Utah Homeseller Sues Realtors Over High Commissions
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A Utah County man who sold a home in 2022 has sued the National Association of Realtors and a handful of the state’s largest brokerages and franchises over what he says was an illegal scheme to keep real estate commissions high.
Dalton K. Jensen filed suit last week in U.S. District Court, one of nearly two-dozen similar lawsuits filed in recent months alleging that the real estate industry conspired to keep broker commissions much higher than they should be.
The industry accomplished this by creating rules that brokers and agents were required to follow, including forcing listing brokers to split commissions with buyer brokers and blocking the ability for buyers and sellers to negotiate the amount of money a buyer’s agent receives from the seller, according to the complaint.
“The cornerstone of Defendants’ conspiracy is NAR’s adoption and implementation of a rule that requires all seller’s brokers to make a blanket, unilateral and effectively nonnegotiable offer of buyer broker compensation (the ‘Adversary Commission Rule’) when listing a property on a Multiple Listing Service,” the complaint says.
The lawsuit follows a landmark verdict in a Missouri case that created an existential crisis for the real estate industry after a jury found the National Association of Realtors (NAR) and several large real estate firms led an illegal conspiracy that inflated housing and commission costs.
Commissions are typically paid by sellers to a listing broker after their home sale closes. Half of that commission is typically then given to the buyer’s broker, which is how real estate agents get paid.
The jury awarded $5.3 billion in damages to the Missouri homesellers in the case, effectively determining that the status quo in real estate compensation has been illegal.
NAR and Berkshire Hathaway HomeServices of America have continued defending the rules, which have recently been changed, and vowed to appeal the ruling.
Keller Williams, Anywhere Real Estate and RE/MAX reached a settlement agreement with the plaintiffs in the Missouri case and another in Chicago. If approved, the companies and their agents and franchises would be covered from future claims — like the one Jensen filed this week — and about 20 others that have been filed in the wake of the Missouri verdict.
Jensen’s lawsuit brings the issue home to brokers and agents in Utah.
His complaint also names several Utah franchises and brokerages that haven’t reached a proposed settlement agreement, including Equity Real Estate, Realtypath and Windermere Real Estate Services.
His proposed class action lawsuit would cover anyone who used a listing agent to sell a home anywhere in Utah between Feb. 9, 2020 using one of the 13 brokerages or franchises that were named as defendants.
Like the other lawsuits that have been filed in recent months, Jensen’s alleges that the brokerages and agents followed the rules set by NAR and the multiple listing services in Utah that require commission-splitting.
If not for those rules, he contends, agents would face more competition to obtain a high commission from sellers and buyers.
“If NAR’s Adversary Commission Rule were not in place, then the cost of buyer broker commissions would be paid by their clients (home buyers),” the complaint alleges. “Buyer brokers would thus have to compete with one another by offering a lower commission rate.”
After the Sitzer ruling and settlements, change might be on the horizon for real estate agents in Utah.
Full list of defendants:
- National Association of Realtors
- Anywhere Real Estate
- HomeServices of America
- HSF Affiliates
- BHH Affiliates
- RE/MAX
- Keller Williams
- Keller Williams of Salt Lake
- KW St. George Keller Williams Realty
- KW Westfield
- Equity Real Estate
- Century 21 Everest
- Realtypath
- Windermere Real Estate Services
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