Missouri jury awards USD1.78B in damages for real estate commission conspiracy

(MENAFN) In a significant legal development, a Missouri jury has delivered a verdict against the National Association of Realtors (NAR) and several residential brokerages, finding them guilty of conspiring to artificially inflate commissions for home sales. The verdict, announced on Tuesday, imposes a hefty liability of USD1.78 billion in damages on these entities. Notably, this case involved plaintiffs who were the sellers of more than 260,000 homes in Missouri, Kansas, and Illinois over the period spanning from 2015 to 2022. These sellers had expressed objections regarding the commissions they were required to pay to buyers' brokers.

Under U.S. antitrust law, the damages awarded by the federal jury in Kansas City can potentially be tripled, resulting in a substantial liability of over USD5.3 billion. However, it is essential to note that this ruling remains subject to appeal.

The crux of the plaintiffs' complaint centered around the commission model, which they argued was detrimental to competition within the real estate industry. Despite the diminishing role of brokers in the era where buyers can readily find homes online, commissions for buyers' brokers were allegedly maintained in the 2.5 to 3 percent range. This, according to the sellers, hindered competition and artificially inflated costs for home sellers.

Michael Ketchmark, the lead lawyer representing the plaintiffs, emphasized the significance of this ruling, stating that the "day of accountability has arrived in real estate."

On the other hand, the defendants, including the NAR, denied any wrongdoing. The NAR specifically contended that there was no evidence to suggest that agents were obligated to "make offers of compensation at all, let alone at amounts that stabilize, fix, or raise commissions." NAR President Tracy Kasper expressed their intent to appeal the liability finding, maintaining that NAR rules were designed to serve consumers' best interests, encourage market-driven pricing, and foster healthy business competition. Kasper noted that they remained optimistic about ultimately prevailing in the case and indicated plans to request a reduction in the damages awarded by the jury.

Apart from the NAR, other entities implicated in the case included Berkshire-owned HomeServices of America and two of its subsidiaries, as well as Keller Williams. Following the verdict, HomeServices expressed disappointment and announced its intention to appeal. Meanwhile, a spokesperson for Keller Williams noted that the company would consider its options, signaling that the case was far from over.

In summary, this verdict against the NAR and various residential brokerages represents a significant legal development in the real estate industry, with implications for how commissions are structured and the potential for substantial financial consequences. The outcome underscores the ongoing legal battles surrounding commission practices in the real estate sector and the complex interplay between industry standards, consumer interests, and antitrust regulations.

MENAFN02112023000045015682ID1107357475