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California Realtor groups hit with copycat commission rates lawsuit by Bay Area home seller

Complaints that Realtors maintain anti-competitive commission practices hit California with the filing of a federal “copycat” lawsuit in the Bay Area on Dec. 8. (File photo by Nam Y. Huh/Associated Press)

Five weeks after a Missouri jury issued a $1.78 billion judgment finding that Realtors charge anticompetitive commission rates, a “copycat” lawsuit has been filed in the Bay Area making similar claims.

A Marin County home seller filed the antitrust complaint in federal court this month seeking unspecified damages from the National Association of Realtors, several local Realtor associations, and a north-Bay Area multiple listing service. The complaint also sought damages from five of the nation’s leading real estate brokerages.

The lead plaintiff, Christina Grace, paid a $50,358 commission to sell her home in 2020, “a rate higher than it would have been in a competitive market,” the lawsuit said.

The proposed class-action case also seeks to end the requirement that sellers pay commissions to their buyers’ agents — a long-standing practice that allegedly keeps broker commissions in the 5-6% range despite technological advances, the suit said.

Currently, NAR requires sellers to specify buyer-broker compensation as a condition for listing their properties on an MLS database.

The practice prevents buyers from negotiating compensation directly with their own agents, leading to higher commission rates, the lawsuit alleges.

“To gain the cooperation of buyer brokers, selling brokers are incentivized to offer a higher buyer broker commission,” the lawsuit states. “In a competitive market, the cost of buyer broker commissions would be paid by home buyers, and buyer brokers would compete with one another, … potentially offering a lower commission rate.”

The Missouri case was one of two key antitrust lawsuits filed against NAR and top brokerages, with another proceeding in Illinois. The U.S. Justice Department is also studying possible antitrust action over real estate commissions.

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