We notified Alaska Real Estate Professionals last week about breaking news on some significant class action lawsuits against the real estate industry commission structure how some of the major brokerages have moved forward with some partial settlement agreements that are bound to affect you.
Joshua Sitzer and Amy Winger (now referred to as the Stitzer/Burnett case) vs NAR, Anytime Real Estate, Home services of America, Re/Max, Keller Williams and. the suit charged that several large regional MLSs were co-conspirators.
How will it affect Alaska Real Estate? Once the precedents have been set it will likely lead to copy cat lawsuits with potential settlements in smaller markets and brokerages less able to pay the large low hanging fruit, targeted by large law firms in the major market areas.
In 1996 NAR adopted the adversary commission rule that requires the listing broker to offer a unilateral offer of compensation to other MLS participants and must specify on each listing filed with the MLS service the compensation being offered by the listing broker to other MLS participants.
The listing broker retains the right to determine the amount of compensation offered to other brokerages regardless of relationship to buyer in order to be listed in the MLS system.
In addition, RealTrends Consulting co-founder Steve Murray notes that the settlement agreements might prevent firms that operate under a franchise model from requiring that franchises belong to a Realtor association at any level, that franchises abide by the Realtor Code of Ethics, and that franchise abide by Realtor-affiliated MLS guidelines.
According to the lawsuit, the Adversary Commission Rule + Rebate bans = No Price Competition. Both Kansas and Missouri where the class action lawsuit was filed are included in the 10 states that ban rebates to buyers. Alaska is one of those states. The lawsuit alleges this aspect of state law makes defendants anti-competitive conspiracy even more effective and easier to enforce.
So what is in the future for the Alaskan real estate industry? How do we make changes now to reduce our risk?
Stay tuned to part 3 of Commissions Class Action Lawsuit for more background and what the industry can do.
It is going to get worse!
Live CE classes are better than Correspondence, particularly for this issue.. It was exciting to see the networking, partnerships and strategic partnerships, team building and recruiting and resource sharing that happened at our last live classes. You can't get those benefits sitting at home taking a correspondence class in isolation.
You should seriously consider signing up for our next live classes, Nov 11-12, 2023 or Nov 13-14, 2023 where we will give you tools to reduce your risk for the class action lawsuits that are likely heading our way. We will have workshops and role plays to refine your commission discussion to reduce your risk. You can't get that same level of protection and training in a correspondence class. But hurry to register, these classes have limited slots available and will sell out.
The lawsuits and steps we need to take, is a significant challenge to the industry and more info will follow starting next week.
Jerry Royse, ITI