Commission Litigation…

Another case Gibson et al V NAR et al. 

The attorney for the plaintiffs, Michael Ketchmark, also the attorney in Sitzer/Burnett, is beginning to remind me of David Barry, who filed numerous cases against MLSs in the 1990s.

After the jury’s verdict in the Sitzer/Burnett case, attorney Michael Ketchmark filed another antitrust lawsuit titled Gibson et al. v. NAR et al., in the same Missouri federal court. Alleging very similar claims to those contained in the Sitzer/Burnett lawsuit.

This lawsuit alleges a nationwide class including home sellers who listed a property for sale on an MLS with one of the seven named brokerage defendants, and who paid a buyer broker commission from October 31, 2019 to the present.

By now you have heard about the Sitzer/Burnett verdict, $1.78 Billion and with Treble Damages, over $5 Billion, and more to come with Moehlr, Nosalek, and now Gibson and a few others. It is an avalanche of litigation, and don’t forget the DOJ case against NAR.
Those who think this is about commission amounts are missing the bigger picture. Going to Zero is not going to be enough. The DOJ and its accomplices are going for” the whole enchilada.” (or “the whole megillah”)

This is about eliminating the buyer broker commission from the MLS, and driving down commissions in general, as seen through the lens of the FTC in its 1983 Report on the Residential Real Estate Industry. And it goes back further than that, and I would be remiss if I did not include in the list of aggressors, the Consumer Federation of America.

FTC 1983 Report:

Fact is, MLS is the envy of the world, the “single source of truth” when it comes to what residential real estate is for sale, and what has sold. The housing finance industry owes its exitance in part, to appraisers’ access to MLS. The “American Dream” is fulfilled, in large part because of MLS.

But these are serious times, and you must “Prepare for the worst, and hope for the best.”

Learn how to use Buyer Broker Contracts if you are not already using them.

From the California Association of REALTORS:

Listing agents should talk about the amount of compensation to be paid by the seller to the listing broker. Listing agents should make it clear to the seller that the amount of compensation is negotiable.
As mentioned below, a broker/brokerage may require that its agents request a minimum amount of commission for working on property listings, so if the seller is not willing to pay that minimum amount the seller may need to work with a different company. The listing broker should also talk about the seller’s various options for paying the buyer’s broker. Listing agents should make it clear that the amount of compensation to be offered to the buyer’s broker is negotiable.

The seller should understand there are options to pay $0 to the buyer’s broker, offer another amount (dollar or percentage), or to invite requests from the buyer for seller to pay the buyer’s agent as part of the buyer’s offer. The listing agent should discuss the pros and cons of these options, such as the potential impact on buyers who may be considering the property (e.g., the possible effect on buyers who have less cash to close escrow, or buyers who need loans that will not allow financing real estate commissions, etc.). For risk management purposes, it is recommended that listing agents document in their files that these issues were discussed with their clients.

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