A Lawsuit Raising Eyebrows
A class action lawsuit was filed in Chicago on behalf of anyone who sold a home in the past five years, using any one of the 20 largest listing services in the country. The lawsuit claims that the NAR, as well as four of the largest national brokerages, including the MLS, have conspired to require anyone selling a home to pay the commission of the broker representing the buyer at an inflated rate, which is a federal antitrust law violation. A lawsuit of this nature has been made in the past, however, heads are turning with this lawsuit as it’s being brought to play with some heavy-hitter law firms. Although, at this point, it can still be easily thrown out, if it does make any advances, this can certainly shake up the industry as we know it.
The alleged claims state that our current structure forces sellers to conform to the “Buyer Broker Commission Rule.” A system that states the total cost of commission is placed on the seller, and the buyer’s representing agent will receive a split of the commission. In order to list a property on the MLS, agents must always provide the commission they are paying out to the buyer’s broker. “The conspiracy has saddled home sellers with a cost that would be borne by the buyer in a competitive market,” the lawsuit says. “Moreover, because most buyer brokers will not show homes to their clients where the seller is offering a lower buyer broker commission, or will show homes with higher commission offers first, sellers are incentivized when making the required blanket, non-negotiable offer to procure the buyer brokers’ cooperation by offering a high commission.”
If this case advances further, this could quickly evaporate the MLS structure we all are familiar with. We’ll keep you updated as further news of this lawsuit progresses.