Real estate brokerage Keller Williams will pay $70 million to settle agent commission lawsuits nationwide

To report antitrust concerns to the Antitrust Division follow the steps below. Please keep in mind that the Antitrust Division is prohibited from giving legal advice to private individuals. If you are considering a merger or acquisition, ensure you look at any potential antitrust issues before you proceed. Be aware of The Clayton Act’s requirements for notifications of mergers and acquisitions.

  1. Specifically, regulations address pertinent industry issues, such as bid-rigging, monopoly influence, market allocation, and price fixing.
  2. Arguably, the law firms spearheading the plaintiffs’ lawsuit in Moehrl have a proven track record for success in class action lawsuit of this nature and magnitude.
  3. Sellers are banned from consulting with each other and agreeing on a price for property or merchandise.
  4. The company has said RealPage “uses aggregated market data from a variety of sources in a legally compliant manner.” The company said its software prioritizes a property’s own internal supply and demand dynamics over external factors like competitors’ rents.
  5. But the MLSs are often run collectively by local real-estate associations.
  6. Luckily, colluding or merging to form a monopoly is now considered unlawful, thanks to the Sherman Antitrust Act and other antitrust laws.

When all of the brokerages in the area charge the same amount, clients have no choice but to pay those fees. For example, it is common for a real estate agent to receive a three percent commission on a home sale. However, there is still room for competition when another realtor offers discount services to win clients.

In order to be honest and fair with them, you must abide by antitrust laws and regulations that are created to make a fair playing field for all agents. In a group boycott, real estate agents antitrust violation real estate decide to avoid certain types of customers or refuse to work with a certain broker. They make an agreement to not show your houses and avoid telling their buyers about any of your listings.

What Are Antitrust Laws in Real Estate?

It’s important for brokers to seek advice from a specialized real estate attorney if there is any possibility of a breach of antitrust laws. At CRES, we offer E&O + ClaimPrevent® https://1investing.in/ insurance which provides you with extensive coverage. Plus, you’ll also have access to expert real estate attorneys pre-claim, so you can get legal advice whenever you need it.

Neither MIAMI REALTORS® or MIAMI MLS sets or suggests compensation values or the cooperative division of compensation. As you know, on October 31, 2023, in the Sitzer/Burnett v. NAR, et al. class action case, the jury awarded the plaintiffs $1.785 billion in damages (which could be $5.356 billion after treble damages are assessed). A similar practice is segmenting customer types and only trying to attract specific customers. The Las Vegas Realtors, a member organization of NAR that represents 17,000 local brokers, deferred to the national trade group for comment. The total commission charged was 5 percent, of which 3 percent was paid to the buyer’s broker.

When dealers agree not to advertise via a target media or specific platform to force a reduction in advertising rates, they similarly violate antitrust laws. This is how the Music Teachers National Association (MTNA) found themselves in hot water with the FTC. Brokers should not agree to stay away from each other’s clients or former clients. Poaching may seem impolite, but agreeing not to do it can violate the antitrust laws. Indeed, in this way, the antitrust laws encourage stealing (of customers).

Why Was the Sherman Antitrust Act Passed?

“It was a resource constraint issue he was trying to balance,” the source said of Makan Delrahim, the former assistant attorney general charged with overseeing the division at the time. In addition, RealPage did not have the same reach then as it does today, the source said. But the government can request more information from companies and even seek to block the merger in court if it believes it could substantially harm competition.

Price fixing is the practice of multiple (or all) real estate agents in an area working together to charge the same commission between brokerages. Price fixing is prohibited under the Sherman and Clayton Antitrust Acts. Sellers are banned from consulting with each other and agreeing on a price for property or merchandise. Any consultation or fee discussion between agents is illegal and violates antitrust legislation. Commissions, management fees, or prices must be determined through fair competition.

When bid-rigging happens, the buyers work together to get the houses for a cheaper price than would normally happen at a fair auction. This is not legal and could cause a real estate agent to lose their license. Real-estate brokers typically—but not always—price their services based upon a percentage (known as a commission) of the sales price. At the same time, they usually offer a publicly-announced share of that commission to a broker that brings in a buyer.

If a business wasn’t treating its employees well, it could organize within its labor union and go on strike. The Supreme Court applied the “rule of reason” interpretation to the Sherman Antitrust Act. This meant the courts could weigh the positive competitive features of a business against its anticompetitive conduct before deciding if it was unlawful.

Window to the Law: Antitrust for Real Estate Professionals

For example, dishonest agents may conspire to create a listing service that excludes other dealers. One of the nation’s largest real estate brokerages has agreed to pay $70 million as part of a proposed settlement to resolve more than a dozen lawsuits across the country over agent commissions. LOS ANGELES (AP) — One of the nation’s largest real estate brokerages has agreed to pay $70 million as part of a proposed settlement to resolve more than a dozen lawsuits across the country over agent commissions. An antitrust law is law intended to protect buyers and sellers, or any other parties, from hurtful practices like price-fixing, bid rigging, market or customer allocation, group boycotts, or collectively-run multiple-listing services. If you participate in one of these activities as a real estate agent, you are not only abusing your client, you are breaking the law. They set the ground rules for fair business practices and competition, and prevent monopolies from occurring.

Markets

Market allocation is when brokers divide the area into regions and each brokerage agrees to stay within their region. Real-estate properties, particularly foreclosures, are often sold via auction. These auctions are often local (within a county) with the same players as participants. Bidders should not make any agreements about their bids or lack of bids.

For example, if two brokers agreed never to conduct business with a third broker to have less competition, then it’s a clear violation of the Sherman Antitrust Act. Morgan were all single sellers of their goods in the United States market. The Sherman Antitrust Act broke up these trusts, which helped regulate the prices of goods and gave consumers more power. A monopoly is when one single seller in the market is offering a commodity, service, or good. This seller has no competition, so they can raise their prices to any rate they see fit.

Antitrust laws are designed to protect real estate sellers and buyers from unfair competition and predatory business dealings. The main antitrust laws are the Clayton and Sherman Antitrust Acts, which prohibit price-fixing, group boycotting, and bid-rigging. Second, the seller has alleged that other class members who were harmed include sellers in Florida regions including Sarasota, Tampa, Orlando, Fort Myers and Miami. Accordingly, this lawsuit, if successful, may have a substantial impact on local real estate transactions and may open the door to future litigation against local real estate brokers and agents. Real estate professionals should avoid discussing pricing all together and should always make these decisions unilaterally and independently. Market allocation is when real estate brokers divide the market amongst themselves so they don’t have to compete with each other.

As a broker, you should continuously review your business activities to ensure there are no potential breaches or anti-competitive behaviors. If any agreements with competitors are absolutely necessary, these need to be thoroughly vetted to ensure they are compliant. Agreements with competitors to keep commissions at a certain level are considered to be  ‘price fixing’ as well. Brokers need to keep in mind that breaches of the Sherman Antitrust Act laws aren’t just non-compliance issues, they are criminal felonies that have steep penalties.