The
lawsuit in
a
nutshell

Here’s what
happened:

The
National
Association
of
Realtors®
(NAR)
was
sued
for

antitrust
violations,
specifically,
for
so-called
“price-fixing.”
The
crux
of
the
argument,
made
by
attorney
Michael
Ketchmark
(and
the
jury
agreed),
was
this:
When
listing
agents
go
on
appointments,
they
were
asking
homeowners
to
pay
a

commission
that
covers
both
the
listing
agent’s
fee andthe
buyer
agent’s
fee.
This
“full
fee”
is
baked
into
the
listing
agreement.
Then,
when
the
home
hits
the
MLS,
that
buyer
agent’s
fee
was
publicly
displayed
and
offered
out
to
all
competing
brokers.

In
other
words,
we weren’t just
advertising
a
commission,
we
were
locking
homeowners
into
paying
a
fixed
fee
to
any
broker
who
brings
a
buyer, essentially
standardizing compensation
across
competing
companies. That’s where
the
price-fixing
argument
comes
in.

What
is
price-fixing?

Here’s the
deal:
Price-fixing
is
when
competitors
agree
to
set
prices
instead
of
letting
the
market
decide.
Think
of
it
like
this:
If

McDonald’s
and

Burger
King
got
together
and
said,
“Let’s
both
charge
$4.99
for
a
cheeseburger,
so
nobody
competes
on
price,”
that
would
be
textbook
price-fixing.
Consumers
lose
out,
and
competition
is
squashed.

In

real
estate,
when
we
ask
homeowners
to
commit
(in
writing)
to
offering
a
specific
percentage
of
the
commission
to
any
agent
from
any
competing
brokerage
who
brings
a
buyer
—
and
then
blast
that
offer
out
on
the
MLS
—
we’re not
that
far
off
from
the
burger
example. We’re setting
a
standardized,
industry-wide
fee
for

buyer
brokers,
whether that’s the
intent
or
not.

The
heart
of
the
violation.
It wasn’t just
the
MLS

Here’s where
a
lot
of
folks
are
missing
the
point:
The
violation didn’t happen
just
because
we
posted
the
commission
offer
on
the

MLS.
That
was
just
the vehicle
—
the
megaphone.

The
real
“gotcha”
moment
—
the
violation
—
was
when
the
homeowner signed
the
listing
agreement committing
to
a
specific
selling
broker
fee,
with
the
understanding
that
this
fee
would
go
to
any
competing

broker
who
brought
a
buyer.
The
MLS
was
just
how
we
told
everyone
about
it.
The
root
problem?
We
created
an
industry
norm
and
locked
consumers
into
it
before
the
house
ever
hit
the
market.

In
fact,
this
is
the
actual
legal
theories
that
won
the Moehrl and

Burnett
cases.
In
both
lawsuits,
the
plaintiffs
argued
that
the
harm
occurred
at
the
very
moment
a
seller
signed
the
listing
agreement,
committing
upfront
to
a
buyer’s
broker
fee.
Even
the
American
Bar
Association’s

Antitrust
section
highlighted
this
exact
issue,
summarizing
that
the
home-seller
plaintiffs
“alleged
that
NAR
rules
requiring
seller
brokers
to
offer
compensation
to
buyer
brokers
violated
antitrust
laws
by
eliminating
competition
that
could’ve
lowered
fees
among
buyer
brokers.”

In
other
words,
by
forcing
every
seller
to
promise
a
fee
to
any
buyer’s
broker
in
advance,
the
industry’s
rules
killed
off
the
normal
competitive
process
where
buyers
and
their

agents
negotiate
fees
individually.

Yet,
many
in
the
industry
continue
to
miss
this
crucial
point,
setting
us
up
for
another
potential
legal
disaster.

The
settlement:
MLS
commission
offers
are
out

As
part
of
the
NAR
settlement,
we
can
no
longer
advertise
the
buyer
broker
commission
on
the
MLS.
Simple
enough,
right?
Not
quite.

Some
agents
and

brokerages
have
tried
to
get
creative,
putting
the
commission
offer
on
yard
signs,
flyers,
or
even
whispering
it
in
private
messages.
Michael
Ketchmark
has
already
said,
on
record,
that he’s watching
—
and
more
lawsuits
will
follow
if
this
continues.
The
lesson
here:
changing
the place where
you
advertise
the
fee doesn’t change
the
fact
the
violation
is occurring.

Are
we
setting
ourselves
up
for
the
next
lawsuit?

Here’s the
kicker
—
and
every
board,
association,
and
brokerage needs to
pay
attention:
The real
legal risk isn’t where you’re posting
the
commission.
The
problem
is
having any language
in
your
listing
agreements
that
locks
homeowners
into
paying
a
set
fee
to
the
buyer’s
broker. That’s
exactly
the
kind
of
behavior
the
courts
have
already
labeled
as
price-fixing.

Shockingly,
many
Boards
and
Associations
still haven’t gotten
the
message. They’re actively
encouraging
their
members
to
keep
asking
homeowners
to
commit
upfront
to
a
fixed
buyer-agent
commission,
which
clearly
goes
against
the
core
of
the
antitrust
ruling. 

These
associations
aren’t just
playing
with
fire; they’re practically
inviting
another
legal
smackdown
by
ignoring
the
lesson
our
industry
just
learned
the
hard
way.

Final
thoughts:
Time
for
real
change

If
the
goal
is
to
move
away
from
price-fixing
allegations,
we can’t just
play
“hide
the
commission.”
We have
to let
the
market
(buyers,
sellers,
and
their
agents)
negotiate
compensation
like
any
other
business.
If
we don’t, we’re not
only
ignoring
the
lesson
from
the
lawsuit—we’re begging
for
another
one.

It’s time
for
the
real
estate
industry
to
face
facts,
ditch
the
old
templates,
and
put
transparency
and
negotiation
front
and
center.
Anything
less
is
just
setting
ourselves
up
for
another
legal
smackdown.

Have
thoughts,
questions,
or
a
take
of
your
own?
Sound
off
in
the
comments
below.

Darryl
Davis,
CSP,
has
spoken
to,
trained,
and
coached
more
than
600,000
real
estate
professionals
around
the
globe.
He
is
a
bestselling
author
for
McGraw-Hill
Publishing,
and
his
book, How
to
Become
a
Power
Agent
in
Real
Estate,
tops
Amazon’s
charts
for
most
sold
book
to
real
estate
agents.

This
column
does
not
necessarily
reflect
the
opinion
of
HousingWire’s
editorial
department
and
its
owners.

To
contact
the
editor
responsible
for
this
piece: [email protected]