© Reuters. FILE PHOTO: A man looks at advertisements for luxury apartments and houses in the window of a Douglas Elliman real estate sales business in the Upper East Side neighborhood of Manhattan in New York, New York, United States United, October 19, 2021. REUTERS/Mike Segar/File
By Jonathan Stempel
NEW YORK (Reuters) – A complaint filed Monday accuses the Real Estate Board of New York (REBNY) and more than two dozen brokerages and companies of conspiring to artificially inflate commissions paid to agents who help sell real estate residential in Manhattan.
The proposed class action against REBNY Trade Group, Corcoran Group, Douglas Elliman and others follows the October 31 verdict by a Missouri federal jury awarding home sellers $1.78 billion, in a similar case against the National Association of Realtors and several brokerages.
The verdict, which a judge can triple to more than $5.3 billion, could upend decades-old practices that force sellers to pay commissions to buyers’ brokers. NAR faces at least two other similar proposed class action lawsuits.
In Monday’s lawsuit in Manhattan federal court, plaintiff Monty March said commissions on residential sales in Manhattan remained steady, between 5 and 6 percent, even as housing prices soared, the average price of apartments exceeding $2 million in early 2022.
March said sellers using REBNY’s listing service should not pay commissions of 2.5% to 3% to buyers’ brokers, given that commissions are lower in “fully competitive” markets such as Brooklyn, where they are traded separately and average 1%.
REBNY general counsel Carl Hum said the group is reviewing the complaint with its attorneys and is confident that its SEO service’s practices and procedures “comply with all relevant laws.”
Corcoran and Douglas Elliman did not immediately respond to requests for comment.
March said he paid inflated commissions on the recent sale of a property on Manhattan’s Upper East Side. Real estate records show he sold an apartment there for $5.6 million in July 2022.
Beginning January 1, REBNY will begin requiring sellers, not their brokers, to pay commissions directly to buyers’ brokers, to promote “transparency and consumer confidence in the residential market.”
March said it was unclear whether this would result in lower commissions or delay sales while buyers’ brokers negotiate with sellers.
The lawsuit seeks damages for sellers of residential properties in Manhattan over the past four years who paid buyers’ broker commissions in accordance with REBNY rules.
The case is March v. Real Estate Board of New York et al, US District Court, Southern District of New York, No. 23-09995.