Arguments Begin in Broker Commissions Class Action Lawsuit

The National Association of Realtors’ officially began its defense against claims it conspired to drive up broker commissions.

In oral arguments delivered Tuesday, the trade group’s attorney, Ethan Glass, argued that NAR doesn’t explicitly set commission rates and that membership in the organization is optional, Inman first reported.

The three-week trial, which began Monday in Kansas City, is the first of two pivotal antitrust lawsuits to come before a jury. NAR is a defendant along with Keller Williams Berkshire Hathaway HomeServices and its affiliates.

At the center of the Sitzer | Burnett case is a decades-old rule requiring brokers listing properties on Realtor-affiliated MLSs to include an offer of compensation for the buyer’s agent.

The plaintiffs, a group of Missouri home sellers, allege that the policy, known as the “participation rule,” inflates the amount sellers pay to brokers and that NAR conspired with some of the nation’s largest brokerages to enforce the policy.

Glass denied these claims in his opening remarks, and instead, stated that the purpose of the policy is to motivate buyer’s agents to lock down deals. Glass likened the rule to a lost dog reward, which is typically only paid out if someone returns the dog to the owners.

“No one wants to work for free,” Glass told the court. “What NAR is doing is trying to help people and trying to promote homeownership.”

He also said that the terms of the rule are readily available on the group’s website.

“What kind of conspiracy is out in public?” Glass asked. “There isn’t one.”

The plaintiff’s attorney, Michael Ketchmark, referenced video depositions of Keller Williams CEO Gary Keller and Gino Blefari, CEO of Homeservices of America and chairman of Berkshire Hathaway Homeservices, where the two discuss commissions and agent training tactics.

Ketchmark played a clip of Blefari speaking in an agent training session, in which he mentions that he only negotiates his commissions up and automatically adds a six-percent commission in his listing agreements.

In the deposition, Blefari said that he was just sharing his tactics, not instructing agents on business procedures. He also brushed off Ketchmark’s question about whether he considered his assertion to be “quintessential price fixing.”

“No, it’s just negotiating,” Blefari said in the deposition.