Discount residential real estate brokerage Homie, which has struggled in recent months amid a slow market, filed a lawsuit against the National Association of Realtors and some of the largest real estate franchises in the country on Thursday.
The firm alleged NAR, Keller Williams, RE/MAX, Utah’s local multiple listing service and a handful of other entities violated federal antitrust laws through an illegal boycott of its business model.
The lawsuit by the Utah-based company became only the latest threat to some of the biggest players in residential real estate, and was filed in the wake other litigation that resulted in sweeping changes to the rules real estate agents follow, which took effect last weekend.
Homie alleged in its complaint that the real estate companies and NAR conspired to block competition that would have provided homebuyers and homesellers more affordable options for buying and selling real estate.
“Defendants imposed rules nationwide that erected substantial barriers to entry for new competitors, thereby elevating the price of residential real estate brokerage services well above competitive levels,” the company wrote in its complaint.
The complaint comes four months after Homie laid off employees and converted its remaining agents from full-time, W2 employees to independent contractors in April amid a slow sales market and the challenges it said it faced from its competitors’ practices.
“Had Homie been allowed to compete with Defendants and their co-conspirators, it would have gained market share at Defendants’ expense while posing a competitive check on Defendants’ ability to charge exorbitant prices for brokerage services to consumers,” Homie said. “By excluding Homie and other new entrants, Defendants, in a single stroke, harmed competition, harmed consumers, and caused injury and damages to Homie.”
Homie offered buyer brokers 1.5 percent at a time when real estate agents were more accustomed to earning closer to 2.5 percent to 3 percent for representing a buyer in a transaction.
In fact, NAR and real estate companies were found by a jury to have conspired to keep real estate agent commissions higher than they otherwise might be after a trial in federal court in Missouri last October.
NAR agreed to settle the litigation in March and agreed to enact changes to the way real estate is bought and sold. All told, NAR and real estate companies have agreed to pay nearly $1 billion to settle the litigation, a figure that is expected to rise.
Starting Aug. 17, real estate agents working with buyers have been required to obtain a signed contract before touring homes with their prospective clients. Those contracts have to specify how much the agent’s brokerage would be paid for representing them in a sale.
Sellers can still offer to pay for the buyer’s broker, which has been customary for decades. But they aren’t compelled to, and buyers could be on the line to either pay their agents directly or back out of a sale under the changes.
Homie alleged it was unfairly boycotted by major players in the industry and prevented from grabbing a stronger foothold.
The commissions for real estate agents are expected to decrease as a result of the separate antitrust litigation. Financial analysts expect the total number of real estate agents — there are currently over 1.5 million Realtors — to fall substantially if that happens.
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