The National Association of REALTORS® (NAR) recently filed a motion to dismiss the class action lawsuit Moehrl v. NAR, which alleges the organization conspired to inflate commissions by requiring all brokers to “make a blanket, non-negotiable offer of buyer broker compensation when listing a property on a Multiple Listing Service (MLS),” violating federal antitrust laws. In addition to NAR, Realogy, HomeServices of America, RE/MAX and Keller Williams are among the defendants named.
“What they are claiming is completely baseless,” states Mantill Williams, VP of PR and Communications Strategy at NAR, who emphasizes the MLS is pro-consumer and pro-competition.
“These lawyers are just conspiring to line their own pockets on the backs of consumers,” he adds.
Rene Galicia, director of MLS Engagement at NAR, agrees, stating the allegations stem from a lack of understanding of the industry.
“They don’t understand how MLSs and the real estate market work,” says Galicia. “Brokers, who have their boots on the ground, will say that it is ultra-competitive, and the management of data has allowed us to have a better understanding than the plaintiffs do.”
In a recent release, NAR stated that the lawsuit mischaracterizes the Association’s rules, leading the class action attorneys to “dream up” purportedly anticompetitive rules that simply do not exist in NAR’s Handbook or Code of Ethics.
“In reality, NAR rules specifically direct listing brokers to determine—in consultation with their clients—the amount of compensation to offer buyers’ brokers in connection with their MLS listings,” the release continues.
It goes on to say that a buyer’s broker is “free to negotiate a commission from the listing broker that is different from what appears in the MLS listing. Neither NAR nor any MLS has any say in setting broker commissions.”
Galicia looks at the Manhattan real estate market to compare, as it does not currently run on a central MLS.
“In the Manhattan real estate market, you see the opposite of what plaintiffs argued,” he says. “There, data quality suffers, and without an MLS, some brokers are able to create their own markets, which doesn’t foster competition amongst other brokers and doesn’t result in a centralized repository of property information for consumers. MLS levels that playing field.”
“The MLS system is designed to create competitive markets to facilitate the sale of residential property in a way that benefits both buyers and sellers,” said NAR president John Smaby in a statement.
Additionally, NAR’s filing adds that “past court rulings have noted that NAR rules provide a more transparent marketplace, and encourage REALTORS® to share listing information and cooperate in the sale of real estate.”
Katie Johnson, NAR general counsel and chief member experience officer, recently spoke on the matter at the Risk Management Issues Committee: Legal Hot Topics session, held during the REALTORS® Legislative Meetings and Trade Expo. Since the initial lawsuit, she said, two copycat claims have surfaced against NAR.
“We are hoping to consolidate the cases and defend vigorously in one action instead of three,” said Johnson.
“In today’s complex real estate environment, REALTORS® and Multiple Listing Services promote a pro-consumer, pro-competitive market for homebuyers and sellers, contrary to the baseless claims of these class action attorneys,” said Smaby. “Our filing [at press time] shows the lawsuit is wrong on the facts, wrong on the economics and wrong on the law.”
In the latest development in response to NAR’s motion to dismiss, the plaintiff’s attorneys this week let the court know they are amending their complaint. NAR officials note that “this is a sign that the class action attorneys recognize the legal viability of NAR’s position and are regrouping to try to salvage their baseless claims.”
Stay tuned for updates.
Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at email@example.com.