A federal law suit in Kansas City challenging rules requiring home sellers to pay commissions to brokers representing the buyer has just received class action status. This means that if homeowners prevail, they could be eligible to receive funds back from their home closings. U.S. District Judge Stephen Bough on Friday ruled that the lawsuit, which was originally filed in 2019 on behalf of Missouri home sellers who had listed their homes on the Multiple Listing Services system (MLS), met the criteria for a class action, including numerosity and common questions of law or fact. This is not the only case for the same matter, there is an almost identical lawsuit going on in Chicago. The suit names the National Association of Realtors as well as 4 of the top real estate brokerages. The defendants own and operate other large brokerage firms across the US.
The plaintiffs allege the real estate brokerages and NAR have conspired to require home sellers to pay brokers representing home buyers inflated amounts, in violation of federal antitrust law, Missouri antitrust law and the Missouri Merchandising Practices Act. As a condition of listing their homes on an MLS, a centralized database listing homes for sale, sellers are required to agree that the listing agent will split the commission with the agent representing the buyer. Absent that requirement, the plaintiffs claim, “seller brokers would set a commission to pay themselves alone and would likely begin to engage in more vigorous competition with one another to lower their rates and/or provide additional services to justify their newly transparent rates.”NAR argues that the MLS system is efficient and beneficial to consumers. It says that it allows many first-time, low-income buyers to purchase a home they couldn’t otherwise afford because they don’t have to pay brokers directly. IIn response to a request for comment, NAR emailed a statement to KCUR saying it was disappointed with Bough’s ruling, which it said it plans to appeal. “The pro-competitive, pro-consumer local broker marketplaces serve the best interests of buyers and sellers,” NAR said. “Local broker marketplaces ensure equity, transparency, and market-driven pricing options for the benefit of home buyers and sellers. These marketplaces reduce transaction costs by ensuring, among other things, that a buyer broker and their client understand how much the listing broker will pay the buyer broker for procuring a buyer for the listed property.
In granting the plaintiffs’ request for class certification, Bough certified three separate classes, including one consisting of all home sellers since April 29, 2015, who used a listing broker affiliated with the defendants and who paid a commission to the buyer’s broker when they sold their homes.The plaintiffs estimate the classes include “hundreds of thousands of class members geographically dispersed throughout the state of Missouri and portions of Kansas and Illinois.”