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Real Estate - Commercial

Local Agents Weigh In On Lawsuits

By Cece Nunn, posted Nov 17, 2023
Realtors in the Wilmington area are watching the outcomes of recent national lawsuits that could have industrywide effects.

At the end of October, a jury awarded $1.78 billion in damages in a class action lawsuit against the National Association of Realtors (NAR), Keller Williams and HomeServices America. According to news reports, the Kansas City jury found the NAR and the companies conspired to keep commissions higher than necessary. 

“The National Association of Realtors believes that the jury reached an outcome that is neither supported by the law nor the facts presented in the case and plans to appeal,” said Trey Wallace, president of Wilmington-based Intracoastal Realty Corp. “Keep in mind that this lawsuit was brought in Missouri, which has very different real estate and agency laws than North Carolina.

“Realtors in North Carolina are in a better position compared to Missouri and many other states because we already have rock-solid buyer agency agreements that have been required as a part of North Carolina transactions for many years.”

According to Cape Fear Realtors, CFR members have not seen significant impacts from the Oct. 31 outcome because the verdict did not require a change in practice.

Steve Mitchell, 2023 president of Cape Fear Realtors, said NAR for many years has emphasized the use of buyer representation agreements, “which maximize transparency by putting all agreements in writing to ensure clarity and understanding, as all members are obligated to do pursuant to the NAR Code of Ethics. These agreements formalize the professional working relationship with clients and detail what services consumers are entitled to and what the buyer agent expects from their client in return.”

Mitchell said commissions are negotiable and set between brokers and clients.

Wallace said the state association, NC Realtors, “has a dedicated team of experienced lawyers and other volunteers who work each year to ensure the forms we use in our day-to-day business are relevant and protect our clients’ best interests in their transactions.”

But the Kansas City decision wasn’t the only lawsuit to trigger speculation about industry changes. On Oct. 6, Anywhere, the parent company of Coldwell Banker, announced that it settled an antitrust case for $83.5 million. 

That settlement, which still needs approval from the judge, impacts Wilmington-headquartered Coldwell Banker Sea Coast Advantage, officials said, “by protecting all Anywhere brands and its agents from being sued” for the same reason, according to Denise Kinney, president of Sea Coast. 

The Anywhere release said Anywhere officials don’t expect the terms of the proposed settlement “to have a material impact on its results of operations, liquidity, or cash flows.” 

The release also provided a detailed picture of Anywhere’s brand reach.

“The proposed settlement includes injunctive relief requiring practice changes in Anywhere Advisors, the Company’s owned brokerage operations, which includes Coldwell Banker Realty, Corcoran, and Sotheby’s International Realty, for a period of five years following final court approval,” the release stated. “Anywhere has also agreed to recommend and encourage these same practice changes to its independently owned and operated franchise network across the Better Homes and Gardens Real Estate, CENTURY 21, Coldwell Banker, Corcoran, ERA, and Sotheby’s International Realty brands. The practice changes are consistent with positions for which Anywhere has previously indicated support in the industry.”

According to the release, practice changes include: 
 • Anywhere will prohibit company-owned brokerages and their affiliated agents from claiming buyer agent services are free.
 • Anywhere will require company-owned brokerages and their affiliated agents to include the listing broker’s offer of compensation for prospective buyers’ agents as soon as possible in each active listing, consistent with MLS rules and/or capabilities of third-party website operators.
 • Anywhere will prohibit company-owned brokerages and their affiliated agents from using any technology (or manual methods) to sort listings by offers of compensation unless requested by the client.

But the Anywhere settlement and previous NAR outcome aren’t the end of the story. A new federal class-action lawsuit filed Nov. 6 in South Carolina alleges the NAR and Keller Williams violated antitrust laws, causing inflated home prices, the Associated Press reported.

Kinney said Nov. 9 that Sea Coast agents weren’t seeing any significant impacts from the recent lawsuit news.

“We do have clients asking questions,” she said. “Our agents have the tools and resources to address any concerns or questions they may receive. As always, our focus has been and will continue to be fair and honest representation to our clients.”

At the heart of some of the criticism is access to multiple listing services. Local MLS access is granted by membership in CFR and NAR, which means “membership is needed insofar as access to the MLS is important to conduct business as a real estate broker in a clear and cooperative manner and to maximize exposure for our seller clients,” Wallace said. 

Kinney said, “Being a member of these associations turns agents into Realtors. There is a difference. Realtors are held to higher standards in our industry and must abide by a Code of Ethics.”

Wallace said the practice of offering compensation to Realtors “has historically ensured efficient, transparent and accessible marketplaces where sellers can sell their home for more and have their home seen by more buyers while buyers have more choices of homes and can afford representation.”

He said when broker services are rendered in this way, it prevents the buyer from taking on a greater cost burden. 

“That would be especially devastating for people that are getting loans or have a lower income,” he said. “Most lenders do not allow commissions to be financed by a mortgage, and if buyers had to pay compensation directly, it would add thousands of dollars to an already costly transaction. … Leaving a large pool of buyers in the cold without proper representation is a deterioration of this ecosystem, not an advancement, as I have seen some people argue in the media.”
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