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The Case Against the National Association of Realtors

Several weeks ago, the National Association of Realtors along with four other major brokerages found themselves in a class action lawsuit allowed to proceed as ruled by a federal judge in Illinois. The lawsuit, Moehrl v. National Association of Realtors, filed by several homeowners alleges unfair and anticompetitive practices on the part of the brokerages and could forever change the standards held within the real estate industry.

What is the National Association of Realtors?

The National Association of Realtors headquartered in Chicago, Illinois is a trade association consisting of more than one million residential and commercial real estate brokers, property managers, appraisers, and others within the real estate industry. In short, the association helps its members make the most of their real estate business by offering various industry insights and promoting home ownership.

What is in the Lawsuit?

The lawsuit alleges that the multiple listing site or M.L.S. maintained by real estate brokerages in is anticompetitive because it is not accessible for the public within the market. Additionally, the suit alleges unfair commission practices. Typically, the agent commissions, set by rules of the National Association of Realtors, for the seller and buyer are borne by the seller through the sale. Under this structure, neither the seller nor the buyer can negotiate for a lower commission. Further, the buyer agent has access to commission information prior to showing a home and could direct buyers to homes with a higher earning potential.

What is the Status of the Lawsuit?

Several weeks after the Moehrl v. National Association of Realtors was allowed to proceed, the United States Department of Justice filed its own lawsuit against the National Association of Realtors alleging illegal practices which include prohibiting the disclosure of the buyer realtor commission and falsely claiming the buyer realtor commission is free. A Final Judgement has been proposed in the DOJ case which would include changes to certain policies, practices, and procedures of the association. More information about those specific changes can be found here. It is unknown at this time if an agreed settlement between the DOJ and National Association of Realtors would mean a settlement in the lawsuit filed by homeowners.

We will keep you updated as this story continues to develop.

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