Whether it’s refining your business model, mastering new technologies, or discovering strategies to capitalize on the next market surge, Inman Connect New York will prepare you to take bold steps forward. The Next Chapter is about to begin. Be part of it. Join us and thousands of real estate leaders Jan. 22-24, 2025.
Homie, a once-rising flat-fee brokerage that has since struggled with layoffs, has filed an antitrust lawsuit against the National Association of Realtors and other industry players, saying they “conspired” to prevent innovation and boycott low-commission listings.
The suit was filed Thursday in U.S. District Court in Utah, where Homie is based. In many ways, the suit’s claims mirror those made in other recent antitrust lawsuits: It argues that NAR and other organizations violated the Sherman Antitrust Act, along with other laws; it takes issue with NAR’s now-eliminated Participation Rule, which required listing brokers to offer buyer brokers a commission in order to submit a listing to a Realtor-affiliated MLS; and it asks for unspecified damages. The Participation Rule is at the heart of many other real estate antitrust lawsuits.
TAKE THE INMAN INTEL INDEX SURVEY FOR AUGUST
The language is also similar to that in other cases.
“The anticipated wave of disruptive innovation and entry into the residential real estate brokerage market has not yet occurred because defendants conspired to prevent it,” the complaint in the case argues. “Using their control of the MLS, defendants imposed rules nationwide that erected substantial barriers to entry for new competitors, thereby elevating the price of residential real estate brokerage services well above competitive levels.”
The lawsuit goes on to claim that Homie was subject to both “express and tacit boycotts” that involved real estate incumbents “steering buyers away from” the company’s listings. The complaint also includes a transcript of an alleged text message in which one agent discusses not showing a Homie listing because it was only offering a 1.5 percent commission to the buyer’s broker.
Homie also allegedly received similar messages through the local MLS.
“If you up the commission, I will bring my buyers. If not, I will not,” one message stated, according to the complaint.
“[R]aise Commission to 3%,” another allegedly demanded.
In addition to NAR, the suit names a handful of other defendants: Anywhere, HomeServices of America, RE/MAX, Keller Williams, and the Wasatch Front Regional Multiple Listing Service, which operates the locally popular UtahRealEstate.com website.
News of the new suit was first reported by HousingWire.
Asked for comment, a Homie spokesperson directed Inman to a statement on the company’s website that describes the suit as “”shining a light” on “unjust practices.”
“Our fight is about so much more than savings,” the statement adds, “it’s about every homebuyer and seller who’s had to endure a system that puts profits over people.”
Asked about the lawsuit, an NAR spokesperson said in a statement to Inman that the organization’s “goal is to promote local real estate marketplaces that provide fair and equal access to property information and promote competition while empowering Realtors to serve clients on their homebuying and selling journeys. We will respond to these claims in court.”
HomeServices Executive Vice President Chris Kelly said that “while we cannot comment on the specifics of the complaint given its recent filing, the claim that competition within the real estate industry has been stifled is simply unfounded.”
“The industry has undergone significant evolution over the past decade, with dynamic changes in the competitive landscape,” Kelly continued. “For example, of the top 10 brokerages by closed sides in 2013, only three remain in the top 10 in 2023. Notably, seven of the top 10 brokerages in 2023 were not in that group just 10 years ago. There has been an ongoing and continued introduction of new brokerages, models and platforms, such as iBuying, that have emerged over the past decade.”
Keller Williams and Anywhere both declined to comment.
In addition to alleging a conspiracy, Homie argues in the complaint that NAR’s Clear Cooperation Policy is “exclusionary.” NAR rolled the policy out in 2019 in an attempt to crack down on pocket listings, or homes that are for sale but not entered into the MLS. The policy has been controversial from the get-go and still faces criticism today.
For Homie’s part, it argues in the complaint that Clear Cooperation “tends to prevent the creation of rival listing networks that might arise to challenge the dominance of the NAR-affiliated MLS system.”
Regarding the Participation Rule, the complaint argues that the defendants “understood and intended” the policy to result in steering to properties with higher commissions. The complaint refers to the policy as the “Buyer Broker Compensation Rule.”
The lawsuit comes amid a period of tumult for Homie. The company was once among the most prominent flat-fee brokerages in the U.S. and employed hundreds of people. In 2021, the company announced plans to hire 1,000 buy-side agents.
However, Homie eventually experienced multiple rounds of layoffs and, earlier this year, announced it was moving its agents to contractor status. The company had no CEO at the time. A spokesperson said Homie was undergoing a “shift” and would continue on with only a “handful” of W2 employees.
Antitrust lawsuits such as the one Homie filed have dominated the real estate industry for the last year. Many of those lawsuits were filed by consumers who objected to the way sellers’ and buyers’ agents traditionally shared commissions. The situation led to a jury verdict last fall against NAR and major franchisors, followed by a slew of major settlements from those franchisors.
NAR announced its own settlement in March. The settlement included an agreement to pay $418 million and to enact a variety of new rules. Those rules went into effect on Saturday.
Though Homie’s suit resembles previous cases in many ways, it is also atypical because it was filed by a corporation instead of a homeseller or homebuyer.
The suit ultimately describes the brokerage landscape as a “stagnant industry” and says Homie took legal action to “recover damages suffered as an excluded competitor foreclosed by the Defendants’ conduct.”
Homie additionally argues in the complaint that if it weren’t for the defendants’ actions, the company could have taken market share from real estate incumbents. Instead, the complaint claims, both consumers and the company suffered.
Read Homie’s full complaint here (refresh if you have trouble viewing):
Update: This story was updated after publication with comments from the various parties involved in the suit, and with additional details from the complaint.
Email Jim Dalrymple II
Credit: Source link
