New homebuyer commission suit hits the court docket

NAR is not named as a defendant in the suit. Rather, the trade group along with “NAR MLSs, NAR-affiliated brokerages and Realtor associations” are named as co-conspirators. Additionally, the suit alleges that the defendants are all “heavily intertwined with NAR.” 

“NAR frequently names brokers from large residential real estate firms such as Defendants and their co-conspirators to serve in leadership positions concurrently with their position as real estate brokers. For example, Vanguard’s Nina Dosanjh serves as a Director for the NAR and has chaired the NAR’s Federal Technology Policy Committee,” the filing states. “Similarly, Defendants’ brokers frequently serve in leadership roles in REALTOR associations in Illinois.”

Cwynar is being represented by Colin Primo Cuscraini, an attorney at McGuire Law PC. This is the first homebuyer commission suit not filed by attorneys at either Freed Kanner London & Millen or Korein Tillery.

According to the complaint, which was filed in U.S. District Court in Chicago, the brokerage defendants engaged in and facilitated “a conspiracy that has perpetuated anticompetitive measures in the real estate broker services market within Illinois and nationwide.”

“Defendants and their co-conspirators adopted and implemented anticompetitive practices that harmed consumers and homebuyers by, among other things, increasing and artificially sustaining the commissions paid to real estate brokers as part of residential real estate transactions,” the complaint states.

Prior to the NAR settlement business practice changes going into effect last year, Cwynar claims that NAR’s Participation Rule and other stipulations “prohibited buyer-agents from making purchase offers contingent upon a reduction of the buyer-agent’s commission.” He also claims there was a prohibition on “the disclosure to buyers of the commission to be paid to buyer-agents.”

“The result is that the amounts of buyer-agents’ commissions became artificially elevated, and this fact was opaque and ill-understood by the homebuyers whose home purchases funded those commissions,” the complaint states.

“These anti-competitive rules have permitted Defendants and their co-conspirators to sustain buyer-agent fees at artificially high levels which would not exist in a competitive marketplace.”

The complaint also alleges that agents routinely steered clients to properties offering higher commissions as NAR-affiliated MLSs allowed agents to filter searches for properties by commission amounts. 

“Naturally, this conflict of interest led to buyer-agents promoting properties that would maximize their commission, which lowered demand for properties that offered lower commissions and thus eliminated competition from discount brokers,” the complaint states.

“This harmed homebuyers, who received diminished, biased services from buyer-agents who steered homebuyers toward purchasing homes that offered high commissions.”

The Real Brokerage and Realty ONE Group, each of which have settled the home seller commission lawsuits, declined to comment when reached by HousingWire. The suit’s other defendants did not return requests for comment. 

The suit is seeking class-action status. Cwynar is demanding a jury trial, damages and a permanent injunction enjoining “the defendants from maintaining or reestablishing the same or similar anti-competitive rules, policies, or practices as those challenged in this action in the future.”