Archives for March 2019

A group of recent home sellers filed a class action antitrust lawsuit against multiple realty agencies in federal court in Chicago Wednesday, alleging the agencies conspired to develop a commission scheme that significantly inflated the cost of selling their homes.
The 30-page complaint claims the defendants, including The National Association of Realtors, Realogy Holdings and RE/MAX Holdings, conspired “to require home sellers to pay the broker representing the buyer of their homes, and to pay at an inflated amount, in violation of federal antitrust law.”
The plaintiffs allege that the conspiracy has centered around The National Association of Realtors’ “adoption and implementation of a rule that requires all brokers to make a blanket, non-negotiable offer of buyer broker compensation…when listing a property on a Multiple Listing Service,” or MLS.
This makes the market noncompetitive, according to the complaint, since the cost of paying a commission to the buyer broker is a cost that would normally fall on the home buyer in an ordinary, competitive market. And since the defendants have control of the local MLS, which is the key database of region-specific property listings on which most homes in the United States are sold, this gives them unfair leverage and market power.
The lawsuit also notes that “in furtherance of the conspiracy” The National Association of Realtors “advises MLS’s to enter into non-compete agreements with third-party websites, such as Zillow, so that those websites do not become competitive rivals to MLS’s.”
This means that in order for another listing service to compete under these rules, they need to have listings as comprehensive as the popular MLS’s. The inability to list properties for sale in a centralized MLS database excludes a broker or agent from the vast resources an MLS makes available.
The complaint makes the point that The National Association of Realtors requires its members to comply with the buyer broker commission rule as part of its handbook and code of ethics.
For context, the complaint states that “Brokers and their agents who currently profit from inflated buyer broker commissions and total commissions have minimal incentive to participate on an alternative listing service that would general lower buyer broker commissions and lower total commissions.”
“In a typical transaction,” the complaint states, “separate brokers will represent the seller and the buyer of a home. Both the buyer broker and seller broker…are paid a percentage of the property’s sales price.” Usually, the total broker compensation in the U.S. is around five to six percent of the home’s sale price, with half that amount going to the buyer broker.
However, the complaint charges that the “Defendant’s conspiracy has kept buyer broker commissions in the 2.5 to 3 percent range for many years despite the diminishing role of buyer brokers.”
An example in the complaint states that a class member who sold their house for $500,000 paid the buyer broker somewhere in the range of $12,000 to $15,000 in additional commissions due to the conspiracy. In a competitive market, the seller would pay nothing to the buyer broker.
Plaintiffs’ attorney Benjamin Brown, with the Washington, D.C. branch of the Cohen Milstein Sellers & Toll firm, said in a statement that “For years, economists have been sounding the alarm that American home sellers are paying inflated broker commissions.”
“This stems from that fact that to list a home for sale on an MLS, sellers need to agree to play by a set of rules that distort and destroy competition, including requiring home sellers to pay the buyer’s broker,” Brown said.
Christopher Moehrl, a listed plaintiff in the lawsuit, sold a home in the Minneapolis area in November 2017. According to complaint, he listed his home on the local Northstar MLS and, at the end of the transaction, Moehrl had paid 2.7 percentage points to the buyer broker.
The suit claims that the alleged conspiracy violates Section 1 of the Sherman Act and requests that the court award the class a permanent injunction under Section 16 of the Clayton Act “enjoining defendants from continuing to require sellers to pay the buyer broker and from continuing to restrict competition among broker buyers” among other measures.
Representatives with The National Association of Realtors could not be reached after business hours Wednesday for comment.
By: Joe Kelly (Courthouse News Service)
Click here to view source article.

An Arena Deal is Close:

The new Downtown Milwaukee Arena is close to becoming a reality – but not a done deal.  Owners along with Local and State officials have been diligently meeting to finalize the plan.  While the benefits are unquestionable for the City, County and State, a complete funding model is the last piece of the puzzle and requires certainty around the local contribution.  Many ideas have been considered and have amounted to a majority of the arena’s $500 million price tag to be funded.  We are considering an approximate $50 to $100 million gap that will ultimately determine if we build the arena or not.  You have a role in helping make this happen.  The State Legislature and the Governor have committed $150 million to the project.  By contacting your city and county officials, you can show them that YOU support this project and their continued efforts.

Consider the following:

• With the arena, we expect to see more than 10,000 jobs.  Many of those jobs will employ City of Milwaukee residents and include both construction and permanent positions that are propped up by the influx in activity around the construction of the project.
• The arena development will lead to an anticipated $500 million in surrounding development.  Owners chose the adjacent Park East location in order to allow for additional development of much needed office, multi-family and other mixed-use development.
• The arena will bring $730 million in new revenue for the State of Wisconsin in the form of income taxes over 30 years.  If the team leaves, the money will follow.
• The impacts of development will be felt immediately with economic benefits for years to come.
• The development will bring density and connectivity to Downtown Milwaukee through a year-round retail and entertainment design and infrastructure changes that encourage traffic flow.
• Other cities making investments in similar projects have seen increases in permits pulled, traffic to the area and jobs created.

This catalytic project will benefit us all.  Take action NOW to ensure the project is completed.

What can you do?  Contact your local officials to tell them you support the new arena.  Urge them to continue their work to find agreement on the funding.  Officials have been committed to creative solutions and must be encouraged to continue.

• Mayor Tom Barrett’s Office: 414-286-2200 | mayor@milwaukee.gov (sample letter here) | Click Here to E-Mail Mayor Barrett NOW!
• County Executive Chris Abele’s Office: 414-278-4211 | CountyExec@milwaukeecountywi.gov (sample letter here) | Click Here to E-Mail County Executive Abele NOW!

CARW’s Interest in this project:

The Commercial Association of REALTORS is the Voice for commercial real estate in Wisconsin and has vowed to support the Milwaukee Downtown sports and entertainment arena.  The 600 member organization representing many facets of the commercial real estate industry has been a vocal supporter of the project from day one.  Our interest lies in growing the region – making our City and our State an even more desirable and profitable destination for tourists, residents and businesses.   We care about economic development, prosperity and jobs.  Our members work each and every day with business owners and communities making decisions on where to locate – and so often, these entities look to the vitality of an area to make that decision.  They consider entertainment options, housing options, job options, and look closely to the connectivity to other economic drivers like retail and education.

The industry understands that large projects such as the arena, fuel economic development and connectivity, two vital and much-needed aspects for Milwaukee.  While geographically centered in Downtown Milwaukee, the impacts are regional and Statewide.  The construction of the downtown Milwaukee arena is a once in a lifetime opportunity to capitalize on a number of assets including the Milwaukee Bucks and the new ownership.

CARW has been one of a multi-faceted coalition, Play It Forward Wisconsin which includes individuals and organizations supporting this generational project and is committed to ensuring the discussions related to the final funding pieces continue as positively as they have to this point.  Timing is critical as if plans are not firm very soon, Milwaukee is in jeopardy of losing the team and losing out on what is anticipated to be a $1 billion development.  These opportunities, once gone, rarely return.  We are committed to doing everything possible to bring this project to light.

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