To all the agents in the house,
Two court rulings this week are a reminder that the National Association of Realtors' centrifugal role in residential real estate is under legal challenge, a challenge that may transform how agents get paid and even how people buy and sell homes.
One ruling is perhaps not that surprising. A U.S. 9th Circuit Court of Appeals three-judge panel reversed a lower court's dismissal of a lawsuit that claimed the ban on pocket listings violates antitrust law. To review, NAR implemented almost two years ago a ban on its member agents marketing a home for sale without first putting it on the local multiple listings service.
Pocket Listings Service, or PLS.com, a real estate listings website started by agents who star on Bravo's "Million Dollar Listing," sued, arguing that the pocket listings ban was designed to drive them and any other MLS competitor out of business. A lower court judge dismissed the case, arguing that PLS.com needed to prove that consumers were harmed by the pocket listings ban. But the federal appeals court judges found that businesses affected by the pocket listings ban, whether those businesses are PLS.com itself or agents, can make an antitrust claim.
The ruling was foreshadowed by oral arguments in January, when Judge Milan Smith, who wrote Tuesday's opinion, stated to NAR's lawyer, "The NAR and its affiliates said, 'We got to put these guys out of business. It's going to ruin us.'"
Not yet known is whether NAR will continue this legal fight, or seek a settlement with PLS.com that may change the pocket listings ban language. NAR hadn't responded to the decision as of this newsletter being fired out.
Another ruling perhaps is surprising. In a federal court in Kansas City, Missouri – hardly a steaming cauldron of anti-business sentiment – Judge Stephen Bough squarely sided with consumers seeking class action status in a lawsuit against NAR. Bough ruled that hundreds of thousands of consumers could go forth in a lawsuit claiming that NAR has been in cahoots with Keller Williams, Berkshire Hathaway HomeServices, Realogy, and RE/MAX to artificially inflate real estate commissions.
What's surprising is that Bough issued the 41-page ruling just four days after hearing oral arguments in the case. The judge apparently did not need much time to decide that the allegations affect virtually the entire real estate industry. NAR and Realogy have said they will appeal Bough's ruling.
To be clear, neither of these decisions are on the merits of the cases themselves. A court has not declared banning pocket listings is illegal, or stipulations to split your commission 50/50 with the buyer's agent is against the law.
What these decisions do say is what courts and the U.S. Justice Department has said for over the past year: that NAR is running a harmful monopoly is a credible claim that deserves a complete courtroom interrogation.
Agents, what do you think of these latest developments? Please email me anonymously at mblake@housingwire.com.
Sincerely,
Matthew Blake
Senior Real Estate Reporter
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