A staggering $1.7 billion jury award to homesellers over inflated real estate broker commissions in Missouri has come roaring home to New York City.
In a class-action suit filed Monday in U.S. District Court in Manhattan, the Real Estate Board of New York (REBNY) and more than two dozen brokerages and companies are accused of conspiring to artificially inflate commissions paid to agents who help sell residential real estate in Manhattan, Reuters reports. Among the brokerages named in the lawsuit are some of the biggest names in New York City real estate, including Douglas Elliman, the Corcoran Group, Compass, Brown Harris Stevens, Halstead, and Sotheby's.
The plaintiff in the New York lawsuit is Monty March, who says he paid inflated commissions when he recently sold property on Manhattan's Upper East Side. (Property records show he sold an apartment there for $5.6 million in July 2022.) March contends that sellers using REBNY's listing service should not pay 2.5% to 3% commissions to buyers' brokers given how commissions are lower in "fully competitive" markets such as Brooklyn, where they are negotiated separately and average 1%.
REBNY General Counsel Carl Hum said the group was reviewing the complaint with its lawyers, and was confident its listing service's practices and procedures "abide by all relevant laws." Starting on Jan. 1, 2024 REBNY will begin requiring sellers, not their brokers, to directly pay any commissions to buyers' brokers in an effort to promote "transparency and consumer confidence in the residential marketplace."
March's lawsuit seeks damages for sellers of Manhattan residential property in the last four years who paid buyer brokers' commissions under REBNY rules. The lawsuit follows an Oct. 31 verdict by a federal jury in Missouri awarding home sellers $1.78 billion, in a similar case against the National Association of Realtors and the brokerages Keller Williams and HomeServices of America. That verdict, which a judge can triple to more than $5.3 billion, could upend decades-old practices that require sellers to pay commissions to buyers' brokers.
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