Last month, a Missouri court found the National Association of Realtors and two brokerage firms liable for $1.8 billion in damages related to how its members collected commissions. Two North Texas companies have now filed a similar suit against the Texas Association of Realtors.
The suit, which also names the real estate associations in Austin, Dallas-Fort Worth, Houston, and San Antonio, was filed on Monday by Granbury-based QJ Homes LLC and Dallas-based Five Points Holdings LLC. It also names a handful of other local brokerages or their parent companies, including Dave Perry-Miller and Associates and Ebby Halliday Realtors.
In October, a Missouri court found that NAR conspired to artificially inflate real estate agent commissions. Homeservices of America and Keller Williams Realty were co-defendants in the suit. However, Re/Max and Anywhere Real Estate were also initially named in the lawsuit before settling out of court.
NAR and the brokerages say they’ll appeal the verdict.
At the heart of the Texas and NAR suits is the practice of paying real estate agents commissions when they help a customer buy or sell a property. Typically, 3 percent of the sale goes to the buyer’s agent, and another 3 percent goes to the seller’s agent. The NAR suit alleged that the organization forces home sellers to pay those commissions as a condition of having their home listed in the local Multiple Listing Service, which is only accessible to real estate brokerages. The use of the MLS and other tactics, plaintiffs argued, restricted price competition to ensure that each real estate agent continued to collect 3 percent for each transaction.
“This conspiracy centers around the enforcement of an anticompetitive restraint that compels home sellers to provide an inflated fee to the broker representing the buyer of their properties, thus violating federal antitrust regulations,” the North Texas suit says. While it names NAR a conspirator, it does not list the organization as a co-defendant.
The suit also says that brokerages and real estate agents are under pressure to join NAR and conform to its practices as a prerequisite for doing business. Part of those practices, it says, requires home sellers to pay a commission that the home buyer should pay.
“Further, this has led to an industry-recognized practice called ‘steering,’ where homeowners are pressured into accepting inflated or stabilized rates out of fear that buyer brokers will not show their home to prospective buyers,” the suit says.
“The commission structure in Texas forces home sellers to pay the agents for both the buyer and the seller, enforces a single source for listings through MLS and creates a conspiracy of silence within the industry,” Julie Pettit, who is representing the plaintiffs, said in a statement. “This corrupt system violates federal law and is frankly antiquated given the available technology and realities of buying a home today.”
The NAR maintains that the commission practice is not mandatory and serves “the best interests of consumers.”
“In court, NAR presented evidence that consumers are better off and business competition is able to thrive because of our rules and how well local MLS broker marketplaces function,” the organization said in October.
In a note to agents, MetroTex Association of Realtors—named in the latest suit—gave instructions on communicating the value of using a real estate agent in transactions and called the lawsuit a “copycat” of the NAR suit.
“NAR’s position – which MetroTex supports – is that the practice of cooperative compensation makes efficient, transparent, and accessible marketplaces possible. Sellers can sell their home for more and have their home seen by more buyers while buyers have more choices of homes and can afford representation,” the note said.
QJ Homes and Five Points Holdings filed the suit in the U.S. District Court for the Eastern District of Texas in Sherman, citing the Sherman Antitrust Act and the Texas Deceptive Trade Practices Act. They are seeking class-action status for home sellers who listed properties on an MLS in Texas from November 13, 2019 to the present day, using an agent or broker with one of the 29 defendants listed as plaintiffs.
Meanwhile, in Missouri, U.S. District Judge Stephen Bough has indicated that post-trial deliberations will likely keep the NAR’s case in court through the spring. With this latest suit in Texas, the thorny issue of home buying and commissions seems unlikely to be put to rest anytime soon.
Author
