enjoin the realtors association from implementing similar commission practices, Judge Wood dismissed units of Warren Buffett’s Berkshire Hathaway, including HomeServices of America, from the case.

Response from Involved Parties

The National Association of Realtors expressed disappointment with the ruling, asserting its commitment to defending practices benefiting consumers and promoting homeownership. HomeServices of America stated that the court recognized its lack of involvement in the challenged practices.

Brokerage defendants Anywhere, Keller Williams, and Re/Max refrained from commenting or did not immediately respond to requests for statements. Attorneys for the plaintiffs also withheld immediate comments on the ruling.

Allegations and Impact on Home Buyers

Home buyer plaintiffs argue that sellers inflate home prices to compensate for the commissions paid to buyers’ agents, which are regulated by industry rules and practices implemented by the defendants. In the U.S., home sellers may pay commissions ranging from 5% to 6% of the house’s cost, with a portion paid to the buyer’s broker.

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Previous Litigation and Future Challenges

Notably, NAR and other defendants faced separate antitrust lawsuits from home sellers, claiming significant damages related to commission fees. In a recent case in Missouri, a jury awarded nearly $1.8 billion in damages to a class of home sellers suing the realtors association, HomeServices, and others. However, the association and brokerages are currently challenging this verdict.

The case in question is Mya Batton et al v. The National Association of Realtors et al, filed in the U.S. District Court for the Northern District of Illinois under case number 1:21-cv-00430.

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