From NAR Legal Counsel Katie Johnson…
Following the Moehrl v. NAR litigation filed in March that challenges the MLS system and the way that broker commissions are paid, two additional lawsuits with similar allegations have been filed against NAR and the same four franchisor firms that were sued in Moehrl. To ensure you have the most accurate information and context, we wanted to share an update.
The two new suits are quite similar to the Moehrl litigation. Plaintiffs in all three cases allege home sellers unfairly pay the commissions of buyers’ brokers. They ignore how commissions are subject to negotiation. And they question the value buyers’ brokers deliver in the home buying and selling process.
Often referred to as copycat lawsuits because the allegations are substantially similar to lawsuits already filed, such litigation is commonly brought by additional law firms whose ultimate goal is to combine their suits with others, in hopes they receive a portion of attorneys’ fees.
NAR remains confident these lawsuits are without merit. They are wrong on the facts, wrong on the law, and wrong on the economics. As each of you know, the MLS system is designed first and foremost with the buyer and seller in mind. It is pro-competitive and pro-consumer. And buyers’ brokers play a very real and critical role in the home buying and selling process. In the best interests of consumers, we will aggressively defend all three lawsuits – and any others that may be filed in the future.
As mentioned in March, we plan to file a motion to dismiss the Moehrl v. NAR case on May 17. In that motion, we will point out the commission offered to the buyer’s broker is determined by the seller and listing broker and is very much subject to negotiation. We will also note that courts have repeatedly held the MLS system promotes competition, increases the efficiency of the market and serves the best interests of sellers and buyers alike. In due course, we will file similar motions to dismiss in the other two cases.
Please note, courts are often reluctant to grant motions to dismiss. If our motion to dismiss is denied, we expect a years-long litigation process. However, we will continue to aggressively defend the right of American home buyers and sellers to continue to have access to a highly efficient home buying market supported by brokers who help navigate a complex transaction.
To further assist you in discussing this matter, should you be asked, we encourage you to ground conversations first in the bigger picture of the value of REALTORS® and the MLS system to both buyers and sellers (see below), and rely on the updated FAQs shared with this message.
REALTORS® provide great value to their clients and communities.
- Every REALTOR® must adhere to a strict code of ethics, which is based on professionalism, consumer protection, and the golden rule of treating others the way we wish to be treated.
- REALTORS® use their unmatched knowledge of local markets and industry expertise to help buyers and sellers navigate and negotiate through what are often the most complicated and lengthy financial transactions of their lives.
- REALTORS® are engaged community members and neighbors, committed to building and enhancing the neighborhoods they serve.
MLSs create efficient markets that benefit home buyers and sellers.
- With the vast amount of real estate information available today, it is more crucial than ever to have trained, local brokers helping consumers navigate their options in order to arrive at the best possible decision.
- MLSs create vibrant markets with numerous opportunities for residential buyers and sellers by enabling cooperation between listing and buying brokers.
- With all of this information in one place, MLSs are able to safeguard and manage market information, allowing all parties to complete real estate transactions with confidence and efficiency.
MLSs are pro-competitive and pro-consumer.
- MLSs benefit both buyers and sellers by providing increased exposure for sellers’ properties while allowing buyers access to all MLS-listed properties through one broker of their choice.
- Because broker commissions are subject to negotiation, this system creates highly competitive, free markets, which ensure consumers receive superior service.
- Over many years, courts across this country have validated the legality, efficacy and value of the MLS system.