The Case Against the National Association of Realtors
Several weeks ago, a federal judge in Illinois allowed a class action lawsuit to proceed against the National Association of Realtors and four other major brokerages. The lawsuit, Moehrl v. National Association of Realtors, filed by several homeowners, alleges unfair and anticompetitive practices by the brokerages. It could permanently change the standards in the real estate industry.
What is the National Association of Realtors?
The National Association of Realtors, headquartered in Chicago, Illinois, is a trade association with more than one million residential and commercial real estate brokers, property managers, appraisers, and others in the real estate industry. In short, the association helps its members grow their real estate business by offering industry insights and promoting home ownership.
What is in the Lawsuit?
The lawsuit alleges that the multiple listing site (MLS) maintained by real estate brokerages is anticompetitive because the public cannot access it freely. Additionally, the suit claims unfair commission practices. Typically, the agent commissions set by National Association of Realtors rules are paid by the seller through the sale. Under this structure, neither the seller nor the buyer can negotiate a lower commission. Further, the buyer agent can see commission information before showing a home and may direct buyers to homes with higher earning potential.
What is the Status of the Lawsuit?
Several weeks after 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. The DOJ alleges illegal practices, including prohibiting disclosure of the buyer realtor commission and falsely claiming that the commission is free. A Final Judgement has been proposed, which would change certain policies, practices, and procedures of the association. More information about these changes is available here. It remains unclear if a settlement between the DOJ and the National Association of Realtors would affect the homeowners’ lawsuit.
We will keep you updated as this story develops.
