Plaintiffs’ Lead Attorney Files New, Nationwide Lawsuit Against ‘Remaining Large Corporate Real Estate Companies’ Minutes After Verdict Is Handed Down
KANSAS CITY—After four years working its way slowly through the federal judicial system and two weeks of contentious courtroom drama, the landmark Burnett class-action case delivered a massive blow to organized real estate today, with an eight-member jury deliberating for less than three hours before finding that real estate power players conspired to inflate commissions in violation of federal law, awarding $1.78 billion to the plaintiffs.
Focused on buyer agent commissions—specifically, mandatory offers of compensation paid by seller agents to buyer agents—the ruling is already sending shockwaves across the industry, as the plaintiffs’ attorneys filed an identical, nationwide lawsuit within minutes of the verdict being handed down, naming even more large real estate companies.
The National Association of REALTORS® (NAR), HomeServices of America and Keller Williams were named defendants in the Burnett case, with RE/MAX and Anywhere choosing to settle in the weeks before the trial, paying around $130 million altogether and agreeing to change policies.
Mike Ketchmark, lead attorney for the plaintiffs, told RISMedia that the new nationwide lawsuit names “NAR and the remaining large corporate real estate companies,” alleging the exact same “misconduct” that he was able to prove to the Kansas City jury.
“The jury returned a verdict…and told these corporations to get their hands out of homesellers’ pockets,” Ketchmark said. “Our goal is to take this nationwide and bring the same relief across the country.”
Darryl Frost, spokesperson for Keller Williams, said that while the company respects the jurors “who decided the case based on the issues in front of them,” the company still disagrees with how the case was decided.
“We are disappointed that before the jury decided this case, the court did not allow them to hear crucial evidence that cooperative compensation is permitted under Missouri law,” Frost wrote in a statement. “This is not the end. Keller Williams followed the law regarding cooperative compensation and stands by the evidence presented on the 100-year-old practice of sellers’ agents offering commissions to other agents who help market and sell homes. Looking forward, we will consider all options as we assess the verdict and trial record, including avenues of appeal.”
Earlier in the trial, the judge disallowed defendants from referencing state laws, although NAR did briefly refer to these statutes in closing arguments.
Mantill Williams, a spokesperson for NAR, was even more explicit in regards to an appeal.
“This matter is not close to being final as we will appeal the jury’s verdict,” he said in a statement. “In the interim, we will ask the court to reduce the damages awarded by the jury. We stand by the fact that NAR’s guidance for local MLS broker marketplaces ensures consumers get comprehensive, equitable, transparent and reliable home information and that brokerages of any size, service or pricing model get a fair shot at competing. We will continue to focus on our mission to advocate for homeownership and always put consumer interests first.”
It remains unclear what will change—or when—as far as the rules and practices that the plaintiffs successfully challenged in this case. Another, much larger class action trial still looms, focused on many of the same policies and same defendants, scheduled tentatively for early next year.
Experts and real estate insiders have offered varying opinions on how this kind of verdict will affect real estate, with most agreeing that major changes are likely based on precedent-setting cases like this one.
RISMedia Founder, President and CEO John Featherston, who attended the opening days of the trial, said he found the plaintiffs’ case “to be extremely weak on it’s foundation.”
“Yet the plaintiff’s skilled attorneys accomplished their of goal of convincing the jury of everyday folks,” he continued. “Barring the decision being overturned through appeal, the residential real estate industry’s compensation commission sharing model will most likely be changed.”
NAR CEO Bob Goldberg was asked directly during this trial whether the organization would change its policies if the jury found in favor of the plaintiffs. He declined to say, adding there would need to be a “legal review.”
For the average agent, the immediate impact is also unclear. Part of the plaintiffs’ ask was for a “permanent injunction” against the defendants, preventing them from forcing sellers to pay the buyer-broker. Some regions are already taking steps to loosen or end the system of “cooperative compensation,” and other companies have sought to distance themselves from NAR.
Additionally the Department of Justice has indicated that simply allowing offers of $0 in the MLS—as several big MLSs have already done—is not enough, as it pursues its own investigation of alleged antitrust violations in the real estate industry.
This is a developing story. Check back here for industry reactions post-verdict and ongoing updates.
William Schmidt contributed to this reporting.
I saw this coming years ago. Why didnt everyone?
So the basis of the suit is realtors are greedy and should not be paid a split of 5 or 6 % of the sales price of the property, which is priced with that in mind. BUT THESE TRIAL LAWYERS ARE NOT GREEDY BY GETTING 50 or more percent of the winnings, am I missing something here? Again, greedy lawyers win an everybody else is going to lose, even the jury when they want to buy or sell a home in the future.
THIS THREATENS TO LEAVE BUYER-BROKERS OUT IN THE COLD; AS BUYERS ARE NOT PREPARED TO PAY COMMISSION!
The real estate industry has lost sight of the fact that any real estate broker/agent is really working for the seller. Why? Because neither the “listing” agency nor the “selling” agency gets paid until the transaction is complete and paid in full. The designations “buyer’s agent” and “dual disclosed agent” are artificial designations that the real estate industry has concocted over the years (and I suggest to the detriment of the prospective real property buyers). This whole mess could be avoided in the future with bona fide transparency. Buyers, do your own due diligence. Do not rely on any “salesperson”. They have their own best interest at heart not yours. Listing agents should be able to share commissions with cooperating selling agents. But there needs to be full disclosure and not the malarky that is contained in waivers as presently constituted. Short of that, there should be a mandatory “fiduciary” responsibility imposed upon the respective brokerages/agencies vis a vis the parties that they (the realtors) purport to represent.
I am very surprised the plaintiffs were able to succeed. Adapt to changes I guess.
If buyers think they have it bad now they can pay a commission on top of it.
Agreed! I’d love to be paid out of a retainer paid up front for every call/email/text, mile driven, hour showing and all work performed on behalf of buyers.
The unintended consequence of this ruling will cripple the ability of low income buyers to either have representation, as they already don’t have the necessary funds for purchase without some sort of assistance, or price them out of the homebuying market completely. It might be unintended, but it sure as hell is what’s going to happen.
Agreed! It will be no time before smarmy attorneys will try to play a game of “gotcha” when agents don’t accept buyers who can not pay for representation as a violation of fair housing. Shall we spend our own resources and billable service hours on those who can’t compensate? Perhaps there will be some sort of fund out of all these settlements set up for buyer’s who can’t pay? (yeah right)
I have the same thoughts, like “if you can’t afford an attorney the state will provide you one?” Shall we mirror that in real estate? This will cripple first time homebuyers, or they will just forego representation. So who forced these seller plaintiffs to hire a real estate agent anyhow? Why didn’t they just for sale by owner?
100% agree!
Lower income people like FHA buyers and firs time buyers will not be able to fork over another fee for a realtor even if they wanted to. The current system has helped create wealth for first time buyers and also use that first home as an equity builder to move up the financial latter and buy another better home later. If the entry market falls due to this ruling then in theory there will not be move up buyers.?
Go figure.
That will require the mortgage industry to recognize a line item, buyer’s agent fee which can be financed just like closing costs currently can be financed. They have always financed real estate commissions which heretofore have been hidden in the sales price. Our industry has been too slow to recognize this change. The solutions are not complicated. It is transparency and disclosure. The market will set the tone for commissions rather than the local Realtor organization and the National Association of Realtors. For first timers and/or low income buyers FHA and VA will come to recognize the need to finance real estate commissions as real estate can not stop over this, it will just experience a long needed series of changes. The current problem is the lack of leadership in the Realtor organizations. This commission change and this mortgage change are critical and long past due. Rather than fight what, to me, is a certain loosing position, they should have been spending time and our money, voluntarily leading the way into these inevitable changes. I have practiced since long before buyer agency and I have seen my local MLS evolve from paper hand outs at a local breakfast meeting with listings moving into a simple fax like machine into the huge and powerful organizations of today where a property can be pulled up on a phone and an appointment made with a click of a button. Look out MLS, here comes the private market. While the Realtor organizations are fighting a loosing battle, Zillow is preparing to knock on your door with an offer you will be glad to accept. And the word Realtor might not have anything to do with it.
It sure opened the door to NO representation for the consumer.
It is still buyer beware in a complicated transaction.
The award was ridiculous and all those who tout transparency are hypocrites.
Just FYI…. the verb is “LOSE” not “LOOSE”
They are fighting a “losing battle.”
You used LOOSE in a couple of places.
Easy to edit. 🙂
Commissions are negotiable and set between brokers and the clients. Total transparency is key; however, representation is needed especially for low-income families/first time home buyers.
Of the $1.78 billion award from the verdict, how much is going towards buyer side commissions in the future? Zero! And I guess the defense attorney hasn’t made enough money yet, as he has filed other cases nationally. All I can say is NAR and the other defendants did a really bad job during jury selection.
Ok. So where do we go from here?
The seller will still need help preparing the property for sale and then marketing it.
The buyer likewise will want help navigating the purchase.
The Realtor organizations will change drastically and MLS may go away
entirely. and NAR is toast. The techno brains behind the MLS type software will be big beneficiaries.
So a person who wants to sell hires a listing side agent to help navigate and
a person who is buying hires a buyer’s side agent to navigate. Commissions will
be negotiated directly between the principal and his agent and likely still paid at closing.
Zillow, Relator.com, or some other tech companies will set up a network of MLS replacement
opportunities paid for by consumers utilizing their services. Also advertizer who will offer
their services in ads as one searches through properties on their network and will pay for the opportunity.
The mortgage industry will need to recognize that the buyer may need to finance the buyer agent fees as
a line item on the settlement statement. Instead of the buyer’s agent fee being hidden in the sales price, it is transparent and fully disclosed to all.
Everyone is worried about the buyer’s agent being left out in the cold, but this need not be the case as the market adjusts. In a Seller’s market a good buyer’s agent will be very valuable to his principal. In a Seller’s market, it is the listing side which may be left out in the cold. The reverse will be true as the market shifts to a Buyer’s market.
Welcome to the Free Market.
It will go back to the 70’s and 80’s where the buyer will go straight to the listing agents. There were no buyer representation back then. or i should say very little. in 1983 when I started that was how business was done!
Except for Realtor.com, Trulia, Zillow, etc., do not put buyers in contact with the listing agent and do not disclose that information at all. They will instead put buyers in contact with another listing agent, one who has paid them (Realtor.com, Trulia, Zillow, etc.) for the leads that they got for free from the MLS in the first place—talking about disclosure! Yeah, right!
This ruling can potentially threaten the livelihood of buyer brokers and the way in which buyer brokers are paid and be a game changer for the industry. I’ve always questioned why buyer brokers are not paid up front for their services. Buyer brokers spend a lot of time driving, calling, texting, emailing, negotiating, submitting offers, etc on behalf of a buyer. Buyer brokers are an important part of the equation in getting a home sold. Are we shifting this responsibility to the buyer or the brokerage?
We now have another example of trashing an industry without any sort of gameplan as to what comes next. If the finalized ruling destroys the current industry then what comes next is a period of time of absolute chaos. Let’s face it the overwhelming majority of buyers will think they can handle a transaction without hiring an agent. As many people think all agents do is turn door knobs and flip light switches. As a prominent listing agent any buyer that shows up unrepresented will be fair game. My job is to get the most favorable terms for my sellers. My sellers will get to pocket more of their sales price. I really feel bad for what’s about to happen to all these buyers. Good buyer agents can make sure their client does not overpay, that they get a fair shake in identifying and negotiating repairs, as well as following the terms and time frames of the contract. My job is to NET my sellers the most money. I will hammer a buyer to no end to make sure this happens. This has always been the job of an elite listing agent and our duty to the seller. In fact, I am salivating over this as I also own a ton of real estate. Those who think a buyer will agree to pay a buyer’s agent commission on a large scale is oblivious to reality and does not understand the vast majority of the general population. Some will choose to do so and the overwhelming majority will not. Again, for a period of time millions of buyers will get raked over the coals thinking a buyers agent is only a door knob turner and a light switch flipper. Once they find out otherwise, they will be out tens of thousands of dollars plus numerous repairs they did not negotiate that will now be needed. I can convince every single seller that I can pay for myself by slamming the unprotected and unrepresented buyers that will be in the vast majority. Let’s see a buyer navigate all the time frames and pit falls in the contract. My sellers will retain deposits when buyers fail to meet time frames. My sellers will never make a repair if the buyer doesn’t send the properly worded addendum for repairs by the end of the inspection period. I will not provide any advice to buyers as they will get a non-representation addendum with the contract. It’s like a wounded animal falling behind the herd with a lion in the shadows. Unfortunately, it will be the low-income people who will fall victim the most. All the Associations have tried to do is implement fairness for both the buyers and sellers. Now it will be Seller is predator and non-represented buyer is the prey. I’m looking forward to what is next as for many decades there has been many different new and shiny technologies and ideas that people say will end us Realtors. The fact is that having a skilled agent navigate the process of the biggest purchase of someone’s lifetime will remain intact for the foreseeable future. This will be a bump in the road. Some attorneys will make hundreds of millions of dollars over this and millions of buyers will pay the price. Those who comment on free market, well the free market created what we have now and the power of one law firm and a judge’s gavel overturned that. So please tell me where the free market is? I barely touched on the down side and did not even touch on the full benefit of both a buyers and sellers agents roles and responsibilities. Who’s ready for additional chaos in the world. Thak you high powered attorneys.
I agree with your post. I am a real estate broker – licensed for over 25 years. Yes, we could very well see a return to the unrepresented buyer. In commercial real estate, most buyers do obtain and pay for their own agent, but they are usually savvy business people with the wherewithall to purchase. However, in residential that is not usually the case. I too feel that the burden will be borne by the lower-income, first time homebuyers who need our services the most. It’s all they can do to scrape up enough down payment and closing cost to purchase. Shall they make it a law that all buyer’s deserve representation, and if they can’t afford one, the state will appoint one for them? No, they really didn’t think this through.
And on another note, just how many sellers constituted the plaintiffs in this case? Did they not know that there is no law requiring them to hire a real estate broker and that they could have sold it themselves?
Oh, and I bet they would’nt have brought this lawsuit forward in a buyer’s market. Just sayin!!!!
The Real Estate Industry has needed a change in their compensation structure for a long time. If we call ourselves “licensed professionals”, our fee structure should be somewhat similar to other professionals — be that a Dentist, Physician, Accountant, Attorney, etc. Some require 50% fee upfront, a retainer fee, hourly fees and specified fees for certain services. How many of us invest not only hours but years with some clients/customers and never receive a dime. How many clients refuse to be reasonable with their asking prices, then switch agents and reduce their price? How many buyers have you driven all over creation only to have them switch in mid-stream to another agent? How many times have you brought a fantastic Offer to a Seller who refuses to be reasonable and the home doesn’t sell? The contracts we have with Sellers and/or Buyers have no teeth in them for the most part. The owners of Brokerage firms never want ‘bad press’ and always let the guilty party off scott free to rid themselves of the angst of dealing with the irrational nonsense that follows. Few people shop for a doctor for what he charges. They research a doctor for his skills, ability, experience and reputation in his field of expertise. The same goes for most professionals. Let’s face it — have ‘Discount Agents’ even taken over the Industry – NO. Has ‘For Sale By Owner’ ever made big inroads into our Industry – NO. If you want an experienced, professional Broker, the services should be spelled out and paid accordingly.
Unfortunately, in this class-action lawsuit, the R.E. firms on trial did not represent their case well. If a Seller’s property was not marketed nationally to reach buyers and their agents, their homes would sit on the market significantly longer. As Brokers/Agents, we all pay into our respective organizations to provide the best exposure to our client’s homes. We continually pay for educational classes/seminars/conferences to keep abreast of Industry & Legal changes. The Sellers in this class-action lawsuit simply expect high Sale Prices on their homes without paying for the services. How often do people pay significant Attorney fees in a myriad of issues and not get their desired results? The same can be true with medical operations, but you are required to pay the quoted fee regardless.
For the most part, I would argue that a client/customer would rather have a set percentage fee than an hourly fee as the cost might likely skyrocket. In essence, it’s better for the client/customer than the R. E. company. Why the NAR defendants allowed the jury to view our practices as being in violation of the Anti-Trust laws was more than a mis-step. This new National, negative coverage for Realtors will have a big effect going forward.
I’ve been retired a long time but there was a time I was a stockbroker and was one for decades. I watched compensation go down and down. Then there was the RIA phase. The real estate industry has had a stranglehold on commissions for far too long. Keller actually wanted me to guarantee their minimum commission from the seller. I said, you want to sell this house to me, pencil that out of the contract. Then there was a $500 fee for (agent wasn’t sure) administration fee she thought….maybe?
I had an aunt that sold real estate for 20 years, starting in the 1960’s and back then with low housing prices you had to hit the streets, door to door for listings.
I’m in my 80’s now and real estate purchasing is becoming a commodity. I suggest the current business model changes or dies.
With the price of housing, commission rates should have been dropping. Pigs get fat, hogs get slaughtered.
This ruling is a hypocrisy, the same attorneys that argue the commissions are excessive, that the seller is paying for someone to negotiate against them, that there is a conspiracy or collusion in the industry are the same ones that will walk away with more money than any plaintiff in the class will. Are the same attorneys that represent divorce cases and one side normally pays the opposing sides attorney fees. The same attorneys that across the board charge the same contingency fees for personal injury cases and class actions as every other firm.
You can go across the country and find a wide variety of commission models at brokerages, every market is different as are the commissions with in those markets, you can get a property listed for as little as $595.00 to as much as 10%, it just depends on who you hire and what you expect.
In addition, why can I not pay another broker to introduce my property to their clients? Its marketing, and how i spend and use my marketing dollars to achieve the sellers ultimate goal, getting top dollar for their property is what they hired me for.
These attorneys only seeking wins to line their pocket do not understand the injustice they are doing to entry level buyer, first time buyers and low income families. The cost of the home to the buyer is not going to go down, the cost will just move from one side of the ledger sheet to the other.
Imagine this, no more cooperation, then there is no reason for brokers to share their listings through IDX. Companies like Zillow, Redfin, Homes.com, Realtor.com and others will no longer have all the inventory in one place for consumers to find. It will be like shopping for a car, you will go from dealership to dealership to find your home, and you will be negotiating with the sellers agent whose only mission is to get the seller what they want. We all know how much fun buying a car is, now buying a home would be the same.
On the flip side this isn’t a sporting event, and although the score is plaintiffs 1, Real estate professionals 0, we get 3 more bites at the apple, and all we need to do is win one out of the 3 remaining bites.
Sellers will be hurt by this ill-advised ruling since what they were really paying for in paying the Buyer’s agent is a finder fee to find and bring a ready, willing, and able buyer to the table. Not as easy job, casting a big net into the unknown to find that right buyer. Now, those sellers will not have that huge benefit. Lots more ‘Days on Market’ coming at them.
Free market and transparency have not been accomplished here. The sellers and the listing agents will be the winners here. Not to mention the attorneys involved. The buyers that are left without buyer representations will be forced to deal with listing agents because they cannot afford the representation fees. They will be at the mercy of the listing agent’s recommendations on behalf of the sellers. The seller will be predator and the buyer will be the prey. How is this consumer protection?
Home Flipper industry want to destroy the NAR and MLS, since the buy and sale without a license neither paying for MLS fees but they are using the realtor for listing information and listed property for free. Just do not work with investor or home Flipper they terrorized seller and buyers. Attorney are getting 33% for all injuries cases across the nation. Investor and second market real Estate making 30% profit in every deal. Insane and Injustice decision that discriminate against the labor laws to charge for services.
Congratulations to the plaintiffs on their triumph in the Burnett case! The jury’s decision, finding that the National Association of Realtors (NAR) and brokerages conspired to fix prices, is a significant victory for fair competition and consumer rights. This landmark ruling underscores the importance of holding industry leaders accountable for their actions, ensuring transparency and integrity in real estate practices. Kudos to the legal team and everyone involved in pursuing justice. The outcome sets a precedent that will hopefully deter anti-competitive behavior, fostering a more ethical and competitive landscape within the real estate market. Well done to all involved!