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A California home seller has filed a third Antitrust Commission lawsuit in the Golden State, but only on behalf of those who pay Redfin buyer’s agent commissions.
Andrea Freedlund, a resident of Aliso Viejo, California, submitted a complain A class-action lawsuit was sought Monday on behalf of any Californian who paid a buyer’s agent commission, directly or indirectly, to Redfin or a Redfin buyer’s agent involved in residential property sales between October 2019 and October 2023.
The lawsuit, filed in the Central District of California, estimates the potential class size at “tens of thousands.” The National Association of Realtors, California Association of Realtors and Redfin are defendants in the federal case.
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Redfin announced on October 2, 2023, that it would withdraw from the National Association of Realtors and require its agents and brokers to withdraw without requiring membership to access multiple listing services, lockboxes or standard contracts.
in a Message to employees In an agreement signed by eight top executives, Redfin Chief Executive Glenn Kelman cited the sexual harassment scandal and commission structure at the 1.56 million-member trade group as the company called on as many as 1,800 brokers and The main reason agents immediately cancel memberships.
According to the complaint, Freedlund sold a home in Laguna Niguel, California, through a Redfin broker in September 2021 to a buyer also represented by a Redfin broker. Buyer’s agent’s commission is 2% of sales price.
Friedlund’s lawsuit was filed in the U.S. District Court for the Central District of California. In January, another California Commission lawsuit, with the lead plaintiff named Fierro, was filed in the same court. Both lawsuits name NAR and CAR as defendants, but the Fierro lawsuit also names numerous brokerage firms and other trade groups as defendants, while the Freedlund lawsuit adds just one defendant: Redfin.
The complaint alleges that Redfin, NAR and CAR formed a “cartel” to drive up the cost of real estate brokerage services for home sellers, and alleges that the association defendants’ cartel continues.
“Defendants’ illegal collusion will inevitably force home sellers such as plaintiffs to bear a fee, a buyer’s commission, that in a competitive market without defendants’ collusion would have been borne by buyers, if any,” the complaint reads. . ”
“Buyers are clearly in a better position and have an incentive to put downward pressure on commissions because they are the ones who actually receive the service and benefit from it, and therefore have an incentive to spend according to their needs. In such a robust system, the buyer’s agent People will compete with each other, including on price.
“Thus, another anticompetitive effect of the rules challenged in this lawsuit is the indemnification that sellers must provide to buyer’s agents.”
The lawsuit challenges a NAR rule that requires listing brokers to compensate buyer’s agents for submitting listings to real estate broker-affiliated MLSs, known as the Engagement Rule or the Collaborative Compensation Rule.
“When a property is listed on the MLS, the seller’s agent must, as a condition of the listing, offer ‘blanket’ and ‘unilateral’ compensation and cooperation to any buyer’s agent involved in the sale,” the complaint states.
“Despite the fact that in the modern internet age, buyers’ agents simply don’t do much work to earn commissions — let alone the 2-3% of the total sales price they earn under these illegal agreements — so , unilateral requests for cooperation are essentially nonsense for real estate agents who are rewarded handsomely for minimal effort (as more and more real estate agents’ functions are narrowed, such as showing home listings) of returns (growing as home prices inexorably rise. , done by buyers using technology like Zillow).
The idea that a buyer’s agent “doesn’t need to do much work to earn a commission” is hotly debated by many in the real estate industry. A “blanket” offer means the commission is not dependent on the quantity or quality of work performed by the agent who brought the buyer.
mantil williams
“Cooperative compensation practices enable efficient, transparent and accessible markets,” NAR spokesperson Mantill Williams told Inman in a statement.
“Sellers can sell their homes for a higher price, have their homes seen by more buyers, and buyers have a wider selection of homes and can afford agent fees. The National Association of Realtors will be in court to respond to this complaint.”
This is the latest lawsuit to challenge a practice that requires listing agents to share commissions with buyer’s agents, following the Oct. 31 ruling in the Sitzer | case. In the Burnett case, a Kansas City jury found that NAR and major real estate franchisees conspired to inflate commissions and awarded damages that may have ultimately cost the defendants nearly $5.4 billion.
Friedlund’s complaint, like Fierro’s complaint, alleges that the defendants violated the federal Sherman Antitrust Act, California’s Cartwright Act and California’s Unfair Competition Law. The complaint seeks a jury trial and seeks damages, costs and a permanent injunction invalidating the rules challenged in the lawsuit and any agreement between NAR and CAR agreeing to those rules.
The lawsuit also names “co-conspirators” involved in the alleged conspiracy, including local REALTORS® associations, local MLSs and local real estate agents, who allegedly “participated in and complied with local challenge rules, including by participating in steering conduct, submitting reports to local associations and/or CAR and NAR report violations of challenge rules and non-advertisement of pricing.”
“Defendants are jointly and severally liable for the acts of their co-conspirators, whether or not their co-conspirators are named as defendants in this complaint,” the complaint adds.
Joan Barlow
CAR general counsel June Barlow told Inman in a statement, “CAR has retained experienced antitrust defense counsel to defend the association, and CAR will be fully prepared to present its arguments in court.” According to the industry group, The law firm is Munger, Tolles & Olson LLP.
Inman has reached out to Redfin and will update this story if we hear back.
Read the complaint:
Send an email to Andrea V. Brambila.
