NYC Brokerages, REBNY, faces antitrust lawsuit
From left: Pam Lipman of Corcoran, Robert Rifkin of Compass, Jim Whelan of Rebney, Howard Lorber of Douglas Elliman, Bess Friedman of BHS, Ryan Serhant of Serhant (Getty; illustration by Kevin Rebong for The Real Deal)
Antitrust lawsuits have arrived for residential brokerages in New York City.
A class action lawsuit was filed in the Southern District Court of New York on behalf of New York City home seller Monte Marsh against the Real Estate Board of New York and 26 companies alleging that the trade group inflated commissions through its rules requiring sellers to pay buyers’ brokers.
The lawsuit, based on March’s experience selling a property on the Upper East Side, comes amid a wave of legal filings focusing on the National Association of Realtors’ requirement that sellers offer a commission to buy-side brokers in exchange for access to local MLS systems.
While New York City does not have a citywide MLS system, and NAR membership here is rare, the lawsuit is tied to a similar rule in the REBNY Universal Co-Brokerage Convention that imposed the same policy.
“This inflexible commission practice has become so ingrained in the system that people have either accepted its unfairness out of respect for tradition or do not understand the nature and economic implications of commission fees,” the complaint says.
REBNY updated the UCBA in October, including a change to prevent listing brokers from paying buyers’ agents, and instead will require sellers to pay them directly.
“We are reviewing the complaint with our attorneys,” REBNY General Counsel Carl Hom said. “At the same time, we are confident that RLS’s practices and procedures adhere to all relevant laws.”
Defendants Compass, Christie’s International, Corcoran, Douglas Elliman, Modern Spaces, Modlin Group and Brown Harris Stevens declined to comment.
The language used in the filing is nearly identical to that used in a landmark case in Missouri, where a jury last week handed down a landmark verdict that opened the door to a slew of copycat lawsuits.
A Kansas City jury sided with the plaintiffs in the case known as Sitzer/Burnett, finding NAR and two brokerage firms guilty of colluding to keep commissions high. Industry group HomeServices of America and Keller Williams were ordered to pay $1.8 billion in damages, which could triple to more than $5 billion.
At least three similar lawsuits have been filed in the week since: one in Missouri, one in Illinois, and now one in New York.
The New York lawsuit cites the Brooklyn MLS system, which does not combine buyer and seller agent commissions, noting that buyers’ agents in that area receive a 1 percent commission, versus 2.5 percent to 3 percent in Manhattan, where there is no MLS system.
The lawsuit involves commercial real estate giant CoStar in a residential antitrust lawsuit over its Homesnap.com portal, a residential listing site that the company said earlier this year it would phase out.
It is the third antitrust lawsuit against Compass, which was not named in the Setzer case. The potentially expensive lawsuits and the prospect of a settlement or large damages come after a year of deep cost cuts at the brokerage, which is under pressure to become profitable.
Douglas Elliman was also named in two other cases filed in Missouri and Illinois.
Corcoran and Coldwell Banker’s status as defendants comes after their parent company, Anywhere Real Estate, proposed a settlement in Setzer’s lawsuit and in another similar case called Moehrl, seeking to protect the company and its affiliates from further lawsuits.
RE/MAX is also a defendant in the New York lawsuit. Last month, the company agreed to settle its involvement in the Setzer case for $55 million, just before the trial began.
The full list of defendants in the lawsuit is as follows:
- Brown Harris Stevens
- Coldwell Banker
- Basic marketing services
- Corcoran Group
- Douglas Elliman
- Elegant real estate
- Engel and Völkers
- Fox Residential Group
- Halstead real estate
- Keller Williams New York City
- Leslie J. Garfield
- Level set
- MNS Real Estate Company in New York City
- Modern spaces
- an agency
- Maudlin Collection
- Nest Seekers International
- Oxford Properties Group
- t New York
- Sloane Square
- Sotheby’s International Real Estate subsidiary
- REBNY Listing Service