by Yamila Gagliano | Aug 7, 2024 | Industry, News Feed
Parent company of Howard Hanna Real Estate Services argues plaintiff agreed to a mediation clause and, as a buyer, doesn’t have standing to sue under federal and state antitrust laws.
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Hanna Holdings is fighting back against an antitrust lawsuit alleging it conspired with other members of the National Association of Realtors to inflate buyer agent commissions, leading to inflated home prices paid by buyers.
On Aug. 5, the parent company of the brokerage Howard Hanna Real Estate Services filed a motion to dismiss the suit, which is one of several commission suits brought by homebuyers. While nationwide settlements have been announced in major commission cases brought by homesellers, such as Sitzer | Burnett and Moehrl, none cover buyer claims.
The filing asked the U.S. District Court for the Eastern District of Pennsylvania to either toss the case “with prejudice” (meaning permanently) or to transfer it to the Western District of Pennsylvania, where Howard Hanna is based.
“This is a case that should not have been brought, and if it had to be brought, it should not have been brought here,” the filing reads.
“The Complaint is nearly identical to amended complaints filed in another court by the same counsel, also on behalf of home buyers, bringing the same claims challenging National Association of Realtors (NAR) guidelines.”
Homebuyer Scott Davis filed the suit, which seeks class-action status, on May 31. Davis’s counsel, Korein Tillery and Lowey Dannenberg, also represent plaintiffs in three other buyer commission suits known as, Batton 1, Batton 2 and Lutz, after their lead plaintiffs. In March, the Batton 2 plaintiffs dismissed Howard Hanna from their suit without prejudice, meaning the claims could be filed at a later time.
Davis, a North Carolina resident, bought a home in Greensboro in 2022 using a buyer broker from Hanna Holdings subsidiary Allen Tate Real Estate. Hanna’s motion to dismiss argues that Davis’s agreement with Allen Tate included a mediation clause that states “[i]f a dispute arises out of or [is] related to this Agreement or the breach thereof . . .the parties agree first to try in good faith to settle the dispute by mediation before resorting to arbitration, litigation, or some other dispute resolution procedure.”
“Plaintiff failed to honor his contractual requirement to mediate before filing this lawsuit” and therefore the suit should be dismissed, the motion says.
The complaint alleges Hanna Holdings violated federal and state antitrust laws by participating “in the establishment, maintenance, and implementation” of several NAR rules alleged to be anti-competitive, including the trade group’s cooperative compensation rule, also known as the Participation Rule, which requires listing brokers to make an offer of compensation to buyer brokers in order to submit a listing to a Realtor-affiliated multiple listing service.
Hanna’s motion to dismiss contends that Davis doesn’t have the right to sue under those laws.
“Plaintiff lacks standing to bring nearly all of his state law claims because plaintiffs may only sue under the laws of states in which they reside or were injured,” the motion reads.
“Plaintiff sues under the laws of 35 states but resides and purchased his home in just one: North Carolina. All other state law claims must therefore be dismissed.
“Plaintiff also lacks antitrust standing to sue under the Sherman Act and many state laws — including North Carolina law — because, as the Batton court recognized, home buyers are not direct purchasers of the allegedly overpriced buyer-broker services.
“Accordingly, not only are home buyers barred from seeking damages under the Sherman Act and many state laws …, they also cannot obtain an injunction under the Sherman Act or damages under North Carolina’s antitrust statute (or its consumer protection statute) because home seller plaintiffs are more efficient enforcers of the antitrust laws …”
Attorneys for Hanna also argued that Davis “has not plausibly alleged either an agreement among Defendant and the purported coconspirators or a relevant antitrust market.” Davis’s complaint does not name any other defendants but does list several parties as co-conspirators of Hanna, including Anywhere (formerly Realogy), RE/MAX, Keller Williams, HomeServices of America, Compass, eXp World Holdings, Redfin, Weichert Realtors, United Real Estate Group, Douglas Elliman, NAR, local Realtor associations, Realtor-affiliated MLSs, and franchisees and brokers of Hanna Holdings.
A pretrial conference in the case is set for Aug. 20. A trial has not yet been scheduled.
Inman has reached out to the plaintiff’s attorney, Carol O’Keefe of Korein Tillery, for comment and will update this story if and when a response is received.
Read the motion to dismiss:
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by Yamila Gagliano | Jul 30, 2024 | Industry, News Feed
Daniel McVicar, Eloy Carmenate and Victoria Levitam spoke at Inman Luxury Connect in Las Vegas on Tuesday in a panel titled “From City to City: Trends & Opportunities in Emerging Luxury Markets.”
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Want to succeed in the international real estate market? Know your audience.
That’s according to panelists at Inman’s Luxury Connect event in Las Vegas Tuesday, who spoke at a session called “From City to City: Trends & Opportunities in Emerging Luxury Markets.”
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“When a high-net-worth individual in our network is referred, this is a person that is referred with a lot of care and I respect that,” said Daniel McVicar, ambassador and global director for Santandrea Luxury Homes & Top Properties in Milan, Italy.
“In the luxury market, it’s essential that people are taken care of. You don’t want to lose a client because you referred them to the wrong person. You don’t want to lose a friend because you referred them to the wrong person. I consider them friends and family when I receive the referral.”
Eloy Carmenate, a broker associate at Corcoran in Miami, agreed.
“Your client is trusting you to connect to somebody who is important,” Carmenate said. “Network is everything. You have to know the right people.”
In order to do that, you have to become an expert on your clientele, according to Carmenate. He knows where his clients live, where they have second homes, where they travel, how many kids they have, how many times they’ve been married.
“We know a lot about them,” Carmenate said.
You also have to travel to the places you hear your clients talking about, he added.
“Typically, it’s Spain, France, Italy and the U.K.,” he said. “Athens is emerging and we’ve all heard about the phenomenon that’s going on in Portugal.”
You also build your network through the people your clients introduce you to, Carmenate said, noting he had met a recent client with a Swiss connection at an American wedding.
“You never know where the next one is going to come from,” he said.
Victoria Levitam, managing partner at The Agency in Panama City, Panama, knows what her clients want and is using that to sell them on buying in her “very special country.”
“Panama is not just a destination; it’s an incredible opportunity,” Levitam said. “It’s the Singapore of the Americas. Everything in real estate is about location, location, location. Panama is the heart of the world, the heart of the Americas. The connectivity is amazing.”
“We have one of the seven wonders of the world, which is the Panama Canal. It has for several decades been one of the best-kept secrets for local elites and top business leaders around the world where they have chosen Panama because of its capable business environment, logistics and connectivity and security as well.”
Carmenate jumped in. “I’m going to be using you for my referrals. She’s sold me on Panama. I’m going to be visiting there very soon.”
McVicar, who is also a television actor, drew a connection between performing for a broader audience to performing for a client.
“There’s a big crossover,” he said. “Really, you’re a public figure when you’re a real estate professional.”
He advised agents to be themselves, but a version of themselves they create.
“Create a character for yourself to be that character,” he said. “And of course, the secret to acting is listening.”
Asked about emerging markets, Carmenate named Singapore, Dubai and Milan, all of which have good weather, tax conditions and healthcare. He advised agents to stay informed.
“If you’re going to raise the bar with your own clientele, you have to know what you’re talking about,” he said.
“You have to know what’s going on in the world.”
Email Andrea V. Brambila.
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by Yamila Gagliano | Jul 22, 2024 | Industry, News Feed
At Inman Connect Las Vegas, July 30-Aug. 1, 2024, the noise and misinformation will be banished, all your big questions will be answered, and new business opportunities will be revealed. Join us.
As a managing director at global wealth management and investment banking company Keefe, Bruyette & Woods, Ryan Tomasello leads the firm’s research coverage of fintech software and real estate technology.
Over the years, he’s not only gained deep insights into the publicly-traded companies he covers as a research analyst — including Blend Labs, CoStar Group, nCino, Offerpad, Opendoor and Porch — but a broad knowledge of the industry as a whole.
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Tomasello, who before joining KBW in 2013 was an investment banking analyst at Bank of America Merrill Lynch, will be a featured speaker at Inman Connect Las Vegas taking place at the Aria Resort and Casino from July 30 through Aug.1.
He took time this week to discuss how commission lawsuits and economic uncertainty have combined to create a “watershed moment” that has the entire real estate industry searching for a path through a “no man’s land” that will ultimately lead not only to consolidation, but more disruptive innovation.
Our interview has been edited for length and clarity.
INMAN: There’s a lot of uncertainty over how the commission lawsuits will affect the real estate industry — a lot may depend on whether the DoJ steps in — but it seems there’s general agreement that commission revenue is going to take some kind of hit. How big a hit do you think it will be, and broadly speaking, who do you think the winners and losers will be?
Ryan Tomasello: We’ve said in our past research that we think the decline in commission [revenue] could be upwards of 30 percent over time. That number is based on various data points, ranging from survey data to comparing commission costs in the United States to that of major countries internationally.
I think the key caveat there is that it’s likely to take time. It’s not something that will happen overnight. As much debate as there’s been around how much commissions will decline, there’s an equal amount of debate around how long this impact will take to play out.
From the winners and losers perspective, I think you can bucket the industry between near-term and long-term winners and losers. Over time [changes to commission rules] stand to benefit the major players across the brokerage space that are best in class, brands that are innovative and choose to adapt and thrive in a new type of market structure.
Those types of firms potentially stand to benefit from increased market share in terms of agent count and transaction count. That could very much offset the headwinds from the actual decline in the commission pool, depending on how market share gains shake out.
Does that mean that we could see a wave of mergers and acquisitions? And what does that mean for startups that see opportunities to innovate and be disruptive?
From just traditional brokerage M&A and agent and team consolidation amongst different brokerage brands, I think there’s a growing consensus out there that this whole storyline ends up being an incremental catalyst to drive more consolidation in the brokerage industry. So the players that have a history of consolidating probably continue to capitalize on that consolidation.
There’s an interesting side thread that occurs next to the bigger picture changes to industry structure from an innovation standpoint. We’ve also said that this could be an opportunity for new disruptive models to capitalize on this watershed moment, to essentially ride an increased wave of transparency and provide knowledge to consumers around the transaction and their options and the fees that are involved.
You’re already seeing companies that are trying to go after this, whether it’s new companies or companies that have been around for some time but are kind of folding this into their strategy. Perhaps they’re taking a more novel approach to how they’re pricing out brokerage services, or investing in new platforms that are alternatives to the more traditional transaction methods of today, such as auction platforms and MLS alternatives.
And how does the role of portals change? How does the role of brokerages and agents in the transaction change? We think this ends up being a watershed type of catalyst for that type of disruptive innovation as well.
What is the climate for startup companies like that to actually get funded? And in big-picture terms, interest rates are coming down gradually as inflation eases, even as the stock market is hitting new records. What’s your view that rates can continue to come down without the economy crashing — that the Fed can actually pull off a soft landing?
We’re not rate prognosticators, but based on our own internal economic forecasts we do expect a gradual decline in the long end of the interest rate curve over the next few years. But the question becomes how much of an impact is that going to have for housing in general?
Based on the performance of the stock market, and our general sense of investor sentiment, it does seem like the consensus is for some sort of soft landing, with inflation continuing to come down [without a recession].
The funding environment for real estate, broadly, whether it’s venture capital or growth capital for mature firms, continues to be very low in terms of capital availability.
So I think real estate is still kind of stuck in the mud a bit here in the current environment, despite this expectation that we will ultimately have a soft landing. When you combine the macroeconomic picture and the rate backdrop, that’s still a difficult environment for housing overall — plus all this uncertainty around the lawsuits.
I mean, real estate is in a bit of a no man’s land right now, from an investor standpoint, given all of these very material moving pieces between macro and near term macro and these long-term structural dynamics.
What do you think people will be hoping to learn at Inman Connect Las Vegas? What are you looking forward to?
I think events like Inman are always a great opportunity to get together in person, have face time with folks, and talk about what everyone is seeing on the ground. Whether it’s housing macro or these longer-term structural elements, we’re just looking forward to hearing what other folks are seeing and what other folks are hearing about how these changes are actually playing out in real time, and sharing our perspective on that.
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