New Illinois Lawsuit Questions Real Estate Algorithm Pricing

Illinois homebuyers have filed a federal antitrust lawsuit against three national real estate brokerages—Equity Real Estate, HomeSmart International, and Fathom Realty—accusing them of collusion and anti-competitive behavior. According to Real Deal, this lawsuit centers around the broker commission practices promoted by the National Association of Realtors (NAR), which the plaintiffs argue violate fair competition principles.

The lawsuit’s plaintiffs, identified as Dawid Zawislak and Michael D’Acquisto, allege that the brokerages and their affiliates engage in practices that restrict competition among real estate professionals. Zawislak purchased a home in Chicago in 2021, while D’Acquisto made his purchase in Bartlett, a west suburban area, in 2022. They are seeking class-action status and requesting a jury trial as part of their legal action.

Despite NAR’s recent efforts to overhaul its commission policies following a prior settlement in the Sitzer/Burnett case, the lawsuit highlights ongoing concerns about the practices of major residential brokerages in the wake of these reforms. The complaint accuses NAR, alongside several multiple listing services and affiliated brokerages and realtor associations, of being co-conspirators in perpetuating these commission structures.

This lawsuit is not isolated; it adds to a series of antitrust challenges that have emerged in Illinois. Two additional lawsuits—known as Batton 1 and Batton 2—have also targeted various national brokerages since their initiation in 2021. These cases, led by plaintiff Mya Batton, have faced hurdles, particularly concerning jurisdictional issues that led to the dismissal of claims against several brokerages.

At the heart of this latest lawsuit is the allegation that NAR’s commission policies essentially forced brokers into agreements that stifled competition. Before the August changes, NAR mandated that listing agents offer a commission—usually between 5% and 6%—to the buyer’s agent, a practice that the plaintiffs claim discouraged competitive pricing. Furthermore, the plaintiffs contend that NAR’s previous policies allowed buyer brokers to filter property searches based on commission amounts, incentivizing them to promote properties with higher commissions.

As these legal battles unfold, the scrutiny on the practices of national brokerages intensifies, raising questions about the future of real estate commission structures and their impact on homebuyers across the country.

Source: Real Deal