A federal jury today agreed with the plaintiffs that organizations such as Keller Williams, Berkshire Hathaway HomeServices of America, and the National Association of Realtors had violated the law by conspiring to inflate commission rates.

Their attorney then filed an additional lawsuit against the other large brokerages, including Compass.

There’s enough for several blog posts here! Let’s begin with the first problem:

In this trial, the defense was pathetic, and the realtors will likely lose in appeals court too.

The defense attorneys rode in cocky and notched it up on the first day when they said the plaintiffs have the burden of proving their case…..and the defense may not even call a witness! Then when they did call a witness, it just had to be the CEO of NAR, Bob Goldberg, whose arrogance may be unrivaled.

He offered the following:

The CEO returned to the stand on Tuesday to face cross-examination from plaintiff party’s attorney Michael Ketchmark. During the cross, Ketchmark tried making an analogy — not for the first time — between the allegations facing NAR and the hypothetical of chicken producers inflating prices.

Goldberg argued the analogy was “apples and oranges” because real estate agents offer a service, not a product. When Ketchmark continued his analogy and pressed Goldberg on whether he needs an explanation of antitrust law, the CEO responded, “No. I need you to explain to me the chicken law.”

What the defense never considered was that the jury came into the courthouse with the same biases/prejudices that every American has considered – realtors are overpaid, and it’s a racket.  The industry never bothers to educate the public, so you can’t blame the jurors or anyone else for thinking that we need to be taken down a notch…or two.

When Bob made his crack about chicken law it had to make every juror hate him even more. Sure, it was kinda funny but this is no time for wisecracks when billions of your members’ money is on the line!

Gary Keller is a nice guy but his soft-spoken testimony didn’t sway the jury – and you can blame his defense attorneys for asking questions that were too lame and indifferent:

Keller’s was the final testimony in the defense’s bid to argue that broker commissions vary and are not set by real estate companies.

Keller denied in his testimony that a “standard commission” existed, saying agents are responsible for setting their own commissions. He said the company had no say in the commissions charged by agents.

While it is true that realtors are independent contractors and each sets their own commission rates, having a gazillionaire state it towards the end of the trial isn’t going to persuade anyone.

The two most important facts of the case were never brought up:

  1. The sellers should have the right to pay a reward, or bounty, to persuade agents to sell their house.
  2. Every seller pays the listing brokerage the full commission, and it’s the LISTING AGENT who decides how much commission the buyer-agent gets.

For the defense to not bring up these points just shows how arrogant and unprepared they were for this trial. The NAR president didn’t exactly give us a reason to think it might be different next time:

This matter is not close to being final. We will appeal the liability finding because we stand by the fact that NAR rules serve the best interests of consumers, support market-driven pricing and advance business competition. We remain optimistic we will ultimately prevail.  In the interim, we will ask the court to reduce the damages awarded by the jury.

In court, NAR presented evidence that consumers are better off and business competition is able to thrive because of our rules and how well local MLS broker marketplaces function. In fact, the NAR cooperative compensation rule for local MLS broker marketplaces ensures efficient, transparent and equitable marketplaces where sellers can sell their home for more and have their home seen by more buyers while buyers have more choices of homes and can afford representation. NAR also presented that REALTORS® are everyday working Americans who are experts at helping consumers navigate the complexities of home purchases and advocates for fair housing and wealth building for all.

Is that all you got? With leaders like this, any future trials will be decided in the same 2.5 hours that it took the jury to decide this one. The only hope is that Compass will hire our own attorneys, and they call on a part-time blogger from San Diego to testify!

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