Editor’s note: The COURT REPORT is RISMedia’s weekly look at current and upcoming lawsuits, investigations and other legal developments around real estate.
The National Association of REALTORS® (NAR) just wrapped up its midyear conference, and for the first time in a couple years, legal issues were not the main focus. As CEO Nykia Wright promises change across the board, her organization and the industry at large still face lawsuits and government investigations. But with the commission copycat pile-on seemingly over, the paradigm is shifting, as incumbents seek to navigate a handful of trailing cases while simultaneously seeking to mitigate future risk.
Here is the latest legal news affecting real estate:
DOJ softens tone as it drops settlement objections
After initially derailing the first-ever commission lawsuit settlement in the Massachusetts-based MLS PIN case, the Department of Justice (DOJ) under President Donald Trump’s second administration is seemingly backing down from its aggressive push against commission practices—for now.
Last week, the DOJ officially withdrew its objections from MLS PIN’s settlement in the lawsuit, after the MLS agreed to align the terms of its agreement with NAR’s deal and remove compensation offers from the platform. However, the DOJ appears to have left the door open, not waiving its right to enforce future action on MLS PIN if necessary.
“To be clear, the United States maintains that blanket, upfront offers of buyer broker compensation by sellers or their listing agents constitute an anticompetitive practice,” the DOJ wrote.
At the same time, NAR Chief Advocacy Officer and EVP Shannon McGahn told a panel at NAR’s midyear Legislative Meetings that new Deputy Attorney General Gail Slater, who oversees antitrust issues, is more focused on tech issues. She added that NAR has a good relationship with Slater, and pointed to a separate push by the Antitrust Division at the DOJ to look into regulations, which NAR submitted feedback to.
When asked by an audience member whether NAR has a “better relationship” with the current DOJ, McGahn responded that “we have consistently had relationships there,” while also describing the shift as an overall positive for real estate.
A hearing for a judge to approve the settlement on a preliminary basis is scheduled for this Thursday, June 12.
Settlement discussions ongoing as buyer plaintiffs seek data
The largest and oldest commission case filed by homebuyers (Burnett and the copycats were largely filed by sellers) is entering later stages, as plaintiffs are currently gathering information for experts to use at trial and to certify a class-action across 32 states.
But the process ran into “unexpected complications” based on how this data is stored—or not stored—by defendants and third parties. Currently, plaintiffs are working with over 50 MLSs to obtain transaction-level data concerning prices, commission offers and property characteristics, according to a joint filing by defendants and plaintiffs last week.
Notably, this only became necessary because Zillow—which is not a defendant—refused to provide this data.
“Despite their narrowed requests and extensive discussion, Zillow finally stated its position that it will not produce anything with respect to MLS listings no matter the extent to which Plaintiffs narrow their request,” the filing states.
That has made the process more difficult, and some MLSs are also refusing to provide data, according to the filing, though plaintiffs said they expect to ask a judge to compel the production of that data.
Also, after acknowledging some early settlement discussions in the case, the filing simply stated that “Plaintiffs have and are pursuing settlement efforts with Defendants.” Plaintiffs in the case previously acknowledged settlement discussions with one defendant in the past tense, suggesting discussions have ramped up.
Defendants in the case are NAR, Anywhere, RE/MAX and Keller Williams. The same plaintiffs are suing several other large brokerages in separate cases, with a judge previously ruling that settlements in the seller cases do not confer immunity to buyer claims.
Keller Williams franchise accused of fake listing scheme in new lawsuit
According to a lawsuit filed by Genesis Capital, a lender based in Delaware, Keller Williams Philadelphia posted fake listings, included fake photos and descriptions of properties, as part of a scheme with a local title company and home flipper to secure millions of dollars in loans.
According to the lawsuit, local developer Travis Robert-Ritter worked with title company Surety Abstract to create fake transactions, inflating the value of properties by hundreds of thousands of dollars in order to use them as collateral for loans. Keller Williams agents were recruited to list the properties on the MLS to make the deals look real, going so far as to use photos from unrelated listings in the MLS and create fake documentation in the aftermath.
Some of the properties were “sold” multiple times for huge premiums, with one property twice listed as being flipped for a 700% premium in the space of two years. Genesis claims that the broker of record at Keller Williams Philadelphia, Viki Carey, was responsible for the oversight of these seemingly bizarre sales, without claiming she was aware of the fraud.
“Carey is an experienced real estate professional knowledgeable about values inparticular neighborhoods in the Philadelphia area. Carey testified under oath that it was impossible for the properties…to suddenly be worth roughly $350,000 each, mere weeks after they sold for between $28,000 and $70,000,” the lawsuit reads.
