Sitzer/Burnett Class Action Lawsuit Update
Important Update for all Missouri REALTORS®:
Class Action Notifications to be Distributed
|As the National Association of REALTORS® (NAR) shared previously, class action attorneys will soon begin to notify members of the class in the Sitzer/Burnett class action lawsuit in Missouri. Notices are typically distributed through a range of communications, including emails and paid advertisements, and for this case are expected to begin September 28.
The plaintiffs in this class action lawsuit are raising questions about how broker compensation is paid. Although the judge granted class certification in the case in April, in no way does that reflect on the actual or perceived merits of the plaintiffs’ claims. The ruling was procedural in what is yet to be a lengthy process. As is common and expected, class action attorneys now begin to notify members of the class of their right to opt-out, even before the validity of the case has been decided.
The message of the notices is: The Sitzer/Burnett v. NAR lawsuit may have an impact on the rights of anyone who recently sold a home in or near Missouri using a real estate agent and paid compensation to the buyer’s representative. The targets of these notices will be anyone who sold a home after April 29, 2014, via the MLSs in Columbia, MO, Kansas City, MO, Springfield, MO, or St. Louis (and after April 29, 2015, in Kansas City, KS, or in Illinois near St. Louis).
NAR has been anticipating and preparing for moments like this by providing resources for members, and in their messaging to consumers and in the media.
That said, it’s important to remember that consumers often disregard these class action notices since there’s no action for them to take unless they opt out of the class, which is rare. Therefore, we want to calibrate our response to avoid unnecessarily making this a further distraction from serving our clients and consumers. The Q&A below provides more background.
Should you receive questions from consumers about broker services and commissions, NAR has created a simple consumer website specific to these class action cases: realestatecommissionfacts.com. Should you receive media inquiries, please send those directly to Mantill Williams, Vice President of Public Relations and Communication Strategy for NAR: firstname.lastname@example.org or 202-383-1128.
The question in the case of Sitzer/Burnett v. NAR is why brokers representing home sellers often pay the compensation of brokers representing home buyers. This practice underpins local broker marketplaces where brokers compile centralized listings of all properties for sale and invite other brokers to cooperate in finding a buyer.
The reason this practice has worked so well for so long is because it provides the greatest economic benefits for both buyers and sellers; creates greater access and equity for first-time, low/middle-income and all buyers; and enables minority and small-business brokers to compete with larger brokers. From 2010 to 2020, local broker marketplaces enabled 6.3 million more people to realize the American Dream of Homeownership and helped homeowners build $8.2 trillion of housing wealth.
Thank you for your help in sharing the facts about real estate commissions.
What’s the background on the Sitzer/Burnett case?
Three years ago, NAR and four corporate defendants were sued in class action lawsuits filed in Illinois and then Missouri alleging that home sellers are damaged when their listing broker offers to compensate the buyers’ representative. The lawsuits falsely allege that various NAR guidelines and our members’ adherence to those guidelines have led to artificially fixed and inflated commissions being paid to real estate professionals.
What’s NAR’s position?
The pro-competitive, pro-consumer local broker marketplaces serve the best interests of buyers and sellers. Sellers making offers of compensation to buyer brokers gives first-time, low/middle-income and all homebuyers a better shot at affording a home and professional representation. As you know, the free market organically establishes commission costs within local real estate markets based on service, consumer preference and what the market can bear.
Where does the case stand now?
In April, a federal judge in Missouri granted class certification in the case, but this in no way reflects on the actual or perceived merits of their claims. The ruling was procedural in what is yet to be a lengthy process. As is common and expected, class action attorneys now begin to notify members of the class of their right to opt out of the class via direct mail, advertising and press stories, even before the validity of the case has been decided.
Who is in the class?
Generally speaking, consumers who used a real estate broker or agent to sell a home between April 29, 2014, or later in Missouri (April 29, 2015 or later in Illinois or Kansas). Sellers must have listed their home for sale on one of the following MLSs: Heartland MLS, MARIS MLS, Columbia Board of REALTORS® MLS, or Southern Missouri Regional MLS. Most of which are in Columbia, MO; Kansas City, MO; Springfield, MO; or St. Louis, MO and used an agent from Keller Williams, RE/MAX, Realogy (under its brands Coldwell Banker, Century 21, Sotheby’s, or Better Homes and Gardens) or HomeServices of America (under its brands ReeceNichols or Berkshire Hathaway).
What should I do if I get questions from clients about whether to opt out of the class?
First, it’s important to understand that all eligible class members (see above) are automatically included unless they ask to be excluded. If they opt out, they will be excluded from any benefits the class may receive, but still maintain their right to sue the defendants separately about the same legal claims in this lawsuit. If you are asked to advise about opting out, you should tell the person inquiring to consult an attorney.
Should members/NAR be concerned about this class action lawsuit?
We expect the class action to gain some attention and it’s possible current and/or former clients may reach out for more information. It is important to recognize these promotional actions by the plaintiffs are expected, and we are more than ready to defend ourselves from these baseless claims and expect to win. You can also direct consumers with questions about the Sitzer/Burnett case to www.realestatecommissionfacts.com.
What is NAR doing to combat the class action attorneys’ communications about brokerage services and commissions?
We continue to maintain engagement with the media and key stakeholders, including stories about REALTORS® as experts, updates to www.realestatecommissionfacts.com and competition.realtor and keeping our point of view in the forefront through various stories that run in media.
What can members do?
We highly encourage the continued use of Buyer Representation Agreements in order to formalize a working relationship with clients and detail what services consumers are entitled to and what the buyer agent expects from their client in return. We also encourage members to remind clients that there are no fixed commissions and that they are negotiable at any point in the transaction.
To learn more about this matter, visit competition.realtor. Should you have specific questions, reach out to the Chief Executive Officers of these Multiple Listing Services:
Lastly, to reiterate two points above, if you are asked to advise about opting out, tell the person inquiring to consult an attorney; and, direct any questions from the media to Mantill Williams at email@example.com or 202-383-1128.
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