For many real estate professionals, 2023 was the year of the commission lawsuit, and the year could not end without one last copycat suit.
Filed last Wednesday in the Western District of Missouri, the Umpa suit, named after its lead and only plaintiff Daniel Umpa, accuses the real estate industry of allegedly colluding to artificially inflate real estate agent commissions.
Although the suit was filed in the same district as the Sitzer/Burnett commission suit, which went to trial in Oct. 2023, Umpa is a resident of Maryland and the lawsuit is in regards to the sale of two homes, one in Maryland and one in Ohio. Umpa sold his Ohio home with Redfin and his Maryland home with Compass, and the suit states that he “paid a substantial buyer-broker compensation,” in both transactions.
The list of defendants in the lawsuit naturally include Redfin and Compass, as well as the National Association of Realtors, Keller Williams, HomeServices of America and its affiliates, eXp World Holdings and eXp Realty, Weichert Realtors, Howard Hanna, HomeSmart International, Douglas Elliman, The Real Brokerage, United Real Estate, At World Properties, Real Broker, and Realty One Group.
The complaint argues that the NAR and the brokerage defendants collude “to impose, implement and enforce anticompetitive restraints that cause home sellers to pay inflated commissions on the sale of their homes, in violation of federal antitrust law.”
According to the filing, like the other copycat lawsuits, central to the lawsuit is NAR’s Participation Rule, which requires listing brokers to make a blanket offer of compensation to buyer’s brokers in order to list a property on the MLS.
“Because this blanket offer must be made available to every buyer-broker using the MLS (i.e., virtually all buyer-brokers) and can be compared by the buyer-broker with the blanket offers that every other seller must post on the MLS, the Rule creates tremendous pressure on sellers to offer a high commission that has long been maintained in this industry so that buyerbrokers will not “steer” buyers away from their property and to properties offering higher buyerbroker commissions,” the complaint argues.
The lawsuit is seeking class action status for everyone in the U.S. who sold a house on an MLS and used an agent from one of the brokerage defendants between Dec. 27, 2019, and the present. However, the proposed class definition includes exceptions for properties listed by Keller Williams and HomeServices of America based on when the sale occurred, and which MLSs were involved.
Batton 1 and Batton 2, which were filed by homebuyers in Illinois, are the only other commission lawsuits whose proposed class includes the entire country.
“The cooperative compensation practice makes efficient, transparent, and accessible marketplaces possible,” Mantill Williams, NAR’s vice president of communication, wrote in an email. “Sellers can sell their home for more and have their home seen by more buyers while buyers have more choices of homes and can afford representation. The National Association of Realtors will respond to this complaint in court.”
A spokesperson for eXp wrote in an email that the firm had been observing the ongoing antitrust litigation against its competitors for the past few years.
“We are committed to upholding fair and transparent practices compliant with law and we already have mechanisms and a plan in place that enables buyers and sellers to negotiate commissions,” the spokesperson added. “Our agile business model allows us to make adjustments seamlessly and effectively, no matter the jurisdiction.”
Similarly, a spokesperson for HomeServices of America stated that its “business practices are, and have always been, designed with the utmost consideration for consumer welfare and promoting a fair and transparent process for buyers and sellers.
“We will continue to seek to protect those we represent and defend our position in the appropriate legal forums, including with this new case which is duplicative of the others previously filed,” the statement concluded.
Compass and Douglas Elliman did not wish to comment, and the other brokerages did not return a request for comment.
Umpa is demanding a jury trial, injunctive relief and an undisclosed amount of damages.
