JURY AWARDS $1.78 BILLION TO CONSUMERS WHO ARE VICTIMS OF REAL ESTATE INDUSTRY PRICE-SETTING

On Monday October 31, a Kansas City jury determined that major real estate industry players had conspired to set prices and awarded $1.78 billion to plaintiffs in this class action lawsuit (Sitzer/Burnett vs. National Association of Realtors et al.), with the possibility of additional treble damages.  Stephen Brobeck, a CFA senior fellow, made the following statement about the decision:

“The speed of the decision and size of the award reveal that jury members believe the industry has restricted price competition to ensure near-uniform five to six percent commission rates.  The extent of injunctive relief decided by the court will strongly influence whether a price competitive system develops that lowers consumer costs and increases quality of services.  We hope that the court will sever the ties between listing agent and buyer agent compensation, freeing sellers from the obligation and need to compensate buyer agents.”