A New Class Action Suit Is Targeted At Real Estate Agents And The Tools They Use For Business And The Housing Industry Observers say it could revolutionize the way Americans buy and sell the largest asset they'll ever own.
The lawsuit was filed in Chicago for anyone who has sold a home through one of the country's 20 largest listing services the past five years. It claims that the Washington-based powerful National Association of Realtors lobby, as well as the four largest national real estate agents and the multiple listing services they use, have plotted that anyone selling a home requires commission from the broker who owns them represents buyers "at an excessive amount" in violation of federal antitrust law.
Homeowners who are willing to sell their real estate usually hire a real estate agent by staging, photographing, adding to the MLS, marketing and showing to potential buyers. Sellers agree to pay this person a commission on the sale price of the apartment. This commission is traditionally referred to as "6%", but is a bit more complicated.
Sellers can only negotiate with the agents they hire, while agents representing buyers typically receive a standard commission of 3%. This means that a seller who wants to negotiate or who works for a discount broker like Redfin
RDFN, + 3.12%
is paid less than a representative of the buyer.
Buyers can choose to be represented by a representative or to renounce one. In any case, however, all commission fees for both sides of the deal are paid by the seller, thanks to a 1996 NAR rule, referred to as the "Buyer Broker Commission Rule."
To buy a property in one of the many regional databases, which is called Multiple Listing Services are known to list, the agents must adhere to the Buyer Broker Rule.The listing on the MLS is indispensable for a sale, and most MLS are controlled by local NAR associations.
"The conspiracy has home sellers at a cost The buyer says this is a burden that the buyer would face in a highly competitive market. "Since most buyer brokers do not show their customers homes where the seller offers a lower commission to buyers, or show houses with higher commission rates first, the sellers become one encouraged to procure the necessary blanket, non-negotiable offer cooperation of buyers dur a high commission. "
As MarketWatch has already reported, many real estate observers refer to real estate agents as a" cartel "to the way they intentionally lead customers to transactions that respect traditional business practices.
See: Meet tech-savvy newcomers who believe they can finally give real estate agents their prize
Rob Hahn is founder and managing partner of 7DS Associates, a real estate consultancy. In a blog released shortly after the lawsuit, Hahn called it a potential "atom bomb on the industry." In an interview with MarketWatch, he said he took it "very seriously".
This is largely because of the strength of the law firms behind the lawsuit. Both Cohen Milstein Sellers & Toll and Hagens Berman Sobol Shapiro have a long history of overweight entities such as Volkswagen for the exhaust scandal, Apple for its e-book agreements and Exxon after the outbreak of Valdez.
In response to a request for comment, NAR said, "The lawsuit is unfounded and contains a wealth of false claims. The US courts have routinely found that multiple listing services are competitive and benefit consumers by making the home and sales process more efficient. NAR looks forward to maintaining a similar precedent for this deposit.
Yet, as Hahn put it, earlier lawsuits were filed mostly by so-called "ambulance pursuers", not the companies behind some of the largest civilian settlements in Berlin. American History.
This view is shared by Cohen Milstein's partner Daniel Small, who describes the way real estate agents call "a long-standing problem". What is different now, Small told MarketWatch, is that deep-seated law firms conducted a "thorough investigation", convincing them that money could be made to take over the entities named in the lawsuit.
Small did not want to elaborate on what prompted the investigation. However, it is worth noting that the lawsuit was filed against the National Association of Realtors about four months after the approval of the Department of Justice. This agreement was struck in 2008 after several years of unsuccessful attempts by the federal government to stop NAR's so-called anticompetitive behavior, which was under attack by Internet newbies.
Read: The real estate agents will soon be released from the ten-year judicial authority – what happens to living? Hahn considers it ironic that an innovation that sought to protect buyers by representing them in a complex and deeply emotional transaction has made the market so bad. Many housing observers have long argued that real estate services should be paid for a la carte or in a phased fee structure rather than a flat rate commission. However, Hahn said, "There is no chance at all for the industry going that way voluntarily."
It is more likely that the American system will resemble the real estate markets in Australia or England where sellers and buyers occur. Everyone pays for their own broker or not. After all, buyers are generally "in the palm of their hand", Hahn says. You save every nickel for a down payment, closing costs and removal costs. While the deep-rooted interests in the US real estate industry argue that this is not consumer friendly, Hahn says he has "never seen a study banning buyers" without representation.
As a former lawyer, Hahn is not sure how he should do so obstructing this case. However, if this prevails, he believes that the industry is facing huge changes. The number of buyer brokers is likely to be decimated, and the infrastructure behind the MLSs and local associations will also wither away.
A spokesman for Realogy
said, "We believe this case has no merit and will not comment further."
A spokesman for Keller Williams said, "It's not ours Politics to comment on pending litigation. "A spokesman for RE / MAX Holdings
declined to comment, and requested a comment from Berkshire Hathaway
HomeServices of America, Inc. was not returned.
"This is an important case for many reasons," said Daniel Small. "Among them is that this is the biggest transaction in most people's lives. There is a lot at stake. "
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