Texas Real Estate Associations and Brokers Face Allegations of Inflating Commissions – Further Challenges for Residential Brokerage Industry
Texas real estate associations and a group of home brokers are facing new accusations of artificially inflating sales commissions, adding to the ongoing legal battles over real estate commissions in the state. This comes after a recent $1.8 billion verdict against the residential brokerage industry. Two home sellers, QJ Team LLC and Five Points Holdings LLC, have filed a prospective class-action complaint in federal court in Sherman, Texas, targeting the Texas Association of Realtors, as well as regional associations in Austin and Houston. Additionally, brokerages Keller Williams and HomeServices of America, owned by Berkshire Hathaway, were named as defendants.
These allegations follow a federal jury ruling in a Kansas City, Missouri case, which found Keller Williams, HomeServices, and the National Association of Realtors guilty of conspiring to inflate commissions paid by home sellers to brokers representing buyers. The jury awarded $1.8 billion in damages to a class of Missouri home sellers. If the verdict is upheld, it could challenge the long-standing practice in the home real estate industry, requiring sellers to pay a commission of up to 6% to the buyer’s broker. Under U.S. antitrust law, the damages could potentially be tripled to over $5 billion.
As for the new Texas lawsuit, the Texas Association of Realtors and other defendants have yet to provide a response or comment. Attorneys for the plaintiffs have also remained silent thus far.
The lawsuit seeks compensation for sellers of Texas residential properties over the past four years who paid commissions to buyer brokers. It highlights the lack of understanding among many sellers regarding the process and reasons behind paying a 3% commission to the buyer’s agent.
Keller Williams, HomeServices, and the National Association of Realtors are planning to contest the Missouri trial verdict, including pursuing appeals, emphasizing their denial of any wrongdoing.
U.S. District Judge Stephen Bough, who presided over the Missouri litigation, has set a post-trial schedule that could potentially keep the case in his court until at least March of next year. To aid in the post-trial process, the defendants have hired prominent appellate lawyers.
The impact of these legal battles extends beyond the specific cases. If the allegations are proven true, it could have profound effects on the real estate industry and the way commissions are structured and paid. Both sellers and buyers may be affected, and the entire brokerage industry could face significant changes.
In conclusion, the residential brokerage industry in Texas faces new challenges as Texas real estate associations and brokers are accused of inflating commissions. With ongoing litigation and the potential for substantial damages, the future of real estate commissions hangs in the balance. It remains to be seen how these legal battles will unfold and what impact they will have on the industry as a whole.
