columns

© DNY59-GettyImages

Lawsuit Against NAR Is Baseless

The Moehrl case and others fail to recognize the proconsumer, procompetitive benefits of the MLS system.

September - October
2019

At the heart of a lawsuit that has been filed against the National Association of REALTORS® and others is the question: Who really has the best interests of consumers in mind? A group of class action attorneys who are advertising for plaintiffs? Or the REALTORS® embedded in neighborhoods around the country, whose work is to help people navigate what for many is the single most complex and significant purchase (or sale) they’ll ever make?

This is not even a close call, and NAR intends to keep making that clear in the courts and the court of public opinion.

Since Moehrl v. NAR was filed in March in federal court in the Northern District of Illinois, there’s been a lot of speculation about what the lawsuit may mean for the industry. NAR takes this issue very seriously, so rather than feed wild rumors or “what if”s, NAR has been focusing on the facts and mounting a forceful defense. As is common in these cases, copycat lawsuits have been filed and additional plaintiffs have been added. The plaintiffs are questioning whether the MLS system is competitive and why the seller pays the buyer broker commission; what value the buyer broker brings; and whether buyer brokers do or should make decisions to show homes based on the amount of the listing offer of commission. On each of these questions, NAR has been aggressively countering the class action attorneys’ misleading and misinformed characterizations and telling the story of REALTORS® on our terms through the media, in meetings, and in the courts.

We are letting people know that REALTORS® and the multiple listing service system promote a proconsumer, procompetitive market for home buyers and home sellers, contrary to the baseless claims of these class action attorneys.

We are making sure people know that:

  • REALTORS® are champions of homeownership, property rights, and the communities they serve. Every REALTOR® adheres to a strict code of ethics based on professionalism, consumer protection, and the golden rule. REALTORS® draw on their unmatched knowledge to help buyers and sellers navigate one of the most complicated financial transactions of their lives. And REALTORS® are engaged neighbors committed to building and enhancing the communities they serve.
  • The MLS system and the way commissions are paid create competitive, efficient markets that benefit home buyers, sellers, and small business. The MLS system creates a highly efficient residential real estate market that fosters cooperation between brokers to the benefit of consumers. Commission structures (including how the listing broker pays the buyer broker) ensure greater access for a large community of home buyers who might otherwise be priced out of the market, which also would limit options for sellers.
  • Local, expert brokers play a crucial role in helping buyers and sellers achieve their goals. Given the volume of information buyers have to navigate and the complexity of this transaction, buyer brokers serve many essential, highly informed roles ranging from scheduling home tours and inspections to coordinating with lenders and appraisers to coordinating attorney reviews and closing documents. Consumers agree: 78 percent of home buyers say their broker was an important information source, and almost 90 percent would recommend their broker to a family member or friend.
  • These lawsuits are wrong on the facts, wrong on the economics, and wrong on the law. Commissions are negotiable and, in fact, can be negotiated at any point during the transaction. The MLS and associated brokerage system create highly competitive markets with increased transaction volume and superior customer service. Consumers have many choices of different service and fee models among many brokers. Over 100 years, the courts have repeatedly validated this procompetitive, proconsumer MLS system, recognizing it increases the efficiency of the market and thus serves the best interests of sellers and buyers alike.

We are letting people know that REALTORS® and the multiple listing service system promote a proconsumer, procompetitive market for home buyers and sellers.

Given that these lawsuits are without merit, in May NAR filed a motion to dismiss Moehrl v. NAR, demonstrating the plaintiff’s case was not legally viable. In response, the class action attorneys filed an amended complaint in June. They also joined forces with a copycat suit filed in the same jurisdiction. NAR filed a motion to dismiss the consolidated Moehrl v. NAR complaint and the other copycat lawsuit, Sitzer v. NAR, in August. Barring that happening, NAR will file a motion to dismiss the Sitzer complaint in August.

The lawsuits also name four national real estate companies: Realogy Holdings Corp., HomeServices of America, RE/MAX Holdings Inc., and Keller Williams Realty Inc. Collectively known as the corporate defendants, these companies will file additional motions to dismiss the lawsuits concurrently with NAR. If NAR’s motion to dismiss is denied, the litigation can be expected to be a long process that extends over many years. NAR is confident in our position that these lawsuits are baseless, but we are prepared to mount a vigorous legal defense should the courts allow them to proceed.

While it’s impossible to know the true motivation behind these lawsuits, one thing is certain: The consumers the class action attorneys purport to be defending would stand to lose the most.

As you know all too well, the MLS system and the associated cooperation between seller and buyer brokers enable an efficient and competitive system that offers the most options for both buyers and sellers and makes home ownership possible when it otherwise wouldn’t be for many people.

In keeping with REALTORS®’ role as consumer advocates, NAR encourages members to transparently discuss these lawsuits with clients and other consumers who have questions. There may be long intervals between substantive developments in litigation, but we will continue to update members about the cases through local REALTOR® associations, updates posted to nar.realtor, and REALTOR® Magazine.

Meanwhile, NAR will continue to aggressively defend the rights of the American home buyer and home seller to have access to a highly efficient homebuying system and to have listing and buying brokers serve as critical stewards of the real estate transaction.

Direct your questions about the lawsuits to kjohnson@nar.realtor.

Katie Johnson is General Counsel and Chief Member Experience Officer for the National Association of REALTORS®.

Related