National Association of Realtors Loses Key Appeal in Civil Case Impacting Real Estate Commission Structure

U.S. Court of Appeals denies defendant's petition, upholds class certification in the Moehrl case.

In a recent development, the National Association of Realtors (NAR) and other major real estate players have suffered a setback in a civil case that challenges the traditional real estate commission structure. The U.S. Court of Appeals for the Seventh Circuit has denied their request to overturn class certification in the "Moehrl agent commission case." This ruling allows the case to proceed as a class action lawsuit, potentially posing a significant threat to the established commission practices in the industry. Let's delve into the details of this development.

The Moehrl agent commission case was originally filed in 2019 and alleges that commission sharing inflates costs for sellers, violating the Sherman Act. The plaintiffs argue that homebuyers should pay their agents directly rather than having the listing agent pay the buyer's agent. The lawsuit gained class action status earlier this year in March, expanding its impact beyond the initial plaintiffs.

With the denial of the appeal for class certification overturn, NAR and the other defendants are now unable to challenge the decision. This means the Moehrl case will likely proceed to trial as a class action lawsuit. However, it's important to note that a pending request from the HomeServices defendants seeks to resolve some class members' claims through arbitration.

Should the court rule in favor of the plaintiffs in the Moehrl case, it could have significant financial implications. Approximately 20 MLS markets and millions of home sellers could seek reimbursement for an estimated $13.7 billion in damages. If the court awards treble damages, the total figure could exceed $40 billion. The magnitude of this potential financial burden has put pressure on the defendants to consider settlement options rather than face a potentially catastrophic multibillion-dollar damages award.

Wes Shaw, a spokesperson for NAR, expressed disappointment with the ruling but emphasized that the decision does not address the merits of the case. NAR remains confident in their position, asserting that pro-competitive MLS broker marketplaces ensure fairness, efficiency, transparency, and market-driven pricing options for both buyers and sellers.

The defendants, including Anywhere, Keller Williams, RE/MAX, and HomeServices, have either refrained from commenting on the ruling or have not responded to requests for comments on the matter.

The denial of the appeal in the Moehrl agent commission case represents a significant development in the ongoing legal battle surrounding the traditional real estate commission structure. As the case moves forward as a class action lawsuit, the outcome could reshape how commissions are handled within the industry. With billions of dollars potentially at stake, the real estate market will closely follow this case as it progresses through the legal system.