Now Buyer Agents are Painted With the Laser
The verdict in the Sitzer/Burnett v. the National Association of Realtors (NAR) case has set off a chain reaction. Now that blood is in the water, multiple additional lawsuits continue to be filed. Lots and lots of them, every day since, today, and tomorrow. However, this one filed hours after the first verdict sets itself apart from its predecessors. Other similar ones have also landed.
Buyer Agents Targeted
Called Batton 2, it is a federal, anti-trust suit which names several major real estate companies as defendants: COMPASS, Douglas Elliman, eXp World Holdings, Howard Hanna Real Estate, Redfin, United Real Estate Group and Weichart Realtors. According to the complaint, the homebuyer plaintiffs say those brokerages, along with the National Association of Realtors (NAR), colluded to inflate buyer agent commissions. The plaintiffs are seeking to have it certified as a class action by the U.S. District Court for the Northern District of Illinois, Eastern Division.
In a departure from the first lawsuit, the complainants in this case are purchasers of homes, not the sellers. Seven individual plaintiffs are named: Mya Batton, Aaron Batton, Michael Brace, Do Yeon Irene Kim, Anna James, James Mullis and Bisbicos Theodore. In 2021, the same group filed another lawsuit in the same district against NAR, Anywhere Real Estate, Keller Williams, RE/MAX, HomeServices of America, alleging that NAR rules inflate agent commissions, resulting in higher home prices. Motions to dismiss that suit, the original Batton, are currently pending hence the “Bratton 2” designation here.
The Objective
The heart of the complaint is the allegation that home buyers are being shortchanged, compelled to pay excessive fees for services that may not measure up. The plaintiffs contend that the National Association of Realtors (NAR) and affiliated brokerages perpetuate inflated buyer agent commissions, which do not fluctuate with the agent’s expertise, performance, or service quality.
The filing further claims that buyer agents have a tendency to avoid showing homes priced lower, which also offer lower commissions, thus limiting choices for home buyers. Effectively steering them away from lower-priced homes which may have offered lower commissions.
The aim of the plaintiffs is to gain class action status for their lawsuit and to champion the cause for all individuals who have bought residential property listed on any NAR-affiliated MLS since December 1, 1996, up to the present filing date.
What Are the Damages
There are always three sides to every story. Here the plaintiffs will be portrayed as victims, the defendants will lean on “the process” that was/should have been followed, and both sides will have reasonable points. In the end, are the claims legitimate? What are the damages and how can they be determined? Does the case have merit? Obviously, that is for the courts to decide, but it’s clear that the way real estate transactions are completed is under vigorous attack.
Blame for These Lawsuits Lies with NAR
NAR is one of, if not the most powerful trade organizations on the globe. They were the biggest lobbying spender in 2022, will be there again in 2023. This engine needs a lot of fuel, which is provided by agent fees. Why are there so many real estate agents? Because NAR, state and local realtor board, brokers, ancillary businesses, and every other associated industry live on agent fees. The bar for entry and retention is comical, this is not a secret to anyone. Real estate is the “perfect side hustle”, the perfect “part time job” and the “perfect post-retirement career”. Which makes the 20%-25% of genuine professionals fume because the clown show reputation of this industry smears the professionalism required to make it look boring and uneventful. NAR is directly responsible for this mess.
The outcome of this lawsuit has the potential to be a watershed moment, potentially redefining the landscape of the real estate industry in the United States. That might be required, because it’s crystal clear that NAR has no interest in raising the standards of agents. These lawsuits are also very likely to have unintended consequences; the impact is likely to hit those that need professional guidance the most. But at this point, it’s clear that the wheels of change are in motion.
Buckle up.
