KANSAS CITY—After the National Association of REALTORS® (NAR) kicked off their defense in the Burnett class-action commission trial yesterday, Mike Ketchmark, lead counsel for the plaintiffs, took his best shots against NAR CEO Bob Goldberg—who gave as good as he got in several combative interactions.
The plaintiffs’ case hinges on convincing a jury that the major corporate brokerages conspired with NAR on rules that limited competition and harmed consumers, focused specifically on buyer agent compensation.
With Ketchmark focusing on the allegation that NAR rules are themselves a conspiracy, forced on the rest of the industry, Goldberg and Ketchmark went back and forth on technicalities, analogies and NAR’s previous reports on commissions, leading to some of the more eye-opening moments of the trial—now in its seventh day.
At one point, Ketchmark asked Goldberg if NAR would change a rule if it was proven that rule raised commissions, with Goldberg responding that members in committees make those decisions.
“You would just let them do it?” asked Ketchmark, pressing Goldberg on whether he would just be “a passenger” in that scenario. Ketchmark went further and asked what NAR will do with their policies if the jury finds the rule caused damages.
“I don’t know the answer to that because we have our legal review of that,” Goldberg answered.
Other moments were less technical and more pugnacious, with Goldberg refusing to play along with Ketchmark’s analogy comparing real estate to someone selling chicken boneless or bone-in, or to a car mechanic charging $300 for a mandatory inspection.
“I need you to explain this chicken law,” Goldberg demanded.
Judge Stephen R. Bough, who is presiding over the case, also sustained an objection to Ketchmark’s questioning of why NAR brought in a witness—Sharon Millett—who he claimed only dealt with the relevant rules 30 years ago and was there to put “a good face” on the creation of the rules.
Ketchmark also pushed forward on another stance the plaintiffs have begun leaning on more heavily—the value, or lack thereof, of buyer agents. After pointing out that buyer agents are paid “sight unseen” regardless of their knowledge or skill, Ketchmark asked why not remove the mandatory element of the buyer commission rule “and let the market decide.”
“(Sellers) can make the decision not to share anything. They can. They can make that choice,” Goldberg insisted.
The plaintiffs have alleged, and brought in experts to argue, that even with offers of $0 of buyer compensation, NAR and MLS rules create a market rife with “steering,” where buyer agents discourage or prevent their clients from seeing lower commission properties.
Ketchmark also pointed out that a study cited by Goldberg yesterday, which stated that using a REALTOR® increases the sales price of a home by 20%, was, in fact, commissioned by REALTOR® magazine, which NAR owns.
Goldberg responded to further pressure from Ketchmark, who claimed NAR used that study to make consumers “play along” for fear of diminished returns on the sale of their home, by saying that the study simply informs consumers on what the analytics show about home sales.
Another key moment came as Ketchmark brought up a report that NAR commissioned back in 2015, entitled the “D.A.N.G.E.R. Report.” Goldberg claimed that was not the name NAR used for the report, which was meant to assess dozens of threats or risks to real estate in the coming years.
Ketchmark noted that Ron Peltier, founder and chairman of HomeServices of America, was part of the committee that commissioned the report, as was Gino Blefari, the current president and CEO. Goldberg acknowledged paying hundreds of thousands of dollars for this report, which described the unilateral compensation of buyer agents by sellers as a “core component” of the real estate market.
The particular section of the report that Goldberg referred to was titled “Commissions Spiral Downward.” Ketchmark claimed that this, and other examples of NAR mentioning or referring to commissions in materials or discussions, undercut Goldberg’s previous assertions that NAR leaves commissions up to individual members.
On redirect, Ethan Glass, lead attorney for NAR, had Goldberg make a distinction between talking about commissions and discussing specific commission rates, which Goldberg called “apples and oranges.”
Goldberg also reiterated that there is nothing in the NAR rules telling sellers what they have to pay a buyer’s agent, and that the purpose of the buyer compensation offer is “to incentivize buyers to come to the table.”
Glass also attempted to flip the conversation on the value of buyer agents, saying that from a seller’s perspective, the only goal is to sell the home. Goldberg also claimed there is no “punishment” for not using a REALTOR®—something else the plaintiffs have alleged, saying that steering is in fact, that punishment.
Another back and forth was over books that NAR sells on its website, with Ketchmark briefly pointing out that a book written by Gary Keller is featured prominently there. A major part of the plaintiffs’ case hinges on proving there was a conspiracy between NAR and the two named brokerages, Keller Williams and HomeServices.
“(The NAR Store) is just a platform that sells those products. We do not endorse or highlight one over the other,” Goldberg said.
Stay tuned for ongoing updates from the courtroom.
William Schmidt contributed to this reporting.
Hard to prove conspiracy WHEN THERE WAS NO CONSPIRACY