Illinois’ 3rd Commission Suit Names @properties, Champions Homebuyers

Key Takeaways:

– A Chicago homebuyer has filed a class action lawsuit against @properties | Christie’s International Real Estate, alleging that the brokerage engaged in a conspiracy to keep agents’ compensation high.
– The lawsuit argues that high commissions limit competition and drive up home prices, negatively impacting homebuyers.
– The lawsuit seeks to form a nationwide class of homebuyers who bought a home listed on a Realtor-affiliated listing service using an @properties agent between March 17, 2000, and the present.
– The lawsuit references the Sitzer | Burnett verdict in Missouri, which has led to numerous lawsuits challenging real estate agent compensation across the country.
– The complaint alleges that @properties benefited from National Association of Realtors (NAR) rules and policies, although NAR is not named as a defendant in the lawsuit.
– The complaint accuses @properties of being “heavily intertwined” with NAR and claims that NAR rules allowed agents to filter listings on the MLS to show properties with higher buyer-side commission offers.
– @properties has stated that the Chicago lawsuit is different from other similar lawsuits filed after the Sitzer | Burnett verdict, as it does not allege any involvement by @properties in controlling NAR.

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A Chicago homebuyer is seeking class status in a new commission lawsuit filed against @properties | Christie’s International Real Estate alleging Illinois’ largest brokerage engaged in a conspiracy to keep agents’ compensation high.

The new suit — known as Tuccori for its lead plaintiff, homebuyer James Tuccori — is only the latest in a series of cases challenging how real estate agents are compensated across the country in the wake of the landmark Sitzer | Burnett verdict in Missouri. While many of the suits filed before and after the October verdict have been led by homeseller plaintiffs, the latest bucks that trend by taking up the argument that homebuyers are hurt by high commissions, which Tuccori alleges limit competition and drive up home prices.

The suit was filed in Cook County Circuit Court on Dec. 8 but was moved to U.S. District Court in Northern Illinois on Jan. 5. It joins three others filed in Illinois, including “Batton” and “Moehrl,” both scheduled for trial this year. Batton was one of the few lawsuits filed by homebuyer plaintiffs before Tuccori. 

Crain’s Chicago Business reported Tuccori used an @properties agent to buy a home in Chicago’s West Town neighborhood for $785,000 in 2018.

Attorneys for Tuccori didn’t respond to requests for comment, and Tuccori couldn’t be reached for comment. An @properties spokesperson told Inman the company would “vigorously defend” itself in court.

The complaint solely names @properties, and the lawsuit seeks to form a nationwide class that includes anyone who bought a home in the U.S. that was listed on a Realtor-affiliated listing service using an @properties agent between March 17, 2000, and today. Thad Wong and Mike Golden co-founded @properties in 2000. The proposed subclass is the same date range for buyers in Illinois.

The lawsuit is only the latest since the floodgates opened after jurors in the Sitzer | Burnett case issued their verdict against the National Association of Realtors, Keller Williams, Anywhere, RE/MAX, HomeServices of America and two of its subsidiaries — HSF Affiliates and BHH Affiliates.

While the Tuccori complaint doesn’t name the National Association of Realtors as a defendant, it mentions the group extensively and alleges that @properties benefited from NAR rules and policies. The complaint calls NAR a co-conspirator in the alleged conspiracy and homes in on various rules and requirements for accessing multiple listing services.

Specifically, the complaint seized on NAR rules requiring listing brokers to offer compensation to a buyer broker; preventing buyer agents from making offers contingent on a reduction of the buyer-agent commission; and restricting lockbox access to only NAR members. It also alleged commissions aren’t easily found on listings, which prevents transparency around compensation for consumers.

“These anti-competitive rules permit Defendant and other NAR members to sustain buyer-agent fees at artificially high levels which would not exist in a competitive marketplace,” the complaint says.

The complaint acknowledges that NAR has changed many of the policies it references, but it says “the harms caused to American homebuyers for decades have not been remedied, nor have the billions in ill-gotten commissions been disgorged.”

The complaint also suggests that @properties is “heavily intertwined” with NAR. Both are based in Chicago. 

“Defendant has consented to engage in, facilitate, and execute this conspiracy, playing a significant role within NAR and mandating its affiliates comply with NAR’s anti-competitive agreements as a prerequisite for accessing the benefits of the Defendant’s brand and infrastructure, including MLSs.”

@properties is among the list of “preferred unit owners” of the Midwest Real Estate Data MLS, which covers the Chicago metro area. Owners can vote for board members, run for the board, participate in exclusive meetings and enjoy other benefits.

The lawsuit noted that, in order to access Midwest Real Estate Data MLS, agents must be members of NAR.

The complaint alleges that NAR rules permitted agents to filter listings on the MLS to show properties with higher buy-side commission offers, which it said promoted steering clients toward those listings.

“This harms homebuyers, who receive diminished, biased services from buyer agents who prefer that the homebuyers only purchase homes that offer high commissions,” the complaint said.

“Plaintiffs and the other Class and Subclass members have suffered significant monetary damages, each incurring thousands of dollars in excess commission fees, due to Defendant’s engagement in the conspiracy,” the complaint alleges.

In response to the complaint, @properties said the new case differs from the other so-called “copycat” lawsuits filed across the country in the wake of the Sitzer | Burnett verdict. 

“The Kansas City case was premised on those other brokerages controlling NAR by having their executives serve on its board of directors and executive committee, which allegedly created, implemented, and enforced the NAR rules at issue,” an @properties spokesman said. “In contrast, the Chicago complaint makes no specific allegation that @properties was or is involved in any such activities.”

“While we are members of NAR, no @properties manager or executive has ever served in any role at NAR with any rule-making authority,” @properties said.

A status hearing in the case is scheduled for March 19.

Email Taylor Anderson


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Property Chomp's Take:

The real estate industry is facing a major shake-up as homebuyers across the country are challenging the traditional model of agent compensation. In a new lawsuit filed against @properties | Christie's International Real Estate, a Chicago homebuyer is seeking class status, alleging that the brokerage engaged in a conspiracy to keep agents' compensation high.

The lawsuit, known as Tuccori for its lead plaintiff, James Tuccori, joins a series of cases challenging how real estate agents are compensated. While previous lawsuits have been led by homeseller plaintiffs, Tuccori's case takes a different approach by arguing that homebuyers are hurt by high commissions, which limit competition and drive up home prices.

The lawsuit was initially filed in Cook County Circuit Court but was later moved to U.S. District Court in Northern Illinois. It joins three other lawsuits filed in Illinois, with two of them scheduled for trial this year. Tuccori used an @properties agent to buy a home in Chicago's West Town neighborhood for $785,000 in 2018.

The complaint solely names @properties and seeks to form a nationwide class that includes anyone who bought a home in the U.S. listed on a Realtor-affiliated listing service using an @properties agent between March 17, 2000, and today. The proposed subclass is the same date range for buyers in Illinois.

The lawsuit alleges that @properties benefited from National Association of Realtors (NAR) rules and policies and calls NAR a co-conspirator in the alleged conspiracy. It focuses on various rules and requirements for accessing multiple listing services, such as offering compensation to buyer brokers and restricting lockbox access to only NAR members. The complaint also claims that commissions aren't easily found on listings, preventing transparency around compensation for consumers.

@properties has stated that it will "vigorously defend" itself in court and has emphasized that the Tuccori case differs from other similar lawsuits filed across the country. The company denies any involvement in the activities alleged in the complaint.

While the real estate industry has seen changes in recent years, this lawsuit highlights the growing dissatisfaction among homebuyers with the current compensation model for real estate agents. As more buyers challenge the status quo, it remains to be seen how the industry will adapt and respond to these demands for change.

Inman Connect New York, taking place from January 23-25, provides an opportunity for industry professionals to come together and discuss these market challenges and future opportunities. By defying the market and betting big on the future, real estate professionals can stay ahead of the curve and navigate the changing landscape of the industry.

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