Upstate lawsuit challenging real estate commission rules

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GREENVILLE, S.C. (FOX Carolina) – A lawsuit filed in the Upstate accuses one of the four big real estate firms of inflating commissions and arguing that the home seller should not be paying the full commission.

Lawyer Matt Shealy said, “The argument is that they have all gotten together, and they have agreed to make the seller, the home seller, pay the buyer’s broker, essentially the person representing the buyer, a commission. And it’s our position, that well, that’s just wrong. It’s wrong to have the seller pay for the guy who’s negotiating against you.”

Lawyers Matt Shealy and Pat Knie filed a lawsuit on behalf of Shauntell Burton, who sold her Spartanburg County home through Keller Williams. “But essentially, they are required having sellers pay buyer’s agents. And by making it public, they’ve made it so that everybody pays a 6% commission, and that buyer’s agent is going to make a set commission,” said Matt.

They believe the seller should be able to negotiate the commission they pay the buyer’s agent.

Realtor Tommy Choi disagrees with the lawsuit. He said, “It’s going to pose a challenge, really, for us to be able to represent the consumers and be able to make sure that we also can have a business and a livelihood to provide for our families.”

He believes the change could add extra stress when buying a home. He said that the change could have a dramatic impact on first-time home buyers who would need to come up with extra cash to buy their home.

The suit calls the National Association of Realtors’ Clear Cooperation Policy the cornerstone of the alleged conspiracy. It cites the National Association of Realtor’s handbook that says real estate agents have a right to know what they’ll be paid before they agree to get involved in buying or selling the home. This means the seller’s broker has to include the commission when posting the listing on the Multiple Listing Service, or M.L.S., within one business day.

Knie said, “In every other sector of our economy, we are a free market country. It’s only in the real estate sector that the big four real estate firms that own all these regional companies have gotten together with the National Association of Realtors and said, We’re going to fix the commissions. You can’t do that under the Sherman Anti-Trust Act. And the real estate industry shouldn’t be treated any different than any other industry in the United States.”

The lawsuit, filed in South Carolina, is similar to one filed in Kansas City, Missouri, where a judge handed down a verdict that said the National Association of Realtors, along with two brokerage firms, were liable for nearly $ 2 billion in damages for conspiring to keep commissions artificially high. The case in Missouri was called Burnett vs. the National Association of Realtors et al.

Those firms are Keller Williams Realty and Homeservices of America. The other two firms named in the Missouri lawsuit are Re/Max and Anywhere Real Estate, formerly known as Realogy, settled out of court. Re/Max and Anywhere Real Estate agreed that they would no longer require agents to be members of the National Association of Realtors.

The verdict of the lawsuit in Kansas City sent ripples across the country.

Choi said, “And my reaction is just pure disappointment because that that verdict, that lawsuit is basically for me as a practicing realtor, it’s an attack on the American dream. And that verdict really put a huge step backwards for consumers and future homeowners. And really, it’s an attack on private property rights.”

While the suit in Kansas City focused on multiple brokerage firms, the one filed in South Carolina focused on only one.

Knie said, “Ultimately, we represent Ms. Burton, and she obviously she sold her home through Keller Williams. Should we get other clients who sold their homes from through one of these other large real estate firms, then we could certainly bring suit, or somebody else could bring suit on their behalf.”

We also reached out to Keller Williams about the lawsuit. A spokesperson responded and said, “We have followed the law regarding cooperative compensation and will vigorously defend ourselves against this lawsuit.”

They also said, “Offers of cooperative compensation remain negotiable and at the discretion of the seller.”

When it comes to the Kansas City lawsuit, the spokesperson said, “We have strong grounds for appeal and are focused on next steps.”

Those interested can read the entire lawsuit filed in South Carolina below.

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