Utah Realtors Boycott Homie Listings With More Than 1.5% Buyer’s Broker Commission: Antitrust Lawsuit

In a lawsuit filed Thursday, a real estate startup Home Technologies claims that consumers selling their homes were not the only ones to suffer from the real estate industry’s allegedly anti-competitive practices.

The defendants in the lawsuit, filed in the U.S. District Court for the Central District of Utah, are typical antitrust heroes: National Association of Real Estate Agents (NAR-) Real estate anywhere, Keller Williams Real Estate, HomeServices AmericaAND RE/MAX. Based in Utah Wasatch Front Regional MLSwho runs a business as UtahRealEstate.comis also named as a defendant in the lawsuit.

In the complaint, Homie claims it is taking the legal action to “recover damages…suffered as a disqualified competitor who was prevented from effectively competing in the relevant market as a result of Defendants’ conduct.”

The company noted that if it “were allowed to compete with Defendants and their associates, it would gain market share at Defendants’ expense while simultaneously imposing competitive controls on Defendants’ ability to charge excessive prices for brokerage services to consumers. By excluding Homie and other new entrants, Defendants have, in one stroke, harmed competition, harmed consumers, and caused injury and damage to Homie.”

Like the antitrust lawsuits filed by consumers, Homi’s lawsuit also targets NAR regulations, including the participation rule that required real estate brokers to make a blanket offer to compensate buyers’ brokers in order to list properties on the MLS. As a self-described “technology industry disruptor,” Homi’s business model involves charging home sellers a flat fee to list their properties on the MLS.

“As part of their low-cost selling strategy, Homie sellers typically offered broker buyer compensation that was slightly lower than the Buyer’s Agent Compensation (BAC) offered by sellers represented by traditional brokers, including the corporate defendants. Homie buyers received some or all of the BAC offered by the seller,” the complaint states.

The buyer’s agent compensation offer that the seller chose to make was to be posted on the MLS alongside the listing. According to the complaint, the buyer’s agents made it clear to Homie that they did not like these lower compensation offers by using the MLS and Facebook comment boxes to indicate that they would not be displaying the listings to Homie because of the lower buyer’s agent compensation offer, known as “steering.”

“Local Utah NAR members used Facebook groups to coordinate boycotts of Homie listings with low buyer and broker commissions during the Buyer and Broker Compensation Rule period, sometimes tagged with the hashtag ‘#boycottHOMIE,’” the complaint states. “The exclusionary campaign against Homie was also conducted through Utah NAR locals, which own and control WFRMLS. Utah NAR locals encouraged agents to steer clients away from Homie, one of their own members.”

Additionally, the lawsuit alleges that Homie received text messages from NAR-affiliated brokers when the participation rule was in effect, in which the buyer’s brokers claimed he would not show Homie’s offer because his commission was only 1.5%.

“I could always show it and then negotiate with the BBC in the deal, but I thought, why bother when we have three other great deals at 2.5-4%. Either way. Please tell your sellers,” read one text quoted in the complaint.

By boycotting Homie’s listings and diverting customers, Homie claims that “innovative upstarts seeking to compete on price and other terms of service attractive to home sellers or buyers were thwarted by traditional real estate agents who acted in concert through the MLS to promulgate a web of rules and practices that created significant barriers to competition.”

The complaint said that while competition from “modern entrants” had been anticipated for years, no companies had emerged due to “anticompetitive conduct by traditional brokerages operating through NAR.”

“The anticipated wave of disruptive innovation and entry into the residential real estate brokerage market has not yet occurred because Defendants conspired to prevent it,” the lawsuit states. “Using their control over the MLS, Defendants imposed nationwide regulations that erected significant barriers to entry for new competitors, thereby raising the price of residential real estate brokerage services well above competitive levels.”

While Homie has undergone several rounds of layoffs since its founding in 2015, as of April of this year, it continues to offer clients brokerage, mortgage and title services, but its real estate agents have been transitioned from W2 employees to 1099 contract workers.

Homie is seeking compensatory damages and a permanent injunction against the defendants and a jury trial.

“While we cannot comment on the specifics of the complaint, the claim that competition in the real estate industry has been stifled is simply unfounded,” Chris Kelly, executive vice president of HomeServices of America, wrote in an email. “The industry has evolved significantly over the past decade, with the competitive landscape changing rapidly. For example, of the top 10 brokerages that closed in 2013, only three remain in the top 10 in 2023. Interestingly, seven of the top 10 brokerages in 2023 were not in that group just a decade ago. Over the past decade, there has been a steady and steady introduction of new models, such as iBuying.”

None of the other defendants responded to a request for comment.

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