Burnett Trial Updates- Week of October 16-20th
Burnett Trial Updates- Week of October 16-20th
NAR went to trial in Kansas City, Mo., this week to present facts, laws about pro-consumer, pro-competition rules.
The National Association of REALTORS®, along with HomeServices of America and Keller Williams Realty, were in court this week in Kansas City, Mo., for the beginning of the trial of Burnett et al v. National Association of REALTORS® et al. NAR will present the facts and law about its pro-consumer, pro-business competition rules that plaintiffs in the case are calling into question.
The trial is expected to go three weeks with a verdict expected by Nov. 10. Plaintiffs in the case allege commission rates are too high, buyer brokers are being paid too much, and NAR’s Code of Ethics and MLS Handbook, along with the corporate defendants’ practices, lead to set pricing. The case covers the Kansas City, Mo.; St. Louis; Springfield, Mo.; and Columbia, Mo., markets.
Here is a recap of what happened in court this week:
Tuesday, October 17, 2023
- Tuesday plaintiffs, co-defendants and NAR outside counsel, Ethan Glass, presented opening remarks in the case of Burnett et al v. National Association of REALTORS® et al.Glass noted that:
- NAR rules are made as part of a very public rule-making process and are persistently and publicly shared and available.
- The compensation rule ensures the buyer broker knows what they will be paid before they commence work and that buyers can afford representation.
- Plaintiffs envision a world where there is no buyers’ agent and buyers would have to go it alone in what is the single most complex and significant purchase most people will make in their lifetime.
- If buyers had to pay out of pocket for representation, that would reduce the number of buyers and the money buyers have to purchase homes from sellers.
- NAR does not seek, track, receive or set commissions for buyers’ or sellers’ agents. Agent compensation is set between brokers and their clients and has always been negotiable at any point in the transaction, as set forth in NAR’s publicly available guidance for members. And those costs are spelled out to buyers and sellers.
- Every plaintiff in this case knew the commission they were paying to their agent and agreed to it in writing.
- Article 1 of the NAR Code of Ethics requires a REALTOR® to “protect and promote the interests of the client.” NAR also has rules that prohibit antitrust behavior.
Wednesday, October 18, 2023
- On Wednesday, three members of the class took the stand to testify as to their experience as home sellers, along with Plaintiff’s other witnesses. In addition, the plaintiffs’ attorneys presented recorded video deposition testimony from three NAR witnesses who discussed NAR MLS guidance, including The Clear Cooperation Policy.
- The Clear Cooperation Policy (CCP) ensures brokers and agents serve the best interest of consumers and promote equal opportunity for all. The CCP advances equal access and opportunity in housing by ensuring listings are widely available and accessible to all consumers and requires MLS participants to submit their listings within one business day of marketing the property to the public. Without the protections from the CCP, consumers would be disadvantaged because agents could refuse to give agents or customers access to those listings.
- The CCP is especially important in competitive markets where properties sell extremely fast, and to help inoculate against circumstances in which properties are publicly marketed to limited groups of people.
- CCP was enacted in response to concerns about confusion in the marketplace about the availability of properties – often to the disadvantage of both home buyers and sellers. Brokers and local MLS broker marketplaces across the country asked NAR to consider a policy reinforcing the pro-consumer, pro-competitive benefits of listing a property in local MLS broker marketplaces.
- Tracey Kasper, NAR President, wrote letter to the editor that the Wall Street Journal published that helped give the fuller story about what’s at stake for consumers.
Thursday, October 19, 2023
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On Thursday, another seller member of the class and an economics professor testified as plaintiffs' witnesses. Some of the discussion centered on the compensation model in local MLS broker marketplaces. For context:
- Agent compensation is set between brokers and their clients and always has been negotiable at any point in the transaction. Those costs are spelled out to buyers and sellers, and NAR doesn’t tell people what to charge. The NAR Code of Ethics also requires members to advise clients about cooperation and amounts of compensation to be offered.
- Despite what may be months or even years of work, agents only get paid when a home is sold, and according to Real Trends(link is external), commission rates have fluctuated over time and are well below where they were in the ‘90s.
- The seller decides what fee they are willing to pay for their broker’s services and how much that listing broker should offer a broker who brings a buyer to close the transaction.
- Because of this practice, sellers have access to the largest possible pool of buyers, and buyers get access to the greatest number of homes for sale in one place all in transparent and efficient virtual marketplaces.
- Buyers also have the greatest chance to receive professional representation to guide them through the financial, legal and community complexities of buying a home in what is for many the single most complex and significant purchase they will make in their lifetime.
- The future of that buyer representation is at risk in this case.
Friday, October 20th, 2023
- Today, the plaintiff's attorneys aim to conclude their case, with the last and final plaintiff home seller expected to testify either today or on Monday. Next week, the remaining defendants, including the National Association of Realtors, Keller Williams, HomeServices of America, BHH Affiliates, and HSF Affiliates, will start presenting their defense.
Stay tuned to Ohio REALTORS Buzz for weekly updates as the trial unfolds.
Read more about NAR’s position, what’s at stake, potential trial outcomes and what you can do to help tell the REALTOR story by clicking here.
