Jury sides with home sellers in commissions trial
After less than three hours of deliberation, the jury ruled for the plaintiffs in the landmark Sitzer/Burnett trial, awarding nearly $1.8 billion.
- The Sitzer/Burnett trial focused on whether a conspiracy was taking place to keep commission fees for buyer agents inflated.
- While it only involves home sellers in Missouri, the trial has led to a national conversation on whether sellers should have to pay buyer agent commissions.
- An appeal is likely in this case, and other similar class action lawsuits are ongoing.
- Immediately following the verdict, plaintiffs' attorney Michael Ketchmark announced his intention to file a new nationwide suit naming additional defendants.
KANSAS CITY, Mo. — After less than three hours of deliberation, the jury ruled for the plaintiffs in the landmark Sitzer/Burnett trial, awarding full damages of nearly $1.8 billion.
The trial, which lasted more than two weeks in U.S. District Court, was a battle between home sellers in Missouri and real estate industry titans: The National Association of Realtors, Keller Williams and HomeServices of America.
"Today was a wonderful day. It's been a long fight for the last four-and-a-half years," said Michael Ketchmark, lead attorney for the plaintiffs, after the verdict was read. "The time has come for the corporations to return the homes to the home sellers."
Not content to limit the lawsuit to the named defendants in Missouri, Ketchmark immediately filed a similar class action suit against NAR and seven major brokerage companies: Compass, eXp, Redfin, Howard Hanna Real Estate, United Real Estate, Douglas Elliman and Weichert Realtors.
"Our goal is to take the message from Missouri across the nation and return the process of selling homes to the fair market and allow people to reap the benefits of technology and to stop this conspiracy from affecting people in our country. It's been a glorious day," Ketchmark said.
Defendants weigh in, express disappointment
A spokesman for Keller Williams said that while they disagree with the verdict, they respect the jurors who decided the case based on the issues in front of them.
"We are disappointed that before the jury decided this case, the court did not allow them to hear crucial evidence that cooperative compensation is permitted under Missouri law,' said Darryl Frost of Keller Williams. "This is not the end. Keller Williams followed the law regarding cooperative compensation and stands by the evidence presented on the 100-year-old practice of sellers' agents offering commissions to other agents who help market and sell homes. Looking forward, we will consider all options as we assess the verdict and trial record, including avenues of appeal."
NAR spokesperson Mantill Williams said the association will appeal the verdict and asked the court to reduce the damages awarded by the jury.
"We stand by the fact that NAR's guidance for local MLS broker marketplaces ensures consumers get comprehensive, equitable, transparent and reliable home information and that brokerages of any size, service or pricing model get a fair shot at competing. We will continue to focus on our mission to advocate for homeownership and always put consumer interests first," Williams said in a written statement, adding that It will likely be several years before this case is finally resolved.
A spokesperson for HomeServices of America said in a written statement that they were disappointed by the ruling and also intend to appeal.
"Today's decision means that buyers will face even more obstacles in an already challenging real estate market and sellers will have a harder time realizing the value of their homes. It could also force homebuyers to forgo professional help during what is likely the most complex and consequential financial transaction they'll make in their lifetime.
"HomeServices of America believes that home buyers and sellers deserve fairness and transparency. Buying or selling a home is a complicated process, and it's essential to have a knowledgeable, experienced advocate to support buyers and sellers throughout their journey and protect their interests. Cooperative compensation helps ensure millions of people realize the American dream of homeownership with the help of real estate professionals," according to the statement.
Jury unanimously responds 'yes' to questions around conspiracy
The sellers alleged that NAR and others participated in anticompetitive practices by forcing them into a system where they pay a commission that is split between buyer and seller agents. That led to inflated fees that hover around 6% of the selling price, according to the plaintiffs, who sought nearly $1.8 billion in damages.
In announcing the verdict, Judge Stephen Bough said the jury unanimously said yes to four of the five questions on the ballot and filled in the full amount of damages requested by the plaintiffs for the fifth question. The first question was whether a conspiracy existed, followed by whether it impacted commission fees, and whether the defendants voluntarily or knowingly acted on this conspiracy.
Both sides appeared to have a sense of how the case was decided as they were called in to hear the verdict. Ketchmark, his family and plaintiffs were seen sharing hugs, while there were plenty of long, glum faces from the defense.
Attorneys leaned into emotions, rationality at various times
The trial featured plenty of drama, particularly from the plaintiffs' attorney, Michael Ketchmark, who used a variety of tactics to attack the defendants on the stand — some of which went too far, in the eyes of the court. Ketchmark was reprimanded for mentioning a related Department of Justice investigation and for introducing a "vulgar" video about commission sales tactics, moves the defense said were grounds for a mistrial. The judge disagreed, but instructed the jury to ignore the evidence in question.
The defense attorneys took a more methodical approach overall, repeatedly saying that there was no conspiracy. They also pointed out that no "smoking gun" existed, such as an email or other type of communication indicating that the defendants discussed keeping commission fees at a specific level — without such evidence, the defense said, the plaintiffs failed to meet their burden of proof.
Industry leaders on the stand
Some of the biggest names in real estate were called to present testimony during the trial. Gino Blefari of HomeServices of America, Gary Keller of Keller Williams and Bob Goldberg of NAR were among those who provided live testimony, sticking to a similar script — that there was no conspiracy and that they didn't talk to each other about commission fees.
Plaintiffs argued price fixing, steering are occurring
Training materials for agents were an important pillar of the plaintiffs' case, with their attorneys introducing a variety of slides that seemed to suggest 6% was the standard commission rate, and something agents should try to maintain — an example of price fixing, they argued. The defense countered that the commission is always negotiable and the 6% figure shown in training materials was merely an example.
To try and further support their claim of price fixing, plaintiffs also called on a former member of NAR's Professional Standards Committee, who said she sent an email to committee leaders in 2012 detailing her concerns about antitrust law violations. In the email, she said, she referred to traditional compensation practices as "the ultimate form of restraint of trade" and a representation of price fixing in the free market. The committee did not investigate these concerns, according to testimony.
Steering, the idea that buyer agents would steer potential home buyers away from homes that offered lower commission rates, was also a major topic of discussion. The plaintiffs argued that the current compensation system encourages steering, with one witness asserting that all homes in Missouri with a listed offer of compensation on the MLS were "suffering the effects of steering." The defense countered that the plaintiffs offered no evidence of this, and witnesses for the defense generally said steering isn't common, particularly when inventory is so low and an agent's credibility is at stake.
Data and technology in the spotlight
Perhaps surprisingly, technology also became a battleground for the two sides. Witnesses for the defense argued that the internet — and the subsequent rise of home search portals like Zillow — have made finding a home more difficult because they don't always have accurate information, and they make it harder for buyers to come to a decision. The plaintiffs attacked this assertion, calling it "nonsense."
Both sides also leaned heavily on data during testimony. The plaintiffs called on expert witnesses who pointed to economic data to support claims of a conspiracy to keep fees inflated, but the defense said no direct evidence existed. The defense later brought in their own economic expert, who disputed the conclusions and presented his own findings; during cross-examination, the plaintiffs' attorney attempted to undermine his credibility.
Want to know more? Follow all of our Sitzer/Burnett trial coverage here.