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Jury Finds Realtors Conspired to Keep Commissions High (1 Viewer)

Had a realtor we liked. Bought and sold two homes with him. On our third sale, he held an open house, and a guy showed up with no agent, and our agent ended up schmoozing him enough that the guy was ready to make an offer. With the guy having no agent, our agent offered to be his agent. Our agent called us and informed us he was going to be acting as a dual agent. We kindly told him to go **** off, but were still stuck with using him as our selling agent because of our contract.

It really soured me on him. He tried to convince us that he would be acting in out best interest, but when pressed, he admitted that he also would told the buyer that he would be acting in his best interest. When asked how that could possibly work, he gave some ******** answer about how he would find agreeable terms for both. I told him it sounded like he was acting in only his own best interest and not either buyer or seller. He got all huffy and hung up on me. Called back later and said that the potential buyer backed out anyway, so he was just out agent now.

Haven't talked to that sleezeball in years.
Only about 8 or 9 states either heavily restrict or outlaw dual agency. I think it should be all 50 states.

The only positive of it is to the RE agent so they can get both sides of the deal. A RE agent I talked to recently told me that there is only one reason to do open houses and one reason only- gain buyer clients.
Dumb question - if I went in to one of these situations and offered the dual agent 3.5% to complete (or something very low) would they go for it, in general? Getting all 6% is absurd in this kind of situation.
 
I'd still like to hear a good explanation from the realtors as to why the standard fee for a $1 million house ($60K) is double that for a $500K house ($30K).

What exactly is being done to execute the $1 million home transaction that warrants $30K more to the brokers?

The transaction process itself is no different. And no apparent reason why I couldn't use the same "high-quality" broker for both. It seems everyone just gets paid more to do the exact same things.

I get it that it's "negotiable," but in the practical world not really since there is no way on this planet the $1mm house gets done at 3%. And if it were, that would just prove that the extra $30K is pure profit.

Isn't this true of a lot of commission based things though? Is being a server at Ruth's Chris 4x more work than being a server at Applebees? Or even within the same restaurant, is dropping off 2 steaks and 2 mixed drinks triple the work of dropping off 2 salads and 2 cokes?
 
Had a realtor we liked. Bought and sold two homes with him. On our third sale, he held an open house, and a guy showed up with no agent, and our agent ended up schmoozing him enough that the guy was ready to make an offer. With the guy having no agent, our agent offered to be his agent. Our agent called us and informed us he was going to be acting as a dual agent. We kindly told him to go **** off, but were still stuck with using him as our selling agent because of our contract.

It really soured me on him. He tried to convince us that he would be acting in out best interest, but when pressed, he admitted that he also would told the buyer that he would be acting in his best interest. When asked how that could possibly work, he gave some ******** answer about how he would find agreeable terms for both. I told him it sounded like he was acting in only his own best interest and not either buyer or seller. He got all huffy and hung up on me. Called back later and said that the potential buyer backed out anyway, so he was just out agent now.

Haven't talked to that sleezeball in years.
Only about 8 or 9 states either heavily restrict or outlaw dual agency. I think it should be all 50 states.

The only positive of it is to the RE agent so they can get both sides of the deal. A RE agent I talked to recently told me that there is only one reason to do open houses and one reason only- gain buyer clients.
Dumb question - if I went in to one of these situations and offered the dual agent 3.5% to complete (or something very low) would they go for it, in general? Getting all 6% is absurd in this kind of situation.
Yes, most good agents will lower the listing 3% by 1 or 2% to save the sellers money, especially if they are getting buy side on new home purchase.
 
Had a realtor we liked. Bought and sold two homes with him. On our third sale, he held an open house, and a guy showed up with no agent, and our agent ended up schmoozing him enough that the guy was ready to make an offer. With the guy having no agent, our agent offered to be his agent. Our agent called us and informed us he was going to be acting as a dual agent. We kindly told him to go **** off, but were still stuck with using him as our selling agent because of our contract.

It really soured me on him. He tried to convince us that he would be acting in out best interest, but when pressed, he admitted that he also would told the buyer that he would be acting in his best interest. When asked how that could possibly work, he gave some ******** answer about how he would find agreeable terms for both. I told him it sounded like he was acting in only his own best interest and not either buyer or seller. He got all huffy and hung up on me. Called back later and said that the potential buyer backed out anyway, so he was just out agent now.

Haven't talked to that sleezeball in years.
Only about 8 or 9 states either heavily restrict or outlaw dual agency. I think it should be all 50 states.

The only positive of it is to the RE agent so they can get both sides of the deal. A RE agent I talked to recently told me that there is only one reason to do open houses and one reason only- gain buyer clients.
Dumb question - if I went in to one of these situations and offered the dual agent 3.5% to complete (or something very low) would they go for it, in general? Getting all 6% is absurd in this kind of situation.
Yes, most good agents will lower the listing 3% by 1 or 2% to save the sellers money, especially if they are getting buy side on new home purchase.
And how many realtors are doing this right now given the tiny amount of overall transactions?
 
I'd still like to hear a good explanation from the realtors as to why the standard fee for a $1 million house ($60K) is double that for a $500K house ($30K).

What exactly is being done to execute the $1 million home transaction that warrants $30K more to the brokers?

The transaction process itself is no different. And no apparent reason why I couldn't use the same "high-quality" broker for both. It seems everyone just gets paid more to do the exact same things.

I get it that it's "negotiable," but in the practical world not really since there is no way on this planet the $1mm house gets done at 3%. And if it were, that would just prove that the extra $30K is pure profit.
Isn't this true of a lot of commission based things though? Is being a server at Ruth's Chris 4x more work than being a server at Applebees? Or even within the same restaurant, is dropping off 2 steaks and 2 mixed drinks triple the work of dropping off 2 salads and 2 cokes?
Primarily the dollar magnitude of the commission. Paying $60 in tips vs. $15 is hardly a cash outlay that anyone cares to spend time doing a cost accounting audit. But an extra $30K? That's worth the time to figure out what value was created to justify it.

It's the same reason fixed asset management fees in the financial/investment industry (e.g. 1% of portfolio value) are a sketchy fee structure.

Lastly, with a high-end restaurant server tip we are also indirectly paying for a higher-quality product provided by the restaurant itself (i.e. good service enhances the food consumption experience). With a house sale, the seller provides the entire product. Brokers have absolutely nothing to do with whether that house is worth $1mm vs $500K.
 
Had a realtor we liked. Bought and sold two homes with him. On our third sale, he held an open house, and a guy showed up with no agent, and our agent ended up schmoozing him enough that the guy was ready to make an offer. With the guy having no agent, our agent offered to be his agent. Our agent called us and informed us he was going to be acting as a dual agent. We kindly told him to go **** off, but were still stuck with using him as our selling agent because of our contract.

It really soured me on him. He tried to convince us that he would be acting in out best interest, but when pressed, he admitted that he also would told the buyer that he would be acting in his best interest. When asked how that could possibly work, he gave some ******** answer about how he would find agreeable terms for both. I told him it sounded like he was acting in only his own best interest and not either buyer or seller. He got all huffy and hung up on me. Called back later and said that the potential buyer backed out anyway, so he was just out agent now.

Haven't talked to that sleezeball in years.
Only about 8 or 9 states either heavily restrict or outlaw dual agency. I think it should be all 50 states.

The only positive of it is to the RE agent so they can get both sides of the deal. A RE agent I talked to recently told me that there is only one reason to do open houses and one reason only- gain buyer clients.
Dumb question - if I went in to one of these situations and offered the dual agent 3.5% to complete (or something very low) would they go for it, in general? Getting all 6% is absurd in this kind of situation.
The commission is negotiable in reality. The big idea behind these lawsuits is that the brokerages conspired to essentially make them not negotiable. I don't think there was ever a real conspiracy but common interest aligning, normal business practices and typical positions of brokers to their agents of 'know your worth' and then you have a lot of the transactions keep at that 'standard' 6%.
 
The commission is negotiable in reality. The big idea behind these lawsuits is that the brokerages conspired to essentially make them not negotiable. I don't think there was ever a real conspiracy but common interest aligning, normal business practices and typical positions of brokers to their agents of 'know your worth' and then you have a lot of the transactions keep at that 'standard' 6%.
Well said
 
Court approves Anywhere, RE/MAX commission lawsuit settlements.
(HousingWire by Brooklee Han). Judge Stephen Bough granted preliminary approval of RE/MAX's and Anywhere's commission lawsuit settlement agreements. RE/MAX and Anywhere Real Estate can breathe a sigh of relief. The two corporate brokerages have received preliminary approval of their settlement agreements in the Sitzer/Burnett, Moehrl and Nosalek commission lawsuits. Judge Stephen Bough, who oversaw the Sitzer/Burnett trial last month in Missouri's Western District, granted the settlements preliminary approval Monday morning.

"The Court finds that the proposed Settlements with Anywhere and RE/MAX, as set forth in the Settlement Agreements, are fair, reasonable and adequate," Bough wrote in his motion granting preliminary approval.

The terms of the settlement agreements require RE/MAX and Anywhere to pay $55 million and $83.5 million, respectively, as well as make policy and practice changes.

Some of these provisions include no longer requiring agents to be members of the National Association of Realtors or following NAR's Code of Ethics or the MLS Handbook. Practice changes outlined in the settlement agreements include that the firms will require or encourage agents to make it clear to clients that commissions are negotiable, that agents will have the freedom to set or negotiate commissions as they see fit, and that agents will not be required to make offers of compensation or accept offers of compensation from cooperating brokers.

"We are pleased with the court's decision to grant preliminary approval of the settlement," Nick Bailey, the president and CEO of RE/MAX, LLC., said in a statement. "This development signifies progress in our ongoing efforts and commitment to a resolution - it's a positive step forward in bringing these cases closer to the finish line."

In an email, a RE/MAX spokesperson also noted that the firm anticipates the final approval of the settlement some time next year.

At Anywhere, CEO and president Ryan Schneider was equally as pleased.

"Our efforts to resolve these claims remove future uncertainty and legal expense for Anywhere, our franchisees, and affiliated agents as, together, we focus on serving home buyers and sellers as they move to what's next," Schneider said in a statement.

According to the order, the parties must contact the court prior to Dec. 22, 2023, to schedule final approval hearing.

While Bough's motion answers one of the questions left by the jury verdict in the Sitzer/Burnett trial, much remains unknown. It is also yet to be seen if the Department of Justice will try to get involved in the Sitzer/Burnett suit as it has already done in the Nosalek lawsuit. Many analysts and observers expect the DOJ to get involved at some point.

With a final ruling not expected until mid-to-late spring 2024, the real estate industry remains in limbo as the copycat lawsuits continue to pile up.
 
We have a neighbor/friend that is a realtor and has helped us get viewings of a few homes in the neighborhood over the last 18 months. It's about 1 every 6 months. We didn't make an offer on any of them, but did get multiple viewings on one of them.

She recently told us that based on our needs that she thought we should stay in our current home. I know we're relatively high maintenance... took us looking at over a dozen homes and like a year when we bought our first home in 2014. Anyway, not sure if she just wants to be done with us or if she really thinks in our best interest to stay where we are.
 

Why are real estate commissions 6%? – and why that may be changing​

Story by By Anna Bahney, CNN

Here’s how paying for a real estate agent to sell your home has long been done: A seller hands a percentage of the sale price to their broker, who then splits it with the broker who brought the buyer.

The commission is typically between 5% and 6%, which is usually tens of thousands of dollars out of the seller’s proceeds. But the seller also factored that cost into what they listed their home for, so indirectly, the buyer is paying the cost, too.

How did that become the standard? And will this process continue?

Changes may soon be on the horizon for real estate commission rates after a Kansas City jury determined – in a $1.8 billion judgement in October – that commissions had been inflated and that brokerages and industry groups conspired to keep them that way. This landmark antitrust court case, along with similar lawsuits like it, could overhaul the standard 6% commission and who pays it.

A shift could allow home buyers and sellers to negotiate not only commission rates with brokers, but also who is responsible for paying them — the buyer or the seller. It’s already happening in New York City, where the fee structure is set to change on January 1.

Many thought the internet would eventually kill the 6% real estate commission. But it has yet to put much of a dent into the share home sellers pay, which is about double the percentage that is paid in other countries, according to a report on commissions from the Brookings Institution. Even as the ranks of stockbrokers and travel agents have dropped in recent years as commissions petered out, the number of real estate agents has grown and their typical commissions are bigger than ever as home prices have risen. That is largely because of the power of the National Association of Realtors, an influential lobbying group that represents 1.5 million real estate agents.

While the NAR is appealing the recent decision and emphasizes that its members’ commissions are always negotiable, there appear to be some emerging cracks in the current way a home is sold.

How real estate commissions work​

Home sellers are usually on the hook for their real estate agent’s commission as well as for paying the agent that represents the buyer. Brokers typically split the commission, which, depending on the market, is usually between 5% and 6%.

A $500,000 home sale with a 6% commission means the seller pays their broker $30,000 upon settlement, which that agent splits with the buyer’s broker, so each side earns $15,000 on the sale. (There is an additional split on each side with the participating brokers sharing their cuts with the agents who inked the deal, so an agent’s actual pay is less than their side’s share of the the total commission.)

Real estate agents will tell you commissions are negotiable — and they are. And there are other models to sell a home including using flat-fee or discount brokers. But there are strong structural forces at play in the industry that keep many sellers from offering less than the typical 6%. Agents’ compensation is included when the home is listed on a regional database known as a multiple listing service, or MLS. Some MLSs will not allow a seller’s agent to list a property that offers nothing to the buyer’s agent.


Sellers may worry agents will “steer” them away from a home that will earn the agent less. And that fear is not unfounded.

A recent academic study of properties listed on Redfin found that agents who offered commissions that were less than the market rate for an area had less traffic and took much longer to sell.

“The people who are most hurt by this are sellers who offer going-rate commissions because they are worried about steering,” said Jordan Barry, a professor of law and taxation at the University of Southern California, and a co-author of the study. “For most homeowners, their house is by far their largest asset. Giving up 6% of the sale price in commissions is a real burden.”

A historic practice​

The shared commission structure was set up in 1913 and appeared in the first Code of Ethics of the National Association of Real Estate Exchanges, which had been established five years earlier and later became the NAR.


A section of the code, entitled “Duties to Other Brokers,” stipulated that an agent should “always be ready and willing to divide the regular commission equally with any member of the Association who can produce a buyer for any client.”

The NAR’s current Code of Ethics (Article 3) allows commission sharing but does not require it.

Until the Supreme Court put a stop to it in 1950, commission rates were set in a schedule by regional boards of realtors. Boards specifically forbade undercutting the prevailing rate, which was climbing.

In the 1920s in the Boston area, for example, the typical commission rate was 2.5%, but by the 1940s it had reached 5%, according to a study published in November 2015.


Agents argued the commission rate was fair because they held access to the listings unavailable to the public on the MLS. Agents put their listings in the MLS databases where only other agents could see them. These databases were — and sometimes still are — managed by NAR member organizations.

In an update to members following the recent verdict, NAR said the possibility of commission sharing has “always has been in place to protect and serve the best interests of consumers, support market-driven pricing and advance business competition.”

to be continued...​

 
....continued from above......

A history of litigation​

Tension over NAR’s gatekeeping for listings would again spill into more litigation in 2005, when the Department of Justice filed a civil antitrust lawsuit against NAR challenging policies and related rules that obstructed real estate brokers who used “innovative internet-based tools” to offer better services and lower costs. In a 2008 settlement with the DOJ, NAR-affiliated MLS were no longer allowed to withhold listings from brokers who serve customers online.


Broadening access to the MLS would later allow online property listing behemoths like Zillow and Redfin to flourish. But as the internet became a critical part of home shopping, the commission rate stayed constant even while home prices surged.

The median priced home in 1950 was $7,354 (about $93,000 adjusted for inflation), according to the US Census, making a 6% commission $441 (about $5,500 in 2023). By 2000, the median home price was $119,600 (about $215,000 in 2023), allowing agents to split a fee of $7,176 (about $12,800 in 2023.) In October, the median home price was $391,800, according to the NAR, and the 6% commission paid by a typical seller was $23,500.

Up next for NAR is an appeal of the $1.8 billion lawsuit from October, which won’t be decided anytime soon.

“Typically antitrust cases like this take about a decade,” said June Babiracki Barlow, the general counsel for the California Association of Realtors. But, she added, that “we’ve never seen a damage award this big.”


If the commission structure shifts to separating the commissions, it could mean big savings for home sellers because they’d only have to pay for their own agent. But it could make buying a home even more expensive because buyers would either have to pay out of pocket for representation or go without a broker, if they didn’t negotiate for the seller to pay the fee.

The rash of cases brought recently against the NAR and other brokerage firms may result in separating seller commissions, said Vasi Yiannoulis-Riva, a partner at the New York real estate team of international law firm Withersworldwide. She added that the changes could create more competition amongst agents, as well as having “a profound effect on how brokerage commissions are paid across the country.”

Changes already​

Some incremental changes have already taken place in the way residential real estate is done, with some of the MLSs allowing a wider variety of commission arrangements to be represented in listings even before the verdict.


In August, Bright MLS, which covers markets in the Mid-Atlantic, changed its requirements so that listings could offer compensation of any percentage or amount for a buyer’s broker — including $0.

In October, the NAR said it is neither requiring nor encouraging MLSs to change their data fields to permit $0 fees, but they were advising that doing so would now comply with the NAR’s MLS policy, which was a change from prior policy.

In an indication of what may be coming for the rest of the country, the Real Estate Board of New York — New York City’s leading trade association — rolled out a new policy it called the “future of how residential real estate is transacted” that will decouple agents’ commissions and require any compensation for the buyer’s broker that is coming from the seller to come directly from that seller, not another broker.
 
Appeals court hears arguments on reopening the DOJ's probe into NAR.
(HousingWire by Brooklee Han). The National Association of Realtor's ongoing battle with the Department of Justice is heating up again. On Friday, a three-judge appellate court panel in Washington, D.C. heard oral arguments from both NAR and the DOJ, over whether the federal agency will be able to reopen its probe into the trade group. A three-judge appellate court panel seemed amenable to allowing the DOJ to reopen its investigation into NAR at Friday's oral arguments.

The DOJ's Antitrust Division would like to investigate NAR's Clear Cooperation Policy and Participation Rule, which are currently at the epicenter of the proliferating commission lawsuits. Based on reports from several news agencies, the panel of judges seemed inclined to allow the DOJ to reopen its probe.

In 2020, the DOJ's antitrust division agreed to a settlement after investigating the trade groups listing and agent compensation policies. The settlement proposed at the time included requirements for NAR to boost transparency about broker commissions and to stop misrepresenting that buyer broker services are free.

However, the DOJ, under new leadership in the Biden administration, withdrew the settlement in July 2021, stating that the terms of the agreement prevent regulators from continuing to investigate certain association rules that they feel harm buyers and sellers.
 
An older article but I just came across it

How commissions litigation could affect mortgage lending​


By Andrew MartinezNovember 03, 2023, 5:22 p.m. EDT4 Min Read

The shockwaves from the recent real estate commissions verdict are still reverberating, and the impacts to the mortgage industry could be numerous.
Three major real estate players face at least $1.7 billion in damages after a federal jury this week ruled in favor of home sellers challenging commission rules. Losing parties in the Sitzer/Burnett trial, including the National Association of Realtors, vowed to appeal both the damages and the verdict, and a resolution could be years away.
Tuesday's decision didn't immediately reshape commission rules, but NAR and major brokerages face two more class action complaints and possible scrutiny from the Department of Justice. As real estate agents weigh the future of their business, mortgage experts see both negative and positive outcomes for lenders.
"This has been a long time coming," said Greg Sher, managing director at NFM Lending. "It evens the playing field for all involved. And most importantly, depending on what's created on the back end of this, hopefully it will lead to lower fees for consumers."

Implementing customer-centric solutions using a transformation roadmap​


In this 3-part series of articles, we have addressed the changing environment lenders find themselves competing in today and how these changes are...
PARTNER INSIGHTS FROM CORELOGIC
Today's rules mandating seller brokers offer compensation, even if it's $0, to a prospective buyer agent for access to a multiple listing service remain unchanged. Any new rules putting the agent commission burden on prospective borrowers could affect low-to-moderate income and first-time homebuyers already facing a historically unaffordable market, experts have warned.
Keefe, Bruyette & Woods recently suggested the Federal Housing Finance Agency and other housing stakeholders are discussing a commission financing workaround which won't disrupt the underwriting and origination process. A buyer could also negotiate a closing credit from the seller equal to some or all of the buyer agent commission in exchange for a higher home sale price, according to their report.
"I'm confident something will happen whether it's rolling the buyer fees into the transaction or mortgage companies creating tools where they can participate in assisting the buyer," said Sher.
The Mortgage Bankers Association has yet to comment publicly on the verdict, while mortgage broker groups remained neutral ahead of the trial.
A potentially weaker MLS system could reduce barriers to entry for alternative home sale methods, such as the iBuying model deployed by publicly traded firms Offerpad and Opendoor, Keefe, Bruyette & Woods said. Leaders of those companies in recent earnings calls said any commission rule changes would have little impact on their expenses.
Strained housing supply could be unlocked with less commission friction, KBW added. Home builders, who are already offering competitive mortgage rate buydowns, could pass potential buyer agent commission savings to prospective buyers.
Aalto, a digital housing marketplace which connects sellers to buyers directly, is already seeing a boost with its nontraditional model, founder and CEO Nick Narodny said. The Bay Area startup, which works with its network of third-party LOs, offers customers a rebate around 1.5% of a commission, which borrowers have been using for buydowns, Narodny said.
"You have to find a loan officer that's willing to do that right, willing to apply a rebate to a 2-1 buydown," said Narodny. "But most are in this market."
Conversely, Realtors marginalized by any structural changes present a counterparty risk to loan officers, experts said. Real estate agents aren't yet fleeing the industry, but firms including Anywhere Real Estate, RE/MAX and Redfin have already distanced themselves from NAR.
"If I'm a top producing loan officer, and I've spent the past 10-to-15 years cultivating relationships with buyer agents, and their role was minimized in any way, shape or form, then there is trailing risk for loan officers," said Matt VanFossen, CEO of Absolute Home Mortgage and board member at the Community Home Lenders of America.
The industry veteran, speaking before this Tuesday's verdict, also raised the possibility of more agents pursuing dual-employment opportunities, or split compensation situations in which they work with a lending team in a bifurcated process.
Lenders with direct-to-consumer models or embedded partnerships could also be an "effective mousetrap" for purchase volumes, KBW also predicted. Its report pointed to Rocket Cos., the industry's largest direct-to-consumer player.
"RKT will need to find ways for its product to better penetrate the homebuyer segment, a strategy it has been focusing on through its Rocket Homes and Rocket Money applications," analysts wrote.
Brokerage investors had a negative reaction to Tuesday's verdict, while mortgage stocks remained largely unaffected. Zillow shares, which fell 10% following the jury's decision, rebounded by Friday afternoon after CEO Richard Barton hinted the company would benefit from a reshaped marketplace.
If buyer agencies fade, Zillow would "be an odds-on favorite to become the leading digital listings marketplace," he said, before suggesting such dominance would be negative for both consumers and the industry at-large.
Experts suggested the commission news hadn't yet entered the consumer zeitgeist. Loan officers have a short attention span, are too focused on surviving today's market and won't be concerned until fundamental changes arise, Sher said.
"This is a big opportunity for mortgage companies to differentiate themselves by going out of their way to be a resource for buyers in figuring out what that means," he said. "Because there's going to be a lot of confusion, a lot of uncertainty."
 
I'd still like to hear a good explanation from the realtors as to why the standard fee for a $1 million house ($60K) is double that for a $500K house ($30K).

What exactly is being done to execute the $1 million home transaction that warrants $30K more to the brokers?

The transaction process itself is no different. And no apparent reason why I couldn't use the same "high-quality" broker for both. It seems everyone just gets paid more to do the exact same things.

I get it that it's "negotiable," but in the practical world not really since there is no way on this planet the $1mm house gets done at 3%. And if it were, that would just prove that the extra $30K is pure profit.

Isn't this true of a lot of commission based things though? Is being a server at Ruth's Chris 4x more work than being a server at Applebees? Or even within the same restaurant, is dropping off 2 steaks and 2 mixed drinks triple the work of dropping off 2 salads and 2 cokes?

That answer is no. There is a diner I go to that the servers work their tails off, but the average tab for 2 is maybe 20-25 bucks tops.

Even if I go to Ruth Chris, refilling my water is the same effort as bringing me a 30 dollar glass of bourbon..but the bourbon get the server 6 more dollars in tip.

I always felt that every home sale commission should be bid on by agents. In a hot market that homes are selling in under a week the commission rate should be negotiated.

Say a 500K home is for sale in a hot market, one agent should be able to say. "I will sell it for 5%, then another should be able to say. This home will sell in days, I will take 3%"
 
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Commission lawsuit is filed in Arizona. But NAR isn't the target.
(HousingWire by Brooklee Han). Arizona brokerages and Realtor organizations named as defendants in the latest copycat commission lawsuit, filed last Friday. The wave of commission lawsuits have arrived in Arizona. In a copycat suit filed last Friday in U.S. District Court in Arizona, Joseph Masiello, an Arizona resident and home seller, accuses several real estate companies of colluding to artificially inflate real estate agent commissions.

Masiello sold a home on an Arizona MLS through HomeSmart "in or about October 2021." According to the filing, Masiello was "required to pay a 2% commission ($8,200) to the seller broker and a 2.5% commission ($10,250) to the buyer broker."

Like the other commission lawsuits, the Masiello suit takes aim at the National Association of Realtors' Participation Rule, which requires listing brokers to make a blanket offer of compensation to the buyer's broker in order to list a property on a Realtor-affiliated MLS.

"This archaic commission structure has remained insulated from market forces for almost 30 years because of a long-running conspiracy among Defendants to implement and enforce anticompetitive restraints in the residential real estate market," the complaint reads. "No pro-competitive justification exists for Defendants' conspiracy, which functions to perpetuate inflated commissions to the detriment of Arizona homeowners. Even if some pro-competitive benefit did come from Defendants' conspiracy, that alleged benefit would be substantially outweighed by the conspiracy's anticompetitive effects and would therefore not be justified."

Though the suit takes aim at NAR's Participation Rule, it does not name NAR as a defendant. Instead the suit lists the state's largest Realtor organizations, including Arizona Association of Realtors, Phoenix Association of Realtors, Scottsdale Area Association of Realtors, and West and Southeast Realtors of the Valley Incorporated, as well as several local and national brokerage firms, including, HomeSmart, My Home Group, Realty One Group Arizona, West USA Realty, Hague Partners Holdings, Realty Executives, Arizona Best Real Estate, North&Company, Silverleaf Realty, Walty Dailey Local Luxury, Christie's International Real Estate, Brokery, Roy H Long Realty Company, and Tierra Antigua Realty.

The complaint argues that the local Realtor organizations "participate in and further the conspiracy by agreeing to adopt, implementing, and enforcing rules in Arizona identical to those promulgated by the NAR, including through their control of the Arizona MLSs."

Similar to all of the other copycat suits filed after the Sitzer/Burnett jury verdict in late Oct. 2023, the Masiello suit is seeking class action status for all persons who used any brokerage defendant to list and sell a home on an Arizona MLS and paid a buyer broker commission between Jan. 5, 2020, and the present.

The plaintiffs are also seeking treble damages of an amount to be determined at trial or by the court, injunctive relief preventing the defendants from engaging in what the plaintiff believes is "unlawful" behavior, and a jury trial.

The defendants did not immediately return a request for comment.
 
Refin is like a 2% fee to sell (maybe it was 2.5%). My RE agent said they'd match the whatever fee Refin was offering when I considered selling my house.
 

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