The National Association of Realtors is facing a tough battle as it plans to appeal a multibillion-dollar verdict in Missouri over agent commissions. However, their challenges don’t end there, as they have been hit with an even larger lawsuit that further threatens their longstanding practices for selling homes.
In a federal courtroom in Kansas City, a jury reached a staggering $1.8 billion verdict against the NAR, Keller Williams, and HomeServices of America. This verdict was based on the argument made by Missouri home sellers that the practice of paying commissions to buyer and seller brokers is anticompetitive and artificially inflates home costs.
If the pending appeals by HomeServices and Keller Williams are unsuccessful, the damages could be tripled to a whopping $5.4 billion due to the antitrust nature of the case. This lawsuit has garnered significant attention as its outcome could potentially impact the national housing market and the broader economy.
Shortly after the verdict was announced in the U.S. District Court for the Western District of Missouri, plaintiffs’ attorney Michael Ketchmark wasted no time and filed a new lawsuit. He believes that this lawsuit could result in hundreds of billions of dollars in damages, aiming to hold the NAR accountable for what his clients perceive as artificially inflated commission payments.
Version 1: The national class-action suit has now expanded its reach to include home sellers across the entire country, marking a significant geographical expansion. In addition, several new brokerages have been added as defendants, amplifying the scope of the case. Ketchmark, in a firm tone, conveyed a powerful message to these defendants, emphasizing that the time for accountability has finally arrived.
Ketchmark, in light of the recent verdict in Kansas City, expressed his determination to put an end to homeowners paying an unnecessary $50 billion each year when selling their homes. He emphasized this as he discussed the new legal action taken by a fresh group of home sellers, who have named several defendants including NAR, Compass, eXp World Holdings, Redfin, Weichert Realtors, United Real Estate, Howard Hanna Real Estate, and Douglas Elliman. This development further complicates matters for the NAR, as they already face the daunting task of appealing the initial verdict and preparing for upcoming cases, including one scheduled for trial in a federal courtroom next year.
The NAR has been facing a lot of scrutiny lately, with industry professionals predicting that if they don’t resolve the ongoing lawsuits, they could face even more trouble. According to a recent report by Keefer, Bruyette & Woods research analysts, the potential damages against the NAR and other defendants could exceed a staggering $400 billion if lawsuits continue to spread across the country.
In response to Tuesday’s verdict, the NAR and HomeServices have announced their plans to appeal, while Keller Williams is still considering their options. Additionally, they are gearing up for another case, Moehrl v. NAR, which is expected to be heard in a federal court in Chicago next year. This case alone could result in damages of around $41 billion.
It’s worth noting that two other defendants, Anywhere Real Estate and RE/MAX, have already settled their cases for a combined total of over $138 million.
The home sellers involved in these cases argue that the NAR and its members engage in anticompetitive practices. They claim that the requirement for all homes to be listed on member-controlled multiple listing services, along with the disclosure of broker commissions before a home is put on the market, limits their options to reduce commission payments. Typically, these commissions amount to approximately 6% split between buyer and seller brokers.
The NAR’s future hangs in the balance as these lawsuits continue to unfold. It remains to be seen how they will navigate these legal challenges and what the ultimate consequences will be.
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