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Zimmerman Reed has filed a case in Federal Court in the Central District of California against Redfin, National Association of Realtors, and the California Association of Realtors for allegedly conspiring to fix and inflate the price of buyer-side real estate agent commissions to supercompetitive levels.

Most middle-class wealth in the United States is typically tied up in a person’s or a family’s home, and buying or selling a home is often the most significant financial transaction of one’s life. Due to buyer’s-side broker fees that are among the highest in the world, these transactions have too-often become a drain on Americans’ most important source of wealth.  Buyer’s-side fees in the United States have escalated to rates of 5 to 6 percent, while most developed nations that have average rates of less than 2.5 percent for combined buyer’s and seller’s agent fees.

Rules such as those published by the National Association of Realtors and the California Association of Realtors could be contributing to these higher commission rates in the United States. These rules state that as a condition of listing a home for sale on the relevant Multiple Listing Service (MLS), home sellers must make a blanket, non-negotiable offer of buyer’s-side agent fees. MLS is a critical tool when promoting a house for sale, as it provides a dynamic and live-updated list of homes for sale in a given area and is the way that most potential buyers identify homes to purchase. The National Association of Realtors administers MLS through local branches and sets the conditions for using its indispensable MLS tool.

Due to the MLS conditions set by the National Association of Realtors and the California Association of Realtors, buyer’s-side agents are actually paid by the opposite party in a home sale–the buyer. Because buyers therefore do not pay their own agents, the market is deprived of the downward pressure on prices that occurs with true competition; the buyer has no incentive to shop around, and the agents have little incentive to discount their rates. As a result, homeowners pay higher fees for one of their largest transactions of their lives.

The case also alleges that Redfin have agreed to these rules set by the realtor associations and required its Redfin agents to abide by them as well, prior to Redfin’s exit from the California and National Associations of Realtors in late 2023.

“This is anticompetitive behavior that harms home sellers and families. That’s why we aim to permanently end this practice for all Californians,” said Caleb Marker, Zimmerman Reed Managing Partner.