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Key Points About the Commissions Class Action Lawsuit

Key Points About the Commissions Class Action Lawsuit

As the Moehrl vs. NAR lawsuit progresses, here are the essential details.

Key points:

The judge in the Moehrl vs. NAR case provided a timeline for the lawsuit during a recent telephone briefing.

 

A verdict in favor of the plaintiffs could lead to changes in agent compensation, MLS business practices, and significant financial damages.

 

The trial date is expected in 2024, but the final outcome may take years due to the size of the case and potential appeals.

 

The class action lawsuit that could potentially change how agents are paid commission is moving forward, with a trial date expected in 2024.

 

During a May 30 telephone conference, U.S. District Court Judge Andrea Wood outlined the upcoming timeline for the Moehrl vs. National Association of Realtors (NAR) case. Court documents from the Northern District of Illinois indicate that deadlines for expert discovery are set for September, followed by other motions in late October. A trial date is likely to be announced around this time.

Here are three crucial aspects that real estate professionals should know:

What is the Moehrl case?

Named after home seller Christopher Moehrl, the class-action lawsuit involves home sellers suing NAR and several major real estate brokerage companies, including Anywhere, HomeServices of America, RE/MAX, and Keller Williams. The plaintiffs allege that NAR and the other defendants engaged in anticompetitive practices by forcing sellers into a system where they pay a commission split between buyer and seller agents. They argue that this approach has resulted in inflated buyer agent fees, negatively impacting home sellers, and believe that homebuyers should be responsible for their own agents’ fees.

 

NAR and the other defendants argue that the current system offers transparency and market-driven pricing options for both home buyers and sellers, according to NAR spokesperson Wes Shaw. Additionally, 20 Multiple Listing Services are identified as “co-conspirators” in the lawsuit.

 

What are the potential impacts if the plaintiffs win?

If the plaintiffs succeed, agent compensation could undergo significant changes, MLSs may need to adjust their business practices, and the defendants could face substantial financial damages. As a class-action lawsuit, thousands of home sellers who paid a commission to the specified companies between 2015 and 2020, as well as “current and future” sellers working with these entities, could receive compensation if the plaintiffs win.

 

Total damages could surpass $13 billion – an enormous sum. As real estate industry expert Russ Cofano noted in a recent column, the market cap of Anywhere is approximately $650 million, which is less than 5% of the claimed damages.

 

What’s the timeline for a verdict?

Judge Wood indicated that she expects to schedule a trial date sometime in 2024, although this could be delayed due to potential appeals. No matter the outcome, it’s possible that some of the defendants will seek to appeal any judgments against them – which may delay the resolution of the case and further extend its timeline.

 

My take

I hear why the plaintiffs in the Moehrl vs. NAR case feel that they are being unfairly treated, but as a real estate professional with 23 years of experience and one that has sold hundreds and hundreds of homes representing the seller, I have never heard a homeowner voice this same feeling or make any such claim. In fact, homeowners place their trust and confidence in agents to help them navigate the complex house-buying process.

 

Real estate professionals should pay close attention as the Moehrl case progresses, as a verdict in favor of the plaintiffs could lead to significant changes in agent compensation and MLS business practices. If the plaintiffs are successful, it could drastically shift the real estate market for buyers, as we have never seen before. I would expect there would be a mass Exodus of agents who leave the industry if the change came about. The buyer will pay the buyer’s agent directly vs. the compensation being agreed to in the MLS by the seller and listing company.

 

Buyers who think they are saving money by going directly to the listing agent may not always be the case, so it is essential to understand the implications of this lawsuit. With my extensive experience in representing sellers over the past 23 years, I am confident that I can maximize my sellers’ position in such a scenario! Buyers should be aware when they engage the services of the listing agent, they are placing their largest financial investment with an agent who is most likely representing the seller’s best interests.

 

In conclusion, although I have never heard a homeowner voice dissatisfaction about the commission split between buyer and seller agents, I am aware of how a verdict in favor of the plaintiffs could greatly shift the real estate market for buyers and sellers. Something to keep an eye on over the next several years! What are your thoughts?

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