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Real Estate Competition and Antitrust Litigation

CEO of Maryland REALTORS® and host of the Association’s podcast, “Get Real Estate,” which is available through any podcast app.

The U.S. model of local broker cooperation has long been viewed as the best value for consumers around the world. 

Of the 1.5 million REALTORS® across the country, more than 1.3 million are small businesses focused on our local communities. The local economic impact of housing affects more than just real estate agents. Preparing a home for the market often involves photographers, cleaners, landscapers, decorators, and other locally-owned small businesses in the home services industry. These locally owned small businesses have a significant impact on real estate. In fact, every home sale generates roughly $88,000 in local economic activity. What’s more, for every two home sales, one American job is supported. Overall, real estate accounts for nearly 18% of the nation’s GDP. 

When it comes to the offer prices for properties and closing costs, the real estate marketplace also makes the transaction more affordable. The commitment to cooperation— in which the listing broker pays the buyer broker—allows countless first-time homebuyers and low-and middle-income Americans the ability to afford both a down payment and professional representation. 

For many prospective buyers, saving for a down payment is challenging. Most lenders do not allow real estate broker commissions to be financed. As a result, for every one percent of broker commission fees that first-time buyers might have to pay, the prices for their homes increases by an additional $2,000. Buyers, particularly first-time buyers, benefit from the advocacy and representation that licensees provide, particularly given the competition for properties and the complications of the home buying process. 

As you know, this well-established marketplace is being threatened by numerous lawsuits. In March 2019, home seller Christopher Moehrl filed a class-action antitrust lawsuit asserting that NAR rules prohibit seller and buyer brokers from negotiating over the amount of commission that will be paid to the buyer broker and that such rules have inflated commissions. 

Later that year, home seller plaintiffs Joshua Sitzer and Amy Winger filed a lawsuit alleging the sharing of commissions between listing and buyer brokers violates the Sherman Antitrust Act by inflating seller costs. Other plaintiffs joined the case. 

On the buyer side, in Leeder v. The National Association of REALTORS®, plaintiffs filed a putative class action lawsuit against NAR, two REALTOR® associations, and several corporate defendants. The purported class consists of home buyers who mischaracterize NAR’s rules by alleging that defendants promulgated and enforced anticompetitive rules that caused home buyers to pay inflated commissions for broker services they misrepresent are free to pay inflated prices for the homes they purchase, and to receive reduced quality broker services. 

REALTOR® associations at all levels will continue to defend our business and will continue the commitment to act in the best interest of buyers and sellers across the country. Maryland REALTORS ® will also update policies to protect consumers and promote transparency and efficiency in the real estate marketplace. 

Find out more by reading Competition in Real Estate and Real Estate Commission Facts.

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