Real Estate Brokerage

U.S. District Court Grants Class Certification in Largest, Most Significant Lawsuit Against the Residential Real Estate Industry

Tens of Billions of Dollars at Stake in Antitrust Litigation

Washington, D.C. – On March 29, the U.S. District Court for Northern Illinois granted plaintiffs class certification in their antitrust lawsuit against the National Association of Realtors (NAR), and major companies in the residential real estate industry, for anti-competitive practices. The litigation, Moehrl v. NAR et al., challenges the industry practice of requiring home sellers to pay the commissions of real estate agents representing home buyers.

In her decision, Judge Andrea Wood recognized that over $10 billion dollars in actual damages related to home sales between 2015 and 2020 is at stake. If trebled, this would total over $40 billion. Some of the largest and most successful class action law firms, including Cohen Milstein, are representing plaintiffs.

Plaintiffs are asking not only for class damages but also for injunctive relief from the “blanket unilateral offer of compensation” from home sellers and their listing agents to buyer agents that is required by multiple listing services (MLSs).  NAR makes the rules governing hundreds of local MLSs.

“This case, which involves widespread industry collusion to set broker commissions, does not pit liberals against conservatives,” said Stephen Brobeck, a Senior Fellow and real estate expert for Consumer Federation of America. “Both have criticized the industry practice. If the court grants plaintiffs injunctive relief, we estimate that consumers should save $20-$30 billion annually in lower commissions, which are likely to decline from the current 5-6 percent level to 3-4 percent.  This prediction is based on commission levels in countries used by plaintiffs as yardsticks – United Kingdom, Australia, and the Netherlands – and, as our research as shown, in the New York City area outside of Manhattan.”

While Moehrl v. NAR is the largest class action litigation challenging mandatory buyer broker commission offers on MLS listings, it is not the only one.  Last year, the lawsuit, Sitzer v. NAR et al., filed against the industry in a federal district court in Western Missouri was granted class certification.

“Our view is that the industry will fight hard to retain mandatory offers but is slowly realizing that the practice is unsustainable in a competitive, capitalist economy,” said Brobeck. “We believe that embracing price competition will only help the most competent and dedicated real estate agents and brokers. Today, real estate agents are usually paid the same commission rates regardless of their experience and competence.”