Key Takeaways:
– The old way of doing business is over and it’s time to prepare for tomorrow’s opportunities.
– A new lawsuit in Texas targets local Realtor associations and teams, accusing them of violating antitrust laws.
– The defendants in the case include the Texas Association of Realtors, the Austin Board of Realtors, and several other brokerages and teams.
– The lawsuit seeks class-action status on behalf of all homesellers in Texas who paid a buyer broker commission.
– The suit argues that the defendants stifle competition and inflate costs to consumers.
– Similar commission-focused antitrust cases are steadily rising.
– Some defendants have expressed disagreement with the verdict and are reviewing the case.
– The complaint asks for a jury trial, unspecified damages, and an injunction to prevent sellers from paying buyers’ agent commissions.
inman:
The verdict is in — the old way of doing business is over. Join us at Inman Connect New York Jan. 23-25, when together we’ll conquer today’s market challenges and prepare for tomorrow’s opportunities. Defy the market and bet big on your future.
The bombshell Sitzer | Burnett verdict is now two weeks old, but the flood of similar new cases continues — including, this week, a new lawsuit out of Texas that targets both local Realtor associations and teams.
Texas-based homebuilder QJ Team LLC and holding company Five Points Holdings filed the case Monday in the U.S. District Court for the Eastern District of Texas. Like the Sitzer | Burnett suit, as well as others that began before and after the recent verdict, the new case slams the practice of having sellers’ agents offer compensation to buyers’ agents. The suit describes this practice as a violation of antitrust laws and the result of a “concealed conspiracy” on the part of the National Association of Realtors and franchisors Anywhere and RE/MAX.
TROUBLE KEEPING TRACK OF THE LAWSUITS? CLICK HERE
However, the new Texas case is noteworthy because despite calling out NAR, Anywhere and RE/MAX, none of those entities are named as defendants.
Rather, the defendants include the Texas Association of Realtors, the Austin Board of Realtors, the San Antonio Board of Realtors, the MetroTex Association of Realtors, and the Houston Association of Realtors. Other defendants include Keller Williams, Fathom Realty, Side, Tim Heyl’s the Heyl Group Holdings, and numerous other brokerages and teams. In total, there are more than two dozen defendants listed in the case.
This new case — along with one filed last week against the Real Estate Board of New York and other firms — consequently represents something of a novel twist in the ongoing bombshell commission saga; in the past, high-profile antitrust commission lawsuits tended to focus on national franchisors and NAR, which operates across the entire U.S.
The case’s complaint also accuses two teams, the Hexagon Group and The Michael Group, of violating the Texas Deceptive Trade Practices Act, which prohibits deceptive or misleading business practices. The complaint doesn’t elaborate on how the teams allegedly broke the law but says they did so knowingly.
The new Texas suit ultimately seeks class-action status — in this case, on behalf of all homesellers in Texas who put their properties on a multiple listing service and paid a “buyer broker commission from November 13, 2019, until the present.”
Among other things, the suit argues that NAR, local MLSs and the various defendants “stifle” competition and inflate costs to consumers. The “conspiracy” also allegedly forces sellers to pay for services that in a “competitive market and in the absence of the defendants’ anticompetitive restraint, would typically be borne by the homebuyer.”
“These anticompetitive measures favor the defendants by enabling brokers to impose charges on homesellers beyond competitive thresholds and thwarting competition from innovative or lower-cost alternatives,” the complaint argues.
Such arguments echo those made in court during the Sitzer | Burnett case, where attorneys for a group of homeseller-plaintiffs in Missouri argued that a real estate industry conspiracy was inflating consumer costs and violating antitrust laws. A jury ultimately found that argument persuasive and, after just two hours of deliberation, awarded the plaintiffs $1,785,310,872 in damages, which will be automatically trebled to $5.356 billion.
Immediately following the verdict — which NAR has vowed to appeal — an attorney representing the plaintiffs filed yet another, similar case, now known as Gibson, against a new series of defendants. Other commission-based suits in Illinois, South Carolina, and New York soon followed as well. Those new cases also add to a group of suits, including Moehrl, Batton 1 and Nosalek, which predate the Sitzer | Burnett verdict and which are slowly moving through the courts.
The point, then, is that there are a lot of commission-focused antitrust cases, and the number is steadily rising.
Reached for comment, the Texas Association of Realtors told Inman in an email Tuesday that it “stands by the value of the professional expertise that its members provide to their clients.”
“We are reviewing the filing and will respond to it accordingly,” the email added.
Keller Williams referred Inman to a previous statement on the Sitzer | Burnett case, which expressed disagreement with the verdict. The statement adds that the company “followed the law regarding cooperative compensation and stands by the evidence presented on the 100-year-old practice of sellers’ agents offering commissions to other agents who help market and sell homes.”
Fathom Realty declined to comment on the case. Side also decline to comment, citing a policy of not speaking out on pending litigation.
The Houston Association of Realtors told Inman it was reviewing the case and is “unable to comment at this time.”
Inman will update this story as other defendants respond to requests for comment.
The complaint in the new Texas case ultimately concludes by asking for, among other things, a jury trial, unspecified damages and an injunction that would prevent the defendants from requiring sellers to pay buyers’ agent commissions.
Read the full complaint here:
Update: This post was updated after publication with comments from various defendants in the case, as well as additional details from the complaint.
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Property Chomp's Take:
The recent Sitzer | Burnett verdict has sent shockwaves through the real estate industry, signaling that the old way of doing business is over. This landmark case, which found a group of homesellers in Missouri awarded $1.7 billion in damages, has paved the way for a flood of similar lawsuits across the country.
One of the most recent cases to emerge is a lawsuit filed in Texas against local Realtor associations and teams. Texas-based homebuilder QJ Team LLC and holding company Five Points Holdings filed the case in the U.S. District Court for the Eastern District of Texas, alleging that the practice of sellers' agents offering compensation to buyers' agents is a violation of antitrust laws.
What sets this case apart from others is that it targets the Texas Association of Realtors, the Austin Board of Realtors, the San Antonio Board of Realtors, the MetroTex Association of Realtors, and the Houston Association of Realtors, among others, instead of the National Association of Realtors (NAR) and franchisors Anywhere and RE/MAX.
The complaint also accuses two teams, the Hexagon Group and The Michael Group, of violating the Texas Deceptive Trade Practices Act. The lawsuit seeks class-action status on behalf of all homesellers in Texas who paid a "buyer broker commission" from November 13, 2019, until the present.
The suit argues that NAR, local MLSs, and the defendants listed in the case stifle competition and inflate costs to consumers. It claims that sellers are forced to pay for services that, in a competitive market, would typically be borne by the homebuyer. The complaint alleges that these anticompetitive measures favor brokers and prevent innovative or lower-cost alternatives from entering the market.
This case is just one of many commission-focused antitrust cases that have emerged in recent months. Others include lawsuits against the Real Estate Board of New York and other firms, as well as cases in Illinois, South Carolina, and New York.
The increasing number of these lawsuits highlights a growing concern within the industry. It suggests that the traditional way of compensating real estate agents may no longer be sustainable or fair. As the market evolves and new players enter the scene, it is essential for the industry to adapt and find new ways to provide value to consumers.
While the outcome of these cases is uncertain, they serve as a wake-up call for the real estate industry. It is time to reevaluate and redefine the way we do business. Inman Connect New York, taking place from January 23-25, provides an opportunity for industry professionals to come together and tackle the market challenges of today while preparing for the opportunities of tomorrow.
The verdict is in — the old way of doing business is over. It's time to defy the market, bet big on the future, and shape the real estate industry for the better.
