Commission-sharing lawsuit – will it lead to major changes?

“This is highly relevant to our business,” Aalto CEO Nick Narodny (pictured) told Mortgage Professional America during a recent telephone interview. “We let consumers buy homes entirely online and keep us in commission.”

Business shaped for this verdict

While many in the industry were taken aback at the verdict over a long-held commission-sharing practice between buyer and seller agents, Narodny said he built his business all but in anticipation of the case outcome. “It’s like TurboTax,” he said of his company’s business model. “We actually let you do everything online,” he added, referencing elimination of commission sharing.

“We’ve almost been building our platform for this,” Narodny said. “So, we’ve been paying very close attention to all these lawsuits and there are many more to come. I won’t say we were surprised. I was surprised at how fast it took and the fact the award was tripled. The named participants, and NAR, now are on the hook – held liable for over $5 billion, which is more than their combined balance sheets.”

A Missouri jury last week found NAR and others guilty of collusion to maintain commissions, giving rise to speculation on how the decision could transform the way homes are bought and sold in the US. The jury demanded nearly $1.8 billion in damages to compensate around 500,000 plaintiffs who recently sold their homes in Missouri.

Following the verdict, a law firm representing plaintiffs escalated the stakes by initiating a more extensive class-action suit seeking more than $100 billion in damages on behalf of US home sellers who paid commissions over the last four years. “It’s $1.7 billion, but for anti-trust cases – and I’m not an attorney – they’re automatically tripled. Their assets aren’t public,” he said of the defendants, “but from calculations I’ve read and understood, it is more than their assets, that is correct. For them to appeal, they would have to post a bond. That’s the big question now: ‘Can they appeal?’ Remember, this is just Missouri; there are many, many more lawsuits that are being filed across the country.”