- Originally published at Inman News - Lillian Dickerson
The class action lawsuit filed by plaintiff James Lutz alleges that HomeServices and other members of the National Association of Realtors fixed commissions, which misled buyers and resulted in buyers paying inflated home prices.
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In a departure from most commission lawsuits filed in recent months by homesellers, a new class action lawsuit was filed on Monday in Florida against HomeServices of America by homebuyers who allege that HomeServices and other members of the National Association of Realtors fixed commissions, which misled buyers and resulted in buyers paying inflated home prices.
A similar case known as Batton 1 was filed against the firm in Illinois in February by homebuyers, but HomeServices was dismissed from the case because none of the company’s constituents are Illinois-based and plaintiffs did not submit a claim that would assert nationwide authority in the case.
The lawsuit filed on Monday in the U.S. District Court for the Southern District of Florida names James Lutz as the plaintiff who bought a home in Key Colony, Florida, in 2021 using a buyer agent who is affiliated with Berkshire Hathaway HomeServices, one of HomeServices of America’s franchisees. The lawsuit is seeking class-action status that will include buyers nationwide who bought MLS-listed homes starting on December 1, 1996.
“For decades, homebuyers across America have been unwittingly paying too much for, and receiving too little from, services offered to them by Defendants and other real estate agent members of National Association of Realtors (‘NAR’),” the complaint states. “Despite agent representations (which NAR permits and encourages) that such services do not cost homebuyers anything, homebuyers in fact pay a hefty cost for these services — namely, supracompetitive commissions at levels fixed by the Defendants, NAR; and other real estate brokers, which in turn lead to higher home prices paid by buyers.”
The suit goes on to allege that the cost to consumers, as a result of the so-called fixed prices, was “enormous,” claiming that “experts have suggested that the amount of ‘annual broker fees consumers might save if there was effective price competition is as much as $30 billion or more annually.’”
Chris Kelly (Credit: Ebby Halliday)
Meanwhile, HomeServices has denied any wrongdoing or anticompetitive behavior and argued that the alleged damages contradicts those asserted in and accepted by the jury in the Burnett case, Real Estate News reported.
“While we are just beginning to analyze this buyer antitrust case that was filed immediately on the heels of our settlement of the Burnett action, we maintain our position that HomeServices’ conduct and business practices were at all times lawful and procompetitive,” HomeServices of America Executive Vice President Chris Kelly told Real Estate News.
“We also note that Plaintiffs’ theory of damages in this follow-on lawsuit is directly at odds with the damages theory accepted by the jury in the Burnett case and could potentially result in a duplicative recovery that would be unfair, unjust and violative of HomeServices’ rights,” Kelly added.
NAR’s “Free Service Rule,” which in the past, had allowed buyers’ agents to represent their services as free of cost, and which the lawsuit also takes issue with, was eliminated in 2022. NAR’s policy change at that time stated, “MLS participants and subscribers must not represent their brokerage services to a client or customer are free or available at no cost to clients, unless the participant or subscriber will receive no financial compensation from any source for those services.”
