For the second time in a month, a lawsuit has been filed in Texas claiming the state’s real estate industry is engaged in a “conspiracy” related to broker commissions.
The new putative class action lawsuit – Martin, et al., v. Texas Association of Realtors, Inc., et al. – calls out the Texas Association of Realtors and more than 40 local-level realtor trade groups and Texas-based brokerages.
“In the realm of Texas real estate lies a concealed conspiracy that has adversely impacted countless home buyers and sellers,” the lawsuit stated. “Plaintiffs, who have listed their homes on Multiple Listing Services (MLS) in Texas, stand as the voice of those who have borne the brunt of the Defendants’ unlawful collaboration and anticompetitive practices. This conspiracy centers around the enforcement of an anticompetitive restraint that compels home sellers to provide an inflated fee to the broker representing the buyer of their properties, thus violating federal antitrust regulations. Notably, the United States Department of Justice’s Antitrust Division is currently conducting a thorough investigation into the residential real estate brokerage sector, with a specific focus on broker compensation and related practices.”
The lawsuit, which was filed on Dec. 14, insisted the National Association of Realtors was the “creator of the conspiracy,” although it is not among the organizations being sued.
“The alleged conspiracy compels home sellers to bear a cost that, in a competitive market and in the absence of the Defendants’ anticompetitive restraint, would typically be borne by the homebuyer,” the lawsuit. “Further, this has led to an industry-recognized practice called ‘steering,’ where homeowners are pressured into accepting inflated or stabilized rates out of fear that buyer brokers will not show their home to prospective buyers.”
“In the absence of NAR’s Mandatory Offer of Compensation Rule, the expense of buyer broker commissions would be incurred by the clients (homebuyers),” the lawsuit added. “This would lead to competition among buyer brokers to offer lower commission rates. Consequently, the Mandatory Offer of Compensation Rule stifles price competition among buyer brokers because the actual party retaining the buyer broker—the homebuyer—doesn’t negotiate or pay the commission for their broker.”
The plaintiffs are seeking class-action status for their lawsuit and are looking to add Texas home sellers who listed properties on an MLS since Nov. 13, 2019.
Last month, a similar lawsuit – QJ Team et al v Texas Association of Realtors et al – was filed, with 29 defendants cited in the litigation. Other lawsuits challenging broker commission structures have been filed across the country while a Missouri court last month found NAR and the brokerage firms Homeservices of America and Keller Williams Realty were liable for $1.8 billion in damages for allegedly colluding to inflate commissions.
