We have all been subject to numerous social media posts and webinar invites to discuss the Sitzer/Burnett class action verdict that occurred on Halloween. We thought we’d weigh in on the topic and let you know just how we think it will affect your business moving forward. Before we dive in, just a reminder that if there is ever anything we can do to support you on the financial side, whether it's coaching, bookkeeping, tax strategy, or tax filing, you can book a free consultation here.
Now let's dive in…
So what actually happened?
A jury in Missouri found NAR, Keller Williams, and Berkshire Hathaway liable for price-fixing commissions in violation of federal antitrust laws, and awarded $1.78B in damages against them collectively (this could be tripled per applicable laws to $5.34B in damages). The main argument was that the Clear Cooperation Policy (CCP), requiring agents to enter their listings in the MLS within 24 hours of being available for public showings, and a concurrent requirement to offer a cooperating commission, had the effect of artificially inflating commissions in the Missouri area. The plaintiffs in the case essentially want buyers to pay for their own agent and for the seller to pay the listing agent.
So why does this matter to you?
Although NAR has said that the CCP and the offering of cooperating compensation is a pro-competitive policy, the jury found that the effect of it in Missouri was to fix commission pricing artificially high via a combination of actors, hence the price-fixing agreement.
First, it’s important to note, that this case applies only to Missouri. Yes, there is a broader set of issues now being litigated elsewhere that could eventually have national implications, though let’s also not get ahead of ourselves today. There will be plenty of time to debate broader implications.
Second and most importantly, what can you do today, inside or outside the state of Missouri? It’s more important than ever for a real estate agent to know their core value offering, be able to articulate it with clarity and conviction, and very importantly, execute it with precision and professionalism. This is within your control, the lawsuits are not, so stay focused.
So what are the Sitzer/Burnett defendants saying in response to the verdict?
The defendants maintain the position that they’ve done nothing wrong, that the individual brokerage offices/agents set their own commissions, and that there was never any agreement on commission levels. NAR has stated that they will continue to enforce the CCP.
What will come next?
Within 30 days after the Final Judgment is entered (which should be within the next few weeks), the defendants may file an appeal. Meanwhile, additional lawsuits have been filed against defendants that weren’t included in the first case.
Please understand that this is a very complex dynamic with many parties and is evolving quickly. Consequently, we will do our best to keep you updated with relevant communications on a cadence that has significant information that we deem worthy of your attention.
As always, if there's anything we can do to support you on the financial side, whether it's coaching, bookkeeping, or taxes, you can book a free consultation here.
Disclaimer: These are just our thoughts having many decades of experience in the industry owning and running small and large real estate brokerage offices and teams. Please consult your local attorney for any legal advice.
Comments