More homebuyers sue to upend how real estate agents get paid

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It’s not just homesellers who are upset about the current real estate commission structure; more and more homebuyers are looking to the courts to upend how agents get paid.

Hanna Holdings, which touts itself as “the largest family-owned and -operated real estate brokerage in the United States,” is now facing an antitrust lawsuit alleging it conspired with other members of the National Association of Realtors to inflate buyer agent commissions, leading to inflated home prices paid by buyers.

While nationwide settlements have been announced in major commission cases brought by homesellers such as Sitzer | Burnett and Moehrl, none cover buyer claims.

On May 31, homebuyer Scott Davis filed a lawsuit seeking class-action status in the U.S. District Court for the Eastern District of Pennsylvania against Hanna Holdings, which is the parent company of the brokerage Howard Hanna Real Estate Services. Davis, a North Carolina resident, bought a home in Greensboro in 2022 using a buyer broker from Hanna Holdings subsidiary Allen Tate Real Estate.

“Plaintiff brings this action against Defendant for agreeing, combining, and conspiring to impose, implement, and enforce anticompetitive restraints that reduce price competition in the markets for buyer-agent services in violation of federal antitrust law and state antitrust statutes, consumer protection laws, and common law,” the complaint says.

“Defendant’s unlawful, anticompetitive conduct causes America’s home buyers to pay inflated commissions for broker services they misrepresent are free, to pay inflated prices for the homes they purchase, and to receive reduced quality broker services.”

The complaint alleges Hanna Holdings violated federal and state antitrust laws by participating “in the establishment, maintenance, and implementation” of several NAR rules alleged to be anticompetitive, including the trade group’s cooperative compensation rule, also known as the Participation Rule, which requires listing brokers to make an offer of compensation to buyer brokers in order to submit a listing to a Realtor-affiliated multiple listing service.

The suit does not name any other defendants but does list several parties as co-conspirators of Hanna, including Anywhere (formerly, Realogy), RE/MAX, Keller Williams, HomeServices of America, Compass, eXp World Holdings, Redfin, Weichert Realtors, United Real Estate Group, Douglas Elliman, NAR, local Realtor associations, Realtor-affiliated MLSs, and franchisees and brokers of Hanna Holdings.

“Defendant is jointly and severally liable for the acts of its coconspirators, whether named or not named as defendants in this Complaint,” the filing says.

The complaint notes that plaintiff’s counsel, Korein Tillery and Lowey Dannenberg, have “brought suit against these co-conspirators … in related litigations.” The law firms represent plaintiffs in three other buyer commission suits known as, Batton 1, Batton 2 and Lutz, after their lead plaintiffs. In March, the Batton 2 plaintiffs dismissed Howard Hanna from their suit without prejudice, meaning the claims could be filed at a later time.

The Davis complaint seeks to represent two classes:

  • “Nationwide Class: All persons who, since December 1, 1996 through the present, purchased in the United States residential real estate that was listed on a NAR MLS.
  • Damages Class: All persons who, since December 1, 1996 through the present, purchased in the Indirect Purchaser States residential real estate that was listed on a NAR MLS.”

“Indirect purchaser states” refers to states that allow indirect purchasers — such as buyers who allegedly pay for buyer agents through commissions paid by sellers — to recover damages under their own antitrust laws. The complaint names 28 such states.

The complaint alleges violation of the federal Sherman Antitrust Act on behalf of the nationwide class, which is asking not for damages but for an order declaring that Hanna Holdings’ actions violated the law.

The complaint also alleges unjust enrichment and violation of state antitrust and consumer protection statutes on behalf of the damages class. The plaintiffs are asking the court for a jury trial and seek damages and/or restitution for the damages class, costs of the suit for the plaintiff, and a permanent injunction stopping Hanna Holdings “from establishing the same or similar rules, policies, or practices as those challenged in this action in the future.”

Hanna Holdings declined to comment for this story.

Read the complaint:

Email Andrea V. Brambila.

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