In October 2023, the National Association of REALTORS® received an adverse verdict in a class action anti-trust lawsuit in Missouri. Following that verdict, Plaintiffs’ attorneys began filing copycat lawsuits all across the country. The copycat lawsuits often include state REALTOR® associations, local REALTOR® associations, MLSs, and brokerages.

Unfortunately, the Arizona Association of REALTORS® (AAR) has now been named in a copycat lawsuit of this nature, along with four of our local associations, and several corporate defendants. The claims asserted are similar to those advanced in other cases, which is that NAR and others conspired to artificially inflate buyer broker compensation. This argument is utterly false and not supported by the evidence.

Regarding the lawsuit recently filed in Arizona, the below questions and answers shed light on the Plaintiff, the claims asserted, the damages sought, and the NAR rules at the center of the case.

Q1. Who is the Plaintiff?

A1. The Plaintiff’s name is Joseph Masiello. According to the Complaint, in or about October 2021, Mr. Masiello listed and sold a home on an Arizona multiple listing service (MLS) while allegedly represented by one of the corporate defendants. As part of the sale transaction, the Complaint states that Mr. Masiello paid a 2% commission to the seller broker and a 2.5% commission to the buyer broker.

Q2. Who are the Defendants?

A2. The named Defendants are the Arizona Association of REALTORS®, the Phoenix Association of REALTORS®, the Scottsdale Area Association of REALTORS®, the West and Southeast REALTORS® of the Valley, the Tucson Association of REALTORS®, and 15 corporate defendants which are brokerages operating in Arizona. The National Association of REALTORS® was not named as a defendant, nor were any multiple listing services.

Q3. Is this a class action lawsuit?

A3. No class of Plaintiffs has been certified by the Court. However, the Plaintiff is seeking to make this a class action lawsuit with a desired class of plaintiffs consisting of “All persons who, from January 5, 2020, through the present, used any Brokerage Defendant to list a home on an Arizona MLS, and who paid a commission to the buyer’s broker in connection with the sale of the home.”

Q4. In what court is the lawsuit filed?

A4. The United States District Court, District of Arizona.

Q5. What are Plaintiff’s allegations?

A5. Plaintiff alleges that Defendants “participated in the establishment, implementation, and enforcement of the Buyer Broker Commission Rule and other anticompetitive NAR rules in Arizona.” Specifically, Plaintiff alleges that a conspiracy exists among all Defendants that “(a) requires sellers to pay inflated commissions for services provided by buyer-brokers; (b) raises, fixes, and maintains buyer-broker compensation at levels that would not exist in a competitive marketplace; and (c) encourages and facilitates steering and other actions that impede entry and market success by lower-cost real estate brokerage services.”

Q6. What relief is Plaintiff seeking?

A6. In addition to class certification, Plaintiff is seeking an award of damages to be determined at trial, an award of statutory interest and penalties, an award of costs and attorneys’ fees, and an order for injunctive relief enjoining Defendants from engaging in the anticompetitive acts Plaintiff alleges.

Q7. What is AAR’s position?

A7. No conspiracy exists and Plaintiff’s claims exhibit a fundamental misunderstanding/misrepresentation of how real estate sales are conducted in Arizona. Consumers have the choice whether to work with a real estate professional, a REALTOR® member, or represent themselves. The practice of listing brokers offering compensation to brokers who produce a buyer emerged in the free market decades ago, and NAR’s rule followed, bringing transparency to preexisting marketplaces. Compensation can be a percentage, fixed rate, hourly rate, or any other arrangement and compensation is always negotiable between agents and their clients. In fact, pursuant to NAR’s policies, compensation for the sale or rental of real property is not set by any Association/Board of REALTORS® or MLS. The compensation rule does not tell listing brokers and their clients how much to offer a buyer broker. Furthermore, the diverse business models that exist in Arizona result in a wide spectrum of options for consumers. 

Q8. Does AAR own or operate a Multiple Listing Service?

A8. No.

Q9. How does the current compensation model benefit both buyers and sellers?

A9. This model of compensation is advantageous for all parties for numerous reasons:

● It means that sellers can have their home seen by more buyers, allowing the free market to produce the best sale price.

● Buyers benefit from professional representation in what for many will be the most significant, complex purchase of their lives.

● Critically, this compensation model promotes access to homeownership that benefits both buyers and sellers. Adding broker compensation on top of closing costs would push the dream of homeownership further out of reach for many.

● The same would be true for veteran home buyers because VA loans prohibit them from paying buyer broker fees.

Q10. When will the trial take place?

A10. No trial date has been set and it is unknown whether Plaintiff’s claims will survive either a Motion to Dismiss or a Motion for Summary Judgment. If a trial were to occur, it would take place many years from now.