Commissions Come Under Fire In 2024

David Goldsmith

All Powerful Moderator
Staff member
NAR’s motion to dismiss broker fee lawsuit shut down
Country’s biggest brokerages accused of violating antitrust laws

A federal judge has denied a motion to dismiss a lawsuit over broker commissions on residential real estate deals.
A U.S. District Court judge threw out motions from the National Association of Realtors and some of the nation’s largest brokerages to dismiss the lawsuit, Inman reported. The judge ruled that the plaintiffs’ allegations show that they would have paid lower commissions if the current broker rules had not been in place, and that the rules established by NAR created an artificially high commission rate.

The lawsuit was originally filed in 2019 by a property seller, and is now seeking class action status. The complaint alleges that the sharing of commissions between the listing and buyer brokers leads to higher seller costs and violates the Sherman Antitrust Act.

NAR argued in its motion that the lawsuit misportrayed the rules for multiple listing services, and that the plaintiffs failed to show they suffered an “antitrust injury,” according to Inman.
But the judge who dismissed the motion disagreed, and wrote in his ruling that, “But-for Defendants’ conspiracy, each plaintiff would have paid substantially lower commissions.”
“As the case moves forward, we intend to demonstrate how the MLS system creates competitive, efficient markets that benefit home buyers and sellers as well as small business brokerages,” a NAR spokesperson told Inman.

The other defendants in the lawsuit are HomeServices of America, Keller Williams, RE/MAX, Realogy, Long & Foster Companies HSF Affiliates. Those firms backed NAR’s motion to dismiss the suit, and those requests were also dismissed by the judge.
 

David Goldsmith

All Powerful Moderator
Staff member
NAR hit with another antitrust lawsuit over commissions and MLS rules
Proposed settlement aims to bring more transparency and competition to the industry

The National Association of Realtors has once again had its competitive practices called into question — this time by the federal government.
The Department of Justice announced Thursday that it filed a lawsuit against the trade association, alongside a proposed settlement, that takes aim at NAR’s “anticompetitive rules, policies, and practices,” according to a DOJ release.

The proposed settlement from the Antitrust Division mandates that NAR change rules that currently allow brokers to withhold information from prospective homebuyers regarding fees and commissions. The proposed changes must also carry over to multiple listing services associated with NAR.
“If approved, the settlement will enhance competition in the real estate market, resulting in more choice and better service for consumers,” the DOJ release said.

In a statement to Inman, NAR said it disagreed with the DOJ’s characterization and admitted no wrongdoing, but had reached an agreement and “fully resolved” the issues raised. A spokesperson added that the organization remained “focused on supporting our members as they preserve, protect and advance the American dream of homeownership.”

The goal of the settlement is to allow for more transparency — and thus competition — in the real estate market, which could result in more choices and better service for homebuyers. The agreement still awaits approval from the court.

“Home buyers and sellers should be aware of all the broker fees they are paying. Today’s settlement prevents traditional brokers from impeding competition — including by internet-based methods of home buying and selling — by providing greater transparency to consumers about broker fees,” Makan Delrahim, assistant attorney general of the DOJ’s Antitrust Division, said in a statement. “This will increase price competition among brokers and lead to better quality of services for American home buyers and sellers.”
With 1.4 million members, NAR has a wide scope of influence. It establishes and enforces policies for agents who belong to the organization, along with affiliated multiple listing services.

NAR has previously come under fire for its alleged anti-competitive practices, with several antitrust lawsuits filed against the organization in recent years.
 

David Goldsmith

All Powerful Moderator
Staff member

DOJ pulls out of NAR antitrust settlement to pursue further investigation​

Realtor trade group calls sudden reversal an “unprecedented breach”​

The Justice Department has abandoned its settlement with the National Association of Realtors, signaling that it intends to conduct a “broader investigation” into the trade group’s practices.
In an abrupt reversal Thursday, the DOJ withdrew its consent to a proposed settlement of an antitrust action brought against the NAR last year and instead filed to voluntarily dismiss its civil complaint without prejudice.

The complaint was filed last November, alongside a proposed settlement that would require NAR to repeal and modify certain “anti-competitive” practices, such as withholding information about broker fees or enabling buyers’ brokers to filter MLS listings based on commissions offered.

The proposed settlement would have prevented the DOJ from pursuing other antitrust claims regarding NAR policies, it said in a statement Thursday.
“Because the settlement resolved only some of the department’s concerns with NAR’s rules, this step ensures that the department can continue to enforce the antitrust laws in this important market,” the statement read.

But that explanation raises questions, because the proposed settlement, which is public, included a clause that specifically reserved the government’s rights to investigate and pursue further antitrust violations by NAR or its members.

When asked to identify what language limited the government’s ability to pursue future claims, a DOJ spokesperson said “we cannot get into the specifics of the modified language discussed.”
NAR called the DOJ’s decision an “unprecedented breach” in a statement to Bloomberg on Thursday.

“NAR has fulfilled all of our obligations under the settlement agreement, and now DOJ is inexplicably backing out,” the association told the publication. NAR did not respond to a request for comment on Friday.
An antitrust practitioner who has served in the government in the past said the DOJ’s “stated motivation is questionable.”

“The Justice Department should explain this further given the clear carve out,” said the person, who agreed to speak on condition of anonymity.
The DOJ spokesperson declined to comment on whether the antitrust division is pursuing any other cases against NAR at this time.
 

David Goldsmith

All Powerful Moderator
Staff member

NAR should play ball with regulators: antitrust experts​

Trade group embroiled in DOJ investigation after scuttled settlement​

Antitrust experts recently advised the National Association of Realtors and other industry members to work with federal authorities as the agencies ramp up their attention on the sector’s rules.

Panelists at last month’s Council of Multiple Listing Services conference warned federal authorities are paying more attention to consolidation and consumer issues across a wide spectrum of industries, including real estate, Inman reported.

The NAR last month moved to block an antitrust probe from the DOJ after a settlement between the parties collapsed.
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The DOJ withdrew from an agreement in July in favor of a “broader investigation” into the trade group’s alleged anti-competitive practices. The original settlement would have required the association to repeal and modify various practices, such as withholding information about broker fees.

President Joe Biden’s time in office has brought scrutiny over the real estate industry. The Justice Department has been looking into practices that could create a closed market for buying and selling homes, which can lead to higher fees and suppress competition. Additionally, the FTC is pursuing a probe into Zillow’s $500 million acquisition of ShowingTime.

“This is not a blip,” Alicia Batts, an antitrust partner at Faegre Drinker Biddle & Reath LLP, said of recent activity. “I think the FTC is likely to make rules. The chair will want her control of the FTC to be successful and she’s got to report into the White House. So they’re going to do something.”

Inman reported that Batt’s fellow antitrust partner Dylan Carson said “the cavalry is coming” for enforcement on antitrust issues.

“There’s bipartisan consensus that the budgets of both enforcement agencies should be significantly increased and there’s bills to essentially double the FTC budget and significantly increase the DOJ’s budget,” Carson said.

When it comes to responding to increasing pressure for federal regulation, Batts said she recommends members of the real estate industry band together to form a voice in the conversation.

“So you should prepare to do something, or to be active participants, whether it’s through an association, but you should work jointly,” Batts said, according to Inman. “It’s more effective to come in and work jointly than to have MLSs doing different things and going in different directions.”
 

David Goldsmith

All Powerful Moderator
Staff member
Consumer groups are continuing to put pressure on MLS and NAR claiming the current arrangement where sellers pay both their own and buyer's brokers commissions is unfair.
Judge denies motion to dismiss broker commissions lawsuit

A group of Massachusetts sellers claim the brokerages are conspiring to inflate broker commissions​

In the quest to explain why home sale commissions are consistently high, it turns out conspiracy theorists could be on to something.
A judge denied a motion from Realogy Holdings to dismiss a lawsuit by a group of home sellers that argues brokerages conspire to inflate commissions.

A group of Massachusetts home sellers filed the suit, Bauman v. MLS, in December 2020. It alleges that brokerages including Realogy, Keller Williams, HomeServices of America and RE/MAX, along with the owner of multiple listing service Pinergy, violated antitrust laws with a “buyer-broker commission rule.”

Sellers that use Pinergy are required to offer a set commission to any broker that found a buyer for their home, according to the complaint. It is typically a percentage of the sales price.
The sellers argue in the suit that such a practice is anticompetitive and causes sellers to pay “artificially inflated, supra-competitive commission rates.”

The system promotes steering, the suit argues, which “prevents rates from falling to competitive levels and enables brokers to avoid doing business with or otherwise retaliate against brokers who attempt to offer materially lower rates.”
Realogy and the suit’s other defendants filed a motion to dismiss the complaint in March 2021. A judge denied the motion Dec. 10, according to a Jan. 5 SEC filing.

MLS Property Information Network, which owns Pinergy, did not immediately respond to a request for comment. Keller Williams, HomeServices and RE/MAX declined to comment. The SEC filing noted that the defendants dispute the allegations and will “vigorously defend” themselves.

With 41,000 members, MLS PIN is the seventh-largest multiple listing service in the U.S., serving brokers and salespeople across New York and New England. Eight of its 15 board members are realtors for franchises owned by Berkshire Hathaway HomeServices, which owns HomeServices of America, RE/MAX and Realogy.

Rather than have sellers pay buyer-broker commission rates, the suit claims that if buyers and sellers each paid their own brokers, the total commission would be less than in the current system, in which sellers pay both.
The sellers involved in the suit did not respond to requests for comment.

Bauman v. MLS isn’t the only suit alleging anticompetitive behavior by brokerages. Other legal battles include Moehrl v. NAR in Missouri and Sitzer v. NAR in Illinois.
Instead of going after the National Association of Realtors, Bauman v. MLS took a different route by targeting a multiple listing service.
Conversations have been brewing regarding who should be responsible for paying brokerage commissions fees. A consumer watchdog organization pushing for the uncoupling of buyer and seller commissions found the broker fees were suspiciously uniform in markets up and down the East Coast.

The group argued that such a move would make homes more affordable. But NAR said it would do the opposite.
“Forcing buyers to take on the additional out-of-pocket expense would cause added financial hardship and could freeze out many from the market entirely, particularly first-time and low- and middle-income homebuyers,” the NAR spokesperson told The Real Deal last month.
 

David Goldsmith

All Powerful Moderator
Staff member

This agent commissions suit could rock the resi industry

A federal court ruling paved the way for homesellers to seek reimbursement on commissions paid to buyer agents, threatening to rock the residential real estate industry.

Judge Stephen Bough ruled on Friday that one of two federal commission lawsuits could receive class-action certification, Inman reported. The lawsuit started three years ago, when two homeseller plaintiffs Joshua Sitzer and Amy Winger filed a lawsuit against the National Association of Realtors, Realogy and others, claiming the sharing of commissions between listing and buyer brokers violated the Sherman Antitrust Act.

The lawsuit hoped to have homebuyers pay their brokers directly instead of having listing brokers pay buyer brokers from what the seller pays listing brokers. The lawsuit alleges the model inflates the costs to sellers.

The judge ruled that class-action certification is the “superior method for fairly and efficiently adjudicating the controversy.” With the decision, the Sitzer/Winger lawsuit can now represent any seller who paid a broker commission for a residential real estate deal across four Missouri MLSs, going back to April 2014.

The legal fallout could be massive. Hundreds of thousands of homesellers can now seek reimbursement on commissions paid to buyer agents in the last eight years, totaling more than $1 billion.

NAR and Realogy both said that they plan to appeal the decision. Keller Williams also said it was aware of the ruling without declaring whether or not it would appeal, but did note the court decision didn’t make mention of the merits of the plaintiffs’ case.

An even bigger federal case along the same lines is unfolding in Illinois. Should NAR and Realogy lose their appeals, it could set a precedent for other homesellers to challenge the broker commissions model across the country.
 

David Goldsmith

All Powerful Moderator
Staff member

NAR catches break in one antitrust lawsuit​

Lawsuit alleging buyer cost inflation dismissed​

As one agent commissions lawsuit against the National Association of Realtors trudges along, the group can breathe a sigh of relief over a similar suit.
A federal judge this week dismissed a lawsuit filed last year by New Jersey homebuyer Judah Leeder against NAR, Realogy, Keller Williams, RE/MAX and HomeServices of America, Inman reported. The suit was seeking class-action status.

The lawsuit alleged commission sharing between listing and buyer brokers violates the Sherman Antitrust Act, inflating buyer costs in the form of higher home prices. Judge Andrea R. Wood of U.S. District Court for the Northern District of Illinois Eastern Division sided with the defendants, claiming buyers aren’t eligible for damages from antitrust violations because they are indirect purchasers of buyer broker services.
Wood did dismiss the case without prejudice, meaning Leeder could refile the lawsuit if he is able to argue that he’s a direct purchaser of buyer-broker services.

NAR’s senior counsel and director of legal affairs, Charlie Lee, celebrated the judge’s ruling on Tuesday, telling the outlet the decision was “good news.”
The dismissal of the lawsuit is far from the end of NAR’s potential antitrust problems, though.

In the decision, Wood referenced another case she is overseeing, Moehrl v. The National Association of Realtors.
The federal case, which puts forth a similar argument, alleges commission sharing inflates the costs of sellers. A ruling against NAR and Realogy in that case could disrupt the broker commissions model across the country.

Part of Wood’s decision noted the Moehrl lawsuit is “vindicating the public interest in antitrust enforcement as they are actively challenging the same NAR rules.”
In a similar case, a federal judge ruled last month a lawsuit started three years ago by plaintiffs Joshua Sitzer and Amy Winger could receive class-action certification. With the decision, the lawsuit can represent any seller who paid a broker commission for a residential real estate deal across four Missouri MLSs going back eight years ago.
NAR and Realogy both plan to appeal the decision in that case.
 

David Goldsmith

All Powerful Moderator
Staff member

Potential Damages from Moehrl v. NAR​

Last couple of days, I’ve given presentations and sat on a panel discussion talking about the class action lawsuits against NAR over the issue of commissions. I thought most people knew about these all-important cases that are making their way through the federal courts. Apparently, only about half of the REALTORS had even heard about them, and those half had not really paid a lot of attention to these cases.
Well, the news that Sitzer v. NAR (now called Burnett v. NAR) got class action status got these cases on the top of people’s minds. Hence, the presentations and panels in 2022 despite the fact that both of those cases were filed sometime in 2019.
In an earlier post, I noted that the potential damages from Sitzer was around $6 billion. (I did the math wrong in the original post.) That was based on the following logic:
Seeing as how Missouri REALTORS says there are about 100K homes sold in Missouri in 2021, at the average price of $258,435 for a sales volume of $25 billion… but 2021 was up 26% YOY… let’s just say we’re talking about $20 billion in sales volume per year since 2015 with about 100K sellers per year.
But, the class is limited to those sellers who used HomeServices of America, KW, Realogy, RE/MAX, HSF or BHH. Let’s say that’s about half the market? The remaining sellers used some other independent brokerage maybe, like EXP or Redfin or someone else.
So this class action lawsuit might be 7 years x 50K sellers = 350K plaintiffs. They’ll be claiming damages equal to 3% of the sales volume, so… call it 3% of $70 billion = $2.1 billion. (Remember that only half the sales are in the class.) Treble for antitrust, so about $6.3 billion in potential damages.
What occurred to me is that as scary as $6 billion in damages is, it pales in comparison to what Moehrl v. NAR is asking for.

Sitzer and Moehrl: One State vs. Many​

The two lawsuits are essentially identical, claiming the same violations of antitrust law. The key difference is that Sitzer/Burnett was concerned only with Missouri:
The local realtor associations own and operate various MLSs, including the Heartland MLS, Columbia Board of Realtors (“CBOR”),Mid America Regional Information System (“MARIS”), and the Southern Missouri Regional (collectively, the “Subject MLSs”). Plaintiffs represent classes of home sellers who listed their property on one of the four Subject MLSs.
In Moehrl, by contrast, the targets stretch across the country. From the Complaint:
  • The Bright MLS (including the metropolitan areas of Baltimore, Maryland; Philadelphia, Pennsylvania; Richmond, Virginia; Washington, D.C.);
  • My Florida Regional MLS (including the metropolitan areas of Tampa, Orlando, and Sarasota);
  • The five MLSs in the Mid-West that cover the following metropolitan areas: Cleveland, Ohio; Columbus, Ohio; Detroit, Michigan; Milwaukee, Wisconsin; Minneapolis, Minnesota;
  • The six MLSs in the Southwest that cover the following metropolitan areas: Austin, Texas; Dallas, Texas; Houston, Texas; Las Vegas, Nevada; Phoenix, Arizona; San Antonio Texas;
  • The three MLSs in the Mountain West that cover the following metropolitan areas: Colorado Springs, Colorado; Denver, Colorado; Salt Lake City, Utah;
  • The four MLSs in the Southeast that cover the following metropolitan areas: Fort Myers, Florida; Miami, Florida; Charlotte, North Carolina; and Raleigh, North Carolina.
So if one state yields $6 billion in potential damages, what would Moehrl result in?

The Moehrl MLSs​

According to the T360 Real Estate Almanac, the MLSs involved, in order of size, are:
  • #2 Bright MLS – 103,224 members
  • #3 Stellar MLS (formerly MyFloridaRegional) – 76,822 members
  • #6 NTREIS (Dallas) – 50,309 members
  • #7 Miami Association of REALTORS – 49,636 members
  • #11 HAR (Houston) – 45,057 members
  • #12 ARMLS (Phoenix) – 41,474 members
  • #13 BeachesMLS (Fort Myers) – 41,390 members
  • #16 REcolorado (Denver) – 27,264 members
  • #18 Northstar MLS (Minneapolis) – 21,852 members
  • #19 Canopy MLS (Charlotte) – 21,132 members
  • #21 ACTRIS (Austin) – 19,139 members
  • #22 UtahRealEstate.com (Salt Lake City) – 18,825 members
  • #24 RealComp II Ltd. (Detroit) – 17,880 members
  • #25 Greater Las Vegas MLS – 17,123 members
  • #28 Triangle MLS (Raleigh) – 16,146 members
  • #30 SABOR (San Antonio) – 15,613 members
  • #33 MLS Now (Cleveland) – 14,254 members
  • #43 Columbus and Central Ohio Regional MLS – 10,110 members
  • #45 Metro MLS (Milwaukee) – 9,743 members
  • #80 Pike’s Peak MLS (Colorado Springs) – 4,604 members
These are some the largest MLSs in the country. It’s nearly impossible to figure out exactly how much past sales we are talking about here, but we just need a high level idea. So I came up with this.
The above MLSs represent a total of 621,597 members. NAR is 1.6 million. So that’s about 40% of the total NAR membership.
Moehrl is asking for damages starting in year 2015.
For the United States as a whole, from 2015 to 2021, a total of 38.65 million homes were sold. 40% of that is 15.46 million homes. While many of the above markets are high-priced areas (like Washington DC), some are lower cost. So let’s go ahead and use the median price for homes for the US (which is wildly incorrect, but good enough for government work).
That gives us a total sales volume of about $4.2 trillion from 2015 to 2021. The buy-side commission, we’ll say was 3%. That’s $125.5 billion. Treble damages for antitrust damages gives us the total: $376.6 billion.
NAR, the above MLSs, Realogy (now Anywhere), RE/MAX, Keller Williams and HomeServices of America would be on the hook for $376.6 billion. Their liability insurance will not, cannot cover that. Nobody’s liability insurance would cover $376 billion.
Just as a point of comparison, the Big Tobacco cases of the late 90s resulted in a settlement of $206 billion paid over 25 years.
Let’s say that NAR and the defendants want to settle. If you were the lawyers for the plaintiffs, what would you accept if you think you can win $376.6 billion? 50%? 30%? 10%? Even 10% is $37 billion — instant bankruptcy for everybody involved.
That’s just money damages from this one antitrust lawsuit. If the plaintiffs win, they’ll get more than just money; they’ll get injunctions against certain practices that will result in buy-side commissions getting wiped out. Plus, note that MLSs #4, 5, 8-10 are all missing from Moehrl. Other lawyers will pick up the slack, and then some.
It is not in the least bit surprising why MLS, Association, and brokerage leaders across the country are so very concerned about these lawsuits.
 

David Goldsmith

All Powerful Moderator
Staff member
It seems like this is definitely headed to trial. A ruling here for the plaintiffs could totally upset the model for paying Real Estate commissions used across the country.

Major agent commissions suit headed to trial​

Judge denied motions by NAR, brokerages for summary judgment​

An agent commissions suit that could have major ramifications for the residential real estate industry is headed to trial.
U.S. District Court Judge Stephen Bough dismissed motions for summary judgment by the National Association of Realtors, Anywhere Real Estate, Keller Williams, RE/MAX and HomeServices of America, Inman reported. If the judge had granted the motions, the lawsuit from homeseller plaintiffs Joshua Sitzer and Amy Winger would have ended in favor of the defendants.

The plaintiffs filed the lawsuit against NAR, Anywhere (then known as Realogy) and others more than three years ago, claiming that sharing commissions between listing and buyer brokers violated the Sherman Antitrust Act. If the plaintiffs succeed, homesellers may be able to seek reimbursement on commissions paid to buyer agents.

The plaintiffs have an issue with the commissions model. They are aiming in the suit for homebuyers to pay their brokers directly instead of having listing brokers pay buyer brokers from what the seller pays listing brokers. According to the lawsuit, the model inflates costs for sellers.

A judge earlier this year granted class-action certification for the lawsuit, which enabled the plaintiffs to represent any seller who paid a broker commission for a residential deal across four Missouri MLSs, dating back to April 2014.

The commissions paid to buyer agents in the state since that time total more than $1 billion, creating the possibility of a massive fallout for the industry. Treble damages could bring the total amount of damages to $4 billion.
Defendants typically file for summary judgments when they believe the material facts of a case to be beyond dispute. Bough said in a decision he doesn’t see things that way, claiming there are several disputes involving material facts in the case, including if the seller is the direct buyer of the buyer-broker’s commission.
A spokesperson for NAR expressed confidence the defendants would prevail in the lawsuit. The brokerages involved in the case did not immediately comment on the latest development in the case.

A trial was initially scheduled to start in February 2023, but was pushed last week at Anywhere’s request, despite objections raised from NAR. A three-week jury trial is now scheduled to start on Oct. 16.
 

nicolebeauchamp

Well-known member
It seems like this is definitely headed to trial. A ruling here for the plaintiffs could totally upset the model for paying Real Estate commissions used across the country.

Major agent commissions suit headed to trial​

Judge denied motions by NAR, brokerages for summary judgment​

An agent commissions suit that could have major ramifications for the residential real estate industry is headed to trial.
U.S. District Court Judge Stephen Bough dismissed motions for summary judgment by the National Association of Realtors, Anywhere Real Estate, Keller Williams, RE/MAX and HomeServices of America, Inman reported. If the judge had granted the motions, the lawsuit from homeseller plaintiffs Joshua Sitzer and Amy Winger would have ended in favor of the defendants.

The plaintiffs filed the lawsuit against NAR, Anywhere (then known as Realogy) and others more than three years ago, claiming that sharing commissions between listing and buyer brokers violated the Sherman Antitrust Act. If the plaintiffs succeed, homesellers may be able to seek reimbursement on commissions paid to buyer agents.

The plaintiffs have an issue with the commissions model. They are aiming in the suit for homebuyers to pay their brokers directly instead of having listing brokers pay buyer brokers from what the seller pays listing brokers. According to the lawsuit, the model inflates costs for sellers.

A judge earlier this year granted class-action certification for the lawsuit, which enabled the plaintiffs to represent any seller who paid a broker commission for a residential deal across four Missouri MLSs, dating back to April 2014.

The commissions paid to buyer agents in the state since that time total more than $1 billion, creating the possibility of a massive fallout for the industry. Treble damages could bring the total amount of damages to $4 billion.
Defendants typically file for summary judgments when they believe the material facts of a case to be beyond dispute. Bough said in a decision he doesn’t see things that way, claiming there are several disputes involving material facts in the case, including if the seller is the direct buyer of the buyer-broker’s commission.
A spokesperson for NAR expressed confidence the defendants would prevail in the lawsuit. The brokerages involved in the case did not immediately comment on the latest development in the case.

A trial was initially scheduled to start in February 2023, but was pushed last week at Anywhere’s request, despite objections raised from NAR. A three-week jury trial is now scheduled to start on Oct. 16.
The US could look a lot more like the operation models abroad. Ironic, since many of those countries are trying (and not necessarily succeeding - or doing so at a glacial pace) to mirror how things work here.
 

David Goldsmith

All Powerful Moderator
Staff member
Back in 1989 when I managed the Greenwich Village office of JI Sopher we had just sold (in contract) a 2 BR/1 bath units at 69 West 9th Street for $200k. The seller of the unit below was trying to sell asking $229k and called because he heard we sold the unit above him. He carefully laid out his argument as to why we should sell his unit for $212k so that he could get the same $200k after our commission that his neighbor got. And no matter how I tried to explain it to him that his neighbor didn't get $212k, that they didn't NET $200k, it didn't matter. He "needed" to net $200k.

I am expecting that in the not too distant future sellers will be having this same type of discussion with their brokers.
 

inonada

Well-known member
On that same theme, I couldn’t figure out the strange closing price on this 2023 sale. Until I saw the 2013/2014 contract/closing. Somebody needed a “win” real bad, I guess. But in my book, the $4 still means they’re a loser.

 

David Goldsmith

All Powerful Moderator
Staff member
I'm not an attorney but I'm not sure I agree with the premise here. As far as I know both OneKeyMLS and StreetEasy allow listing brokers to select whatever commission they wish to for cobrokers. In a deal which closed this week the listing agreement was at 6% with 2 co-listing agents from separate firms. The "cobroke" was listed as 1% leaving 2.5% for each listing broker. The deal was done with the selling broker (who during the deal stated "we are all working for the seller" so I guess he wasn't actually a "Buyer's Broker) negotiated a higher 1.5% commission for his part of the deal (meaning 2.25% for each of us)

U.S. real estate brokerages must face home sellers’ class action over commissions​

By Mike Scarcella
Men work on a construction site for a luxury apartment complex in downtown Los Angeles

Men work on a construction site for a luxury apartment complex in downtown Los Angeles, California March 17, 2015. REUTERS/Lucy Nicholson
March 29 (Reuters) - A federal judge in Chicago on Wednesday ruled that home sellers accusing the National Association of Realtors and a group of real estate brokerages of conspiring to inflate commission rates can move forward as a class action.
U.S. District Judge Andrea Wood's decision grants class-action status to past home sellers seeking more than $13 billion in damages and creates a separate class of current and future sellers who want a court injunction that bars subsequent violations of U.S. antitrust law.

The plaintiffs are seven home sellers. The judge's order said membership in each class "can be expected to number in the thousands, at minimum."

Designation as a class means the plaintiffs' can pursue large-scale claims against the National Association of Realtors, RE/MAX LLC (RMAX.N), Long & Foster Inc and other corporate defendants as opposed to filing individual claims for monetary damages.
The judge's order was not a ruling on the merits of the allegations, which can still be contested at a later stage. The defendants have denied the conspiracy allegations.

In a statement, The National Association of Realtors said it was "disappointed" in the decision and defended industry listing practices.
The lawsuit challenges a requirement that sellers make "blanket unilateral offers of compensation" to buyers' brokers when a home goes on sale via a multiple listing service. That system puts pressure on sellers to offer high commissions to attract buyers' brokers, the sellers claimed.
NAR spokesperson Mantill Williams said this practice "saves sellers time and money by having so many buyer brokers participating in that local marketplace and thus creates a larger pool of buyers for sellers."
A RE/MAX spokesperson said the company did not comment on pending litigation. Long & Foster declined to comment.
The class seeking money damages includes certain home sellers who paid a commission between March 2015 and December 2020 in states including Texas, Florida, New Jersey, Ohio, Pennsylvania, Virginia, North Carolina and Colorado, court filings show.

The case is Moehrl et al v. The National Association of Realtors et al, U.S. District Court for the Northern District of Illinois, No. 1:19-cv-01610.
 

David Goldsmith

All Powerful Moderator
Staff member
This proposed bill ignores the history of why NYC is different on this subject on this matter and the answer is Rent Stabilization. Historically prospective tenants were paying broker's fees for getting below market rents where those rents had been regulated.

City Council bill would shift broker fees to landlords​

Similar measure sparked furious response four years ago

Here we go again.
New York City Council member Chi Ossé will on Thursday introduce legislation to cut rental brokers’ income and shift costs to landlords, The Real Deal has learned.

According to a REBNY email sent to roughly 12,000 residential brokers, the bill seeks to cap agent commission at one month’s rent and ban landlords from forcing tenants to pay it. Its language is expected to be similar to a 2019 bill that brokers beat back, though REBNY officials have yet to see the new version.
Ossé’s bill attempts to do what a state agency also failed to do that same year. The Department of State, based on the Housing Stability and Tenant Protection Act, shifted rental broker fees to landlords.

The city and state actions galvanized the real estate industry, housing advocates and the general public, re-igniting long standing debates about housing affordability. The Council bill never came to a vote and the state regulation was defeated in court.
Ossé’s office did not immediately respond to a request for comment, although he tweeted after publication that his bill will not cap fees. He noted that brokers could still be paid by prospective tenants who hire them.
“The bill is fair and simple: whichever party hires the broker will have to pay the broker fee,” the Council member wrote.
Agent commissions — and who pays them — have been on the minds of lawmakers for years. Historically, renters in New York City have paid broker commissions even when the broker represents the landlord.
Four years ago, the Department of State’s action and Council bill sparked an intense response from the industry. Advocacy groups including REBNY, the New York Association of Realtors and 12 brokerages won a temporary injunction against state regulators while the decision was litigated.

In 2020, Albany Supreme Court Judge Susan Kushner ruled against the DOS interpretation and sided with the industry, permanently restoring the status quo to the dismay of many renters and housing advocates, who say that exorbitant broker fees make New York City housing even more unaffordable.
In the state legislature, critics of broker fees have unsuccessfully attempted to reopen the issue.
“Tenants should not pay brokers fees,” tweeted New York Sen. Jabari Brisport last year. “The landlord hires the broker. The landlord should pay the broker.” But a state bill this year did not pass the Senate, which has adjourned until January.

The proposed city legislation is an opportunity for REBNY, long accused of favoring commercial brokers over their residential counterparts, to demonstrate its support for rental brokers. In 2020, REBNY led an effort that drew more than 1,000 brokers to protest the cap on commissions in front of City Hall.

On Tuesday afternoon, REBNY, anticipating another high-profile struggle, once again sought to rally its members against the proposed reform. It emailed all of its residential brokers with a call to action.
“Instead of dealing with the housing crisis, this bill is a wasteful distraction that does far more harm than good,” reads the email, which urged members to submit pre-written letters to officials and tweet their opposition. “The legislation wrongly punishes real estate agents for a housing shortage and rising rents they did not create, while falsely claiming it will also improve the home search process for renters.”
In response, the group said, members sent roughly 750 emails to lawmakers within an hour.
According to REBNY, evidence shows that forcing landlords to pay for brokers’ fees raises rents, because landlords simply pass along the costs.
Capping fees could also discourage brokers from steering clients to buildings where housing vouchers are commonly used, said a group representative. (By law, landlords and brokers may not discriminate against voucher holders.)

REBNY also claims the bill would cut incomes in a working-class industry. The annual entry level salary of a rental broker is $52,000 and the average salary is roughly $100,000, according to REBNY.
“Many agents are working-class renters who are just as impacted by the City’s current housing crisis as any other working-class resident,” states REBNY’s pre-drafted letter to officials.
But tenant advocates say between broker fees, security deposits and moving expenses, switching apartments can cost $10,000 or more, essentially trapping tenants in their homes.
 

David Goldsmith

All Powerful Moderator
Staff member
Rental brokers lay out case against Council bill
Legislation would prevent landlords from demanding applicants pay brokers

A bill to spare apartment seekers from having to pay rental listing agents hired by landlords is strongly opposed by the brokerage industry, which believes it would suffer a financial hit.
But in arguing against the measure, the industry says the law would also harm consumers.

Brokerage executives and agents warn of fewer and less detailed online listings, higher rents and less knowledgeable rental brokers if the city enacts Council Member Chi Ossé’s bill to place the burden of payment on the hiring party.
“We’ve been going in a particular direction for 10 years,” said Bruno Ricciotti, co-founder of Bond New York, explaining that the rental market has become more transparent with the rise of online listing platforms. “This will be reversing that and that’s exhausting for me. … We like the way it is now.”

Many apartment hunters don’t. The standard broker’s fee is 15 percent of the annual rent. Given other move-in costs such as moving expenses and a security deposit, relocating can be a large financial burden. That gives tenants less leverage when negotiating renewals.
But industry players say consumers generally misunderstand how the process works. Typically, landlords give certain agents permission to post a rental online as a reward for being productive. If landlords are put on the hook for paying, they would stop hiring those agents to represent the listings and the ads would disappear, say critics of the bill.
As a result, landlords would lack an incentive to work with the same agents, so agents will be less able to answer prospective tenants’ questions about a unit.
Douglas Wagner, director of brokerage service at Bond, said the bill would return the industry to the early days of online listings, when Craigslist was the dominant advertising site and “almost every listing was a neighborhood ad.”
“It was all very confusing and mysterious,” he said. “The transparency the marketplace has created over the last decade will become obscured in a matter of days or weeks.”

StreetEasy did not respond to a request for comment.
The tight rental market has given landlords more leverage to pass broker fees along to applicants for apartments. But Ricciotti said the bill is unnecessary because as the market cools, the number of no-fee units will increase.
“It seems like there’s this misunderstanding that the way that the market is at the moment is the way that it always is,” he said. “It fluctuates quite dramatically, just from season to season.”
He added that in the quarter century his business has done rentals, “it kind of settles around the middle.”

If the city requires landlords to pay their rental brokers, they will likely recover those costs by raising rents. Moving in would be cheaper, but remaining in a unit for years would become more expensive. Adrienne Roberson, an agent at Douglas Elliman, said that would disincentivize long-term tenancy.

Sophia Gilbukh, assistant professor of real estate at CUNY, agreed that the bill would raise rents, but said the bill could also benefit tenants. She said they may be able to negotiate broker fees more aggressively (if landlords are not paying them) and that the changes could eventually lead to lower rents in slow markets.
“The way it works right now is the landlord passes [the broker fee] onto the tenants directly so they have little incentive to negotiate it. … By the time the tenant has found the apartment they like, it’s kind of a sunk cost,” said Gilbukh.
She noted that the proposed law would cause some owners to reduce rents because no-fee rentals would already be universal.
“When it’s harder for landlords to find tenants, they used to use this no-fee strategy to attract more tenants, but now they’ll actually have to lower the price,” the professor said.
Ossé’s office pushed back against the industry’s claims. A spokesperson for the Council member said that if tenants end up paying for a broker, they will at least be hiring someone who represents their interests.

“We expect that landlords will continue to list their properties on platforms like StreetEasy and will contract a broker to help improve their listing if they feel it would help,” said the spokesperson. “Tenants who see a need for a broker’s services will seek out and hire a broker and then pay a broker’s fee, much as they pay a broker’s fee right now.”
The spokesperson went on to say that “nothing can ‘automatically’ increase rent” because “rents are set by the market, not by broker fees, so landlords and tenants would still find an equilibrium price point as they always have.”
The median Manhattan rent last month was $4,268. A tenant paying the first month’s rent, a security deposit and a 12 percent broker fee for such an apartment would need $14,700 to move in. (Tenants can reduce the amount by using companies like Rhino and TheGuarantors, which pay the deposit on behalf of tenants in exchange for a non-refundable fee or a low monthly charge.)
City Council Speaker Adrienne Adams has not taken a position on the bill, according to her office.
Rental agent fees have been in the news since late June, when REBNY began mobilizing against Ossé’s bill three days before it was introduced.

The bill reignited a debate that shook up the industry in 2020, when the New York Department of State shifted the burden of payment to landlords. Five days later the industry won an injunction against the decree while the matter was litigated. Later that year, Albany Supreme Court Judge Susan Kushner ruled in favor of the industry.

 

David Goldsmith

All Powerful Moderator
Staff member

As REBNY attacks broker-fee bill, Ossé says agents will support it​

Council member: Tenant-side brokers get squeezed out of commissions

Council Member Chi Ossé’s fight with REBNY over his rental broker bill is getting vicious.
Ossé emailed the entire City Council last week a “corrected” version of a memo that the Real Estate Board of New York had sent to members it wanted to meet to discuss the bill, which the group opposed even before it was introduced.

The dueling memos make clear that the two sides exist in parallel universes connected by a sense of rising exasperation.
The industry argues that the bill, which would require the hiring party to pay the agent in a rental transaction, will hurt brokers and tenants alike.

“He keeps asserting, incredulously, that the legislation is good for real estate brokers,” said Ryan Monell, vice president of government affairs at REBNY, in a statement. “It is unfortunate that the Council member believes he knows better than the thousands of brokers who have already told him this legislation will raise rents and upend their ability to earn a living.”
Ossé’s rebuttal largely rejected the industry’s economic arguments and laid out why the bill, dubbed the FARE Act, will help some agents.
“Come on, everyone took Econ 101,” said Elijah Fox, Ossé’s spokesperson. “Who do these guys think they are?”
The bill has garnered support from tenant-side rental agents who are often squeezed out of deals by apartments’ listing agents, said Fox.
“As far as we can tell, we’ve got a ton of brokers lined up to testify when this thing comes to a hearing,” he said. “The New York City rental market is a tricky market and brokers play a valuable role. Right now a ton of them are getting stiffed.”

“He keeps asserting, incredulously, that the legislation is good for real estate brokers.”
RYAN MONELL, REBNY
Fox went on to call REBNY “a very landlord-oriented thing. They’re not Team Broker.”
A REBNY representative said the group does not anticipate the bill will make it out of committee, citing a lack of support from Council leadership.
Still, the bill has revived a debate about rental brokers’ fees, three years after the Department of State attempted to spare tenants from paying brokers hired by landlords.

REBNY’s memo says having landlords pay the brokers handling their rentals, as opposed to having tenants pay them, as is often the case, will have a detrimental impact on agents and tenants.

Many landlords will choose not to hire agents, and those who do will pass the cost on to tenants in the form of higher rents, according to REBNY. That could price some renters out of apartments that require tenants to have annual income of at least 40 times the monthly rent.
REBNY said the bill also “eliminates the ability for renters to have flexibility about their own financial decisions they choose to make about their housing search.” (Tenants can opt to apply for no-fee rentals.) It will also lead to fewer online listings, REBNY warned.
Ossé’s office delivered a point-by-point rebuttal and was especially critical of the trade group’s claims of higher rents and less choice for tenants.

“The NYC rental market is tricky and brokers play a valuable role. Right now a ton of them are getting stiffed.”
ELIJAH FOX, OSSÉ SPOKESPERSON
“Some of this language is intentionally misleading,” wrote Ossé’s office. “The bill will provide flexibility in financial decisions by ensuring that each party pays for the services they hire. Tenants and landlords are each free to hire a broker to assist them in their search for a new home or for a tenant.”
It noted that Ossé himself hired a broker to assist in his recent apartment search “and was happy to pay for the excellent service.”
On the economics, Ossé claims that landlords won’t raise rents if they have to pay their brokers, because landlords charge as much as they can regardless. He said his bill would also discourage landlords from raising rents when negotiating renewals because losing a tenant would incur the cost of an agent fee to find a new one.
“There’s a strange assumption that REBNY keeps making that the market is so elastic that all these costs can just be passed back and forth freely, but that’s kind of silly,” said Fox.

Tenants may prefer that broker fees be spread over the course of a lease than to have to pay them up front, Fox noted. He added that when businesses pass along costs to customers, they typically absorb some as well.
“It’s like textbook stuff,” the spokesperson said.
But a REBNY spokesperson responded, “If the Council member is truly arguing that government should continue increasing costs for property owners in order to avoid rent increases for tenants, his argument is not supported by data or common sense.”
In the memo, REBNY also noted that rental agents would still have to pay StreetEasy’s listing fees, while Ossé’s bill would effectively reduce their commission income.
“All landlords and brokers are, in a free market, allowed to pay for and use whichever tools and services they choose,” Ossé’s office answered.

The disconnect between the two sides was evident in that statement: Given StreetEasy’s dominance in rental listings, many brokers feel they have no choice but to use it. And by the same token, given how tight the city’s rental market is, many tenants feel they don’t have the luxury of applying for only no-fee rentals.

 

David Goldsmith

All Powerful Moderator
Staff member

RE/MAX settles buyer broker commission lawsuits for $55 million

RE/MAX is the second defendant to settle the two bombshell class action lawsuits

Yet another national real estate brokerage firm has reached a settlement agreement in two of the major class action antitrust lawsuits facing the real estate industry.
According to court documents filed on Monday, RE/MAX and the home sellers suing the firm in both the Moehrl and Sitzer/Burnett cases, which both deal with buyer brokers’ commissions, have reached a preliminary settlement agreement, settling all claims in both suits.
RE/MAX’s settlement agreements, as well as the earlier settlement agreements reached by Anywhere Real Estate, must be approved by the U.S. District Court judges in Illinois (Moehrl) and Missouri (Sitzer/Burnett), who are overseeing the two lawsuits.

Details of the settlement agreements will not be disclosed until the plaintiffs file a motion to approve the settlement agreements.
However, a filing with the Securities and Exchange Commission reveals some details of the RE/MAX settlement.
“The Settlement resolves all claims in the Lawsuits and similar claims on a nationwide basis against RE/MAX … and releases RE/MAX and the Company, their subsidiaries and affiliates, and RE/MAX sub-franchisors, franchisees and their sales associates in the United States from the Claims,” the SEC filing reads.
“By the terms of the Settlement, RE/MAX agreed to pay a total settlement amount of $55.0 million … into a qualified settlement fund. In addition, RE/MAX agreed to make certain changes to its business practices.”
According to Steve Berman, the managing partner and co-founder of Hagens Berman Sobol Shapiro LLP, which represents the plaintiffs in the Moehrl suit, the Anywhere “settlement includes significant changes to Anywhere’s practices relating to the conduct that we have challenged,” as well as an agreement for the firm to pay a total of $83.5 million for both lawsuits.
In addition, RealTrends Consulting co-founder Steve Murray notes that the settlement agreements might prevent firms that operate under a franchise model from requiring that franchises belong to a Realtor association at any level, that franchises abide by the Realtor Code of Ethics, and that franchise abide by Realtor-affiliated MLS guidelines.
In the SEC filing, RE/MAX stated that the settlement was not an admission of liability.
“The Settlement and any actions taken to carry out the Settlement are not an admission or concession of liability, or of the validity of any claim, defense, or point of fact or law on the part of any party,” the filing stated. “RE/MAX continues to deny the material allegations of the complaints in the Lawsuits. RE/MAX entered into the Settlement after considering the risks and costs of continuing the litigation.”
In an emailed statement, a RE/MAX spokeperson wrote: “RE/MAX, LLC has entered into a nationwide class settlement with plaintiffs in the Burnett (formerly Sitzer) and Moehrl cases. If approved by the court, the settlement paves the way for a clear path forward for the RE/MAX brand, its franchisees and its agents, removing the uncertainty of ongoing litigation related to these cases. While RE/MAX, LLC steadfastly refutes the allegations presented in the lawsuits, this forward-looking decision was made in the best interest of RE/MAX, LLC, its agents and its franchisees, after carefully considering the significant risks and costs associated with continued litigation. Co-Founders Dave and Gail Liniger built the RE/MAX brand with Broker/Owners, agents and consumers at the center of the business and, if approved, the settlement specifically includes releases of liability for RE/MAX franchisees and agents.”
After Anywhere and RE/MAX’s settlements, the only defendants left in the two lawsuits are the National Association of Realtors, HomeServices of America, and Keller Williams.
The two lawsuits take aim at NAR’s Participation Rule, which requires listing agents to make a blanket offer of compensation to buyers’ agents in order to list the property on a realtor-affiliated multiple listing service (MLS). According to the plaintiffs, commission sharing inflates the costs for consumers, in violation of the Sherman Antitrust Act. NAR contends that the current commission structure, which has been in place for over 100 years, actually helps consumers.
Damages in the Sitzer/Burnett suit are anticipated to be up to $4 billion, while damages in the Moehrl suit are expected to reach up to $40 billion.
The Sitzer/Burnett trial is slated to head to trial on October 16, 2023. While a trial date for the Moehrl suit has yet to be set, it is expected start in early 2024.
“Settlement is always an option for any party in litigation. NAR’s commitment to defend ourselves in court remains unchanged and we are confident we will prevail in proving the lawfulness of the rules under attack. Pro-competitive, pro-consumer local MLS broker marketplaces ensure equity, efficiency, transparency and market-driven pricing options for home buyers and sellers,” Mantill Williams, NAR’s vice president of communication, wrote in an email.
He continued: “The practice of the listing broker paying the buyer broker’s compensation saves sellers time and money by having so many buyer brokers participating in that local marketplace and thus creates a larger pool of buyers for sellers. For buyers, these marketplaces save them the burden of extra costs at closing, enable them to receive professional representation and make homeownership possible for more people. In fact, the U.S. model of independent, local broker marketplaces is widely considered the best value and most efficient model in the world, with no hidden or extra costs and with more complete, verified information compared to other countries. We look forward to arguing our case in court.”
Keller Williams and HomeServices declined to comment and lawyers for the plaintiffs did not return a request for comment.
 

David Goldsmith

All Powerful Moderator
Staff member

Has REBNY stopped the bleeding? Broker bill poses test​

Real estate group gearing up to defeat rental agent fee reform

There’s nothing more quintessentially New York than ordering two slices to go, cursing at the subway system or paying thousands of dollars to a rental agent who failed to answer basic questions about the apartment you just leased, the building it’s in and the landlord.
That seemingly universal experience for tenants helped inspire City Council member Chi Ossé to introduce a bill that would flip the rental business on its head. Should his FARE Act become law, rental agents would only be paid by the party who hired them. In the current system, tenants often must pay agents who represent the landlord.

The bill is a litmus test for the Real Estate Board of New York after a string of painful defeats for the industry’s highest-profile advocacy group — notably Local Law 97 and rent stabilization reform in 2019 and the end of the 421a tax break last year.
Its victories now come on the defensive side, such as blocking good cause eviction and a 2019 decision by the New York Department of State that briefly shifted the cost of rental agent fees to landlords. That Ossé has a majority of Council members backing his bill reflects the erosion of REBNY’s political power.

In the 2000s, when real estate seemed to be flourishing, the group had more allies in City Hall and Albany. Yet the seeds of future political troubles were taking root.
The Bloomberg administration ushered in a golden era of development in New York City, but its policies didn’t increase housing supply enough to meet demand. For average New Yorkers, finding affordable housing became like hunting for unicorns.
Meanwhile, the industry used its political capital to whittle away at rent regulation and developers reshaped the skyline with ultra-luxury supertalls. Big Real Estate became the face of the housing affordability problem.
In the 2018 election, that bill came due: Progressive Democrats took control of the state Senate. Refusing to accept donations from real estate was a standard element of their campaigns.
In a recent interview, REBNY President Jim Whelan, who took the helm in the wake of that failure, said factors outside of the group’s control have led politicians to limit housing growth, fueling the affordability crisis.

As an example, Whelan noted that the late Assembly Speaker Sheldon Silver resisted rezoning in Lower Manhattan.
“Shelly did not want to introduce more residents to Lower Manhattan,” said Whelan. “He didn’t want to risk what his voting base was.”
REBNY estimates that 40 percent of New York City is zoned for single-family housing, which the organization chalks up to politicians’ focus on their next election.
“I don’t think the incentive structure is towards thinking about the city holistically or in thinking about, What is this district going to need 10, 15, 20 years from now?” said Zachary Steinberg, senior vice president of policy at REBNY. “It’s, ‘What do I need four years from now?’ And that’s not more housing.”
Where rezoning did lead to more homes being built, such as in northern Brooklyn and western Queens, the pace and extent of the changes may have alienated residents, speculated Marc Norman, associate dean of the Schack Institute of Real Estate at NYU. The blowback made future rezoning more difficult.

“You’ve seen growth in housing but it’s harder to see some of the other things that were promised, like better transportation, increased school funding, libraries, parks,” said Norman. “It’s like, ‘We saw what happened in Williamsburg and what happened in Long Island City, and while we like affordable housing, we’re not sure the other things are going to come.’”
Norman said REBNY could do a better job of explaining to residents what increased density looks like. “It’s not catastrophic,” he said.
But he acknowledged the difficulty of that task, especially when some Democrats reject the evidence that more units, even market-rate ones, lower housing costs overall. Norman said REBNY may be wasting its time trying to persuade detractors like Kristin Richardson Jordan, the Harlem City Council member who blocked Bruce Teitelbaum’s 917-unit project in her district.

“Even if they did it the best they could possibly do it, I’m not sure how much that would move the needle because there’s also the issue of how are the politicians explaining it, or how are the advocates explaining it,” he said. “Everybody gets something out of creating a narrative.”

In a promising sign for the industry, Jordan’s narrative did not pay off for her, as Teitelbaum revived his project and the increasingly isolated Council member did not run for re-election.
The rental-broker bill will again test REBNY’s ability to play defense. To defeat a 2019 bill that sought to cap rental broker fees at one month’s rent, the group brought 1,000 agents to protest at City Hall — the kind of grassroots tactic typically employed by tenant advocates. It also used its legal and lobbying muscle to undo the Department of State decision that temporarily made landlords pay for rental agents.
Ironically, the lack of housing supply that REBNY constantly bemoans is the underlying cause for Ossé’s bill. The tightness of the market gives landlords leverage to insist applicants pay broker fees, and also raises those fees by pushing up rents. The standard fee, 15 percent of the annual rent, works out to an average of $9,000 in Manhattan.
The industry argues that the bill will raise costs for some tenants because landlords will pass the fees along in the form of a higher base rent that persists for years.
REBNY previously said it does not anticipate Ossé’s bill coming to a vote. The legislation was assigned to the Consumer and Worker Protection Committee, which is chaired by Bronx Council member Marjorie Velazquez. Sources told the New York Daily News that Velazquez assured REBNY — which raised $11,500 for her campaign — that she would slow or stop the bill.

Velazquez denied making a deal with REBNY but told the outlet she wouldn’t bring it to a vote this year.

As a result, Ossé has been trying to get City Council Speaker Adrienne Adams to assign the bill to another committee, a source told the News.
“We’re prepared for any contingency,” a REBNY spokesperson said this week.
Both sides have promised fireworks if a hearing is scheduled: Ossé said he has hundreds of agents ready to testify in support, while REBNY has vowed to follow the playbook it used in 2019 to kill the commission-cap bill.

The lobby group is better able to organize now than it was four years ago, when its staffers had to manually look up members’ zip codes before sending them call-to-action emails.
“Now we can geo-target exactly which letters came from which addresses, which blocks and neighborhoods,” said Reggie Thomas, senior vice president of government affairs at REBNY.
The group got the jump on Ossé by starting an email campaign against his bill two days before it was introduced. REBNY has since been organizing meetings between its members and their representatives in the City Council.
Ryan Monell, vice president of government affairs, said REBNY doesn’t see the need to demonstrate publicly against Ossé’s bill — yet.
“Quite honestly, if it does get a hearing, you’re going to see that again,” he said.

 

David Goldsmith

All Powerful Moderator
Staff member

Jury Finds Realtors Conspired to Keep Commissions High, Awards Nearly $1.8 Billion in Damages​

The verdict, which hands loss to brokerages and industry trade association, could upend the home-sale industry​


im-878747
Plaintiffs in a federal lawsuit have asked a judge to order changes in how the home-sale industry operates. PHOTO: RICH PEDRONCELLI/ASSOCIATED PRESS
KANSAS CITY, Mo.—A federal jury on Tuesday found the National Association of Realtors and large residential brokerages liable for about $1.8 billion in damages after determining they conspired to keep commissions for home sales artificially high.
The verdict comes in the first of two major antitrust lawsuits that target decades-old industry practices and seek to drive down commissions and change the way agents are compensated. The two-week trial involved claims by home sellers in several Midwestern states. The jury issued its verdict after just hours of deliberations.


Under antitrust rules, the presiding judge could triple the damages verdict, which would total more than $5 billion. The plaintiffs also have asked the judge to order changes to how the industry operates.
For several years NAR has been fending off accusations by U.S. antitrust officials and private litigants that it has conspired to keep home-sale costs high in the face of major technological upheavals. This verdict is by far the group’s biggest setback yet.
An NAR spokesman said, “This matter is not close to being final as we will appeal the jury’s verdict.”
 

David Goldsmith

All Powerful Moderator
Staff member
This reminds me of the sudden resignation of Johm Banks as president of REBNY after the disastrous 2019 mishandling of the Rent Stabilization renewal. Back then everyone knew that change was coming because most state legislators voiced opinions that change was necessary. But banks and remedy took a "my way or the highway" stance since they had gotten used to decades of the state legislature being in their pocket. It ended very badly for them because rather than negotiating something reasonable, they had to live with the opening offer from housing advocates.

Similarly, here NAR has known for quite a while that there are issues with buyer representation. But rather than coming up with a reasonable plan, we see what has happened


 
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