National Association of Realtors Faces Potential Billions in Lawsuits Following $1.8 Billion Verdict
In the wake of a landmark $1.8 billion verdict against the National Association of Realtors (NAR) and several residential brokerages, private plaintiffs are gearing up to launch a wave of new lawsuits that could potentially reach into the hundreds of billions of dollars.
This legal onslaught poses a significant risk to the real estate industry as it grapples with additional scrutiny of its commission practices, per Bloomberg Law.
Last week, a Missouri jury handed a resounding victory to plaintiffs who accused the NAR and residential brokerages of colluding to inflate brokerage commissions. The case revolved around allegations that the trade group compelled home sellers to make inflated payments to buyers’ brokers, resulting in a costly burden for sellers.
The success of this case has now set a precedent, emboldening attorneys who predict a flood of follow-on lawsuits against the real estate industry. These lawsuits threaten to reshape how the industry operates and potentially alter the compensation structure for real estate agents.
One of the most significant of these suits, a proposed class action filed last week, seeks to represent 31 million home sellers across the United States who allegedly paid inflated commissions to brokers. The lead attorney for the plaintiffs, Mike Ketchmark of Ketchmark and McCreight, is seeking damages in excess of $100 billion from the NAR, Compass Inc., and Redfin Corp. Another class action in Illinois, scheduled for trial next year, is pursuing damages as high as $40 billion.
The influx of litigation aimed at the NAR and various brokerages comes at a challenging time for the real estate industry. Interest rates hovering around 8% have already diminished housing supply, and these lawsuits threaten to further disrupt the market.