The case for Realtors: The National Association of Realtors vs Missouri

Burnett v. The National Association Of Realtors | Introduction

Introducing The Phillips Report-Burnett, a meticulously prepared dissection to unravel the flawed assertions against Realtors in Burnett v. The National Association Of Realtors. This edition of The Phillips Report is the second installment in a series of perspectives that extend the counterarguments explored in The Phillips Report: A Critical Examination And Rebuttal Of Claims Asserted In Commission Lawsuits Vs. The National Association Of Realtors. An industry authority has described The Phillips Report as the definitive guide on how to counteract the class action assaults against The National Association of Realtors.

Burnett v. The National Association Of Realtors | Regurgitation Of Defective Claims

Far from presenting original arguments, Burnett v. The National Association Of Realtors merely echoes the allegations forwarded in other legally deficient lawsuits. The choice to lodge the case in Missouri introduces further counterarguments, which only serve to expose the extent of the misguided thinking underlying Burnett’s assertions.

Burnett | Claims Of Damages Based On Comparable Foreign Markets

Plaintiff’s attorneys cite a study published in 2002, stating, “Globally, we see much lower residential commission rates in most of the other highly industrialized nations, including the United Kingdom (UK), Hong Kong, Ireland, Singapore, Australia, and New Zealand . . . . In the UK, the [total] commission rates average less than 2%. . . . In New Zealand and South Africa, [total] commission rates average 3.14%. In Singapore, the [total] commission rates also tend to run around 3%.”

Firstly, applying an outdated study as the primary basis to predict contemporary conclusions is patently unacademic. Market dynamics, technology utilization, and consumer behavior have evolved significantly since 2002, rendering this data largely irrelevant.

The iPhone was launched in 2007. Shall we expand the class to all transactions from 1776?

Singapore vs. Missouri

Burnett’s intent to conflate fees and rates is misleading and deceptive. While the lawsuit attempts to draw parallels between international markets, including Singapore and U.S. brokerage fees, it completely neglects the crucial aspect of average home values in the comparative markets. To illustrate this point, let us consider Singapore and claims that brokerage fees are significantly lower than in the U.S. The average value of a cluster house (townhome) in Singapore is approximately $2,504,215 when converted to U.S. dollars. Based on available data for 2020, Missouri’s average home value was approximately $210,000. A 3% commission in Singapore would yield a $75,126 fee, while a 6% commission in Missouri would result in a $12,600 fee.

Even if Realtors increased their rates to match the suspiciously similar average rate of 33% imposed by contingency-based law firms, the average fee is $69,300, which falls short of average selling fees in Singapore.

A glaring example of conflation is displayed as Burnett states, “In comparison, THE TOTAL BROKER COMMISSIONS (I.E., THE AGGREGATE COMMISSION PAID TO THE SELLER BROKER AND BUYER BROKER) IN THE AREAS IN WHICH THE SUBJECT MLSS OPERATE AVERAGE BETWEEN 5% AND 6%, with buyer broker commissions by themselves holding steady in a range between 2.5% and 3%.”

Based on data believed to be provided by expert witnesses, Burnett attempts to create two opposing definitions related to commissions in the same sentence. For clarity, Rates or percentages refer to a specific portion or part of a total amount, usually calculated as a fraction of 100. For instance, a real estate agent’s commission rate might be 3% of a home’s selling price. On the other hand, aggregate fees paid represent the total sum of money paid for a service. While rates and percentages provide a method for determining how much to charge, the aggregate fees paid represent the actual out-of-pocket expense incurred by the client or consumer.

Expert Witnesses

An “expert witness” cited in various claims, who seems confused regarding the difference between rates and aggregate fees, appears to be a professor at Harvard University. The Phillips family includes dozens of current and former professors at Harvard and founded Phillips Exeter Academy and Phillips Academy in Andover. Exeter traditionally educates its students for Harvard, much as Andover traditionally educates its students for Yale.

I can say with certainty that Harvard professors have access to dictionaries.

Alleged Price-Fixing In The Legal Segment

Per The American Bar Association, Rule 1.5, “A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses. The factors to be considered in determining the reasonableness of a fee include the following:” (3) the fee customarily charged in the locality for similar legal services.”

How are customary fees established without collusion resulting in price-fixing?

One could reasonably contend that the fee structures imposed by contingency-based law firms border on predatory. This is because most Americans cannot afford legal services based on hourly rates. It is plausible to infer that these contingency-based fee schemes disproportionately burden low-income individuals and minority groups, potentially exacerbating existing social inequities.

Insidious Acts | Concealing Commission Rates

In a fascinating display of irony, Plaintiff’s counsel and expert witnesses have expressed strong criticism of Realtors for not publicizing commissions on consumer-facing websites. At the same time, organizations such as Ketchmark & McCreight PC and The Consumer Federation Of America (CFA) fail to disclose their fees on their respective websites. This omission extends to the CFA’s 990 form, which lacks any compensation data for Steven Brobeck. It is striking that these organizations, quick to hold Realtors to high standards of transparency, do not seem to uphold these same standards themselves. If Ketchmark & McCreight PC and Brobeck sincerely believed in the necessity of publicly displaying fees to safeguard consumer interests, they would undoubtedly incorporate this practice on their own platforms, mirroring the transparency they demand from Realtors.

Rights Of Independent Contractors

Even if “steering” occurs, which it does not, it is not unlawful. Agents are Independent Contractors. The foundation of independent contracting lies in the ability of these professionals to operate with a degree of autonomy unmatched in traditional employment relationships. This extends to their ability to set their own compensation rates, decline to offer services as they see fit and operate without accusations of price fixing simply by virtue of denying service provision.

Moreover, inferences that all buyers enter into a buyer-broker agreement, establishing relationships, are delusional. Provide a peer-reviewed study substantiating this claim.

Following Plaintiff’s logic, an anti-NAR chief propagandist must accept my offer to act as a pro-Realtor propagandist for the next four years, with total compensation at $1.

Moreover, Burnett must reconcile common claims that consumers find homes they acquire BEFORE contacting an agent; nevertheless, agents succeed in steering buyers to acquire residences they do not prefer.

Also, claims of concealment fail as the MLS syndicates properties to an expansive network of national real estate platforms, providing unparalleled access to property listings for consumers. Importantly, these platforms do not filter out properties based on the commission offered, thereby ensuring a level playing field for all properties, irrespective of commission structure. Data suggests an awe-inspiring reach of 300-400 million unique monthly visitors across all platforms, potentially receiving MLS listing syndication.

THE MLS PREVENTS MASSIVE STEERING.

Missouri Consumers | Inferences Of Incompetency

The Phillips team categorically condemns any suggestion that the citizens of Missouri cannot operate a search engine, thus incapable of gaining insight on commission structures. In a comprehensive analysis of online search behaviors, the 30-day auto-suggest data from AnswerTheWeb via Google revealed a significant number of displays, 4,400 to be precise, related to “real estate commission Missouri.” The number of home sales in Missouri amounted to only 7,312 in May 2023.

The data illustrates engagement by Missouri consumers in seeking information about commission structures, signaling their understanding and interest in these matters. Furthermore, this data solely represents Google’s search metrics, omitting other prominent search engines like Bing, further substantiating the argument that consumers are proactively educating themselves on real estate commission structures and their ability to negotiate commissions.

Google Search Results | Referral Firms Claiming To Pre-Negotiate Commissions

Consumers searching the phrase “are real estate commissions negotiable,” results include:

• Upnest: “Avoid High Commission – Low Commission Local Agents”
• Bankrate: “How to successfully negotiate a real estate commission”
• Rentec Direct: “How to Negotiate Real Estate Commission With Your Agent”
• Clever Real Estate: “Negotiating Realtor Fees: 10 Tips for Reducing Commission”
• Felix Homes: “All real estate commissions are negotiable”
• HomeLight: “Real estate commission rates aren’t set by law and are absolutely negotiable”
• Angie’s List: “There aren’t any laws that set real estate commission rates, so you are free to negotiate”
• Realtor.com, a partner of NAR: “Commissions are always negotiable”

Many of these firms pay a premium for top-of-result “sponsored” positions, paying a high cost per click.

AnswerTheWeb estimates the PPC costs of the following queries:

• “Are real estate commissions negotiable” $13.86/click
• “What are real estate commissions in California” $17.33/click
• “Real estate companies with low commission” $32.19/click
• “Real estate commission New York” $54.18/click

The sum of auto-suggest displays pertaining to variations of “real estate commissions” total an astronomical amount of 302,810 instances.

Burnett Goes Completely Off Script

Burnett claims, “Further, many buyers would be reluctant to retain a buyer broker operating on an alternative listing service THAT REQUIRED THEM TO PAY THE BUYER BROKER COMMISSION when other buyer brokers operating on the Subject MLSs are entirely compensated by home sellers. ACCORDINGLY, SELLER BROKERS ON AN ALTERNATIVE LISTING SERVICE WOULD STRUGGLE TO ATTRACT BUYER BROKERS AND THEIR BUYER CLIENTS.”

While every lawsuit seeks to decouple commissions, Burnett momentarily recognizes the potential damage should buyers be required to shoulder commissions themselves and exposes deficiencies of “alternate listing services.” Burnett admits that “A considerable number of buyers might hesitate to engage a buyer broker who mandates their payment of the buyer broker commission. Consequently, this could harm sellers as seller brokers operating under an alternate listing service would face significant challenges in attracting both buyer brokers and their clients.”

Burnett may have single-handedly obliterated the massive propaganda efforts adverse to Realtors, which commenced in 2019. Thank you.

Constant Cycle of Claimants

When seeking an update on various cases, the substitution of plaintiffs becomes apparent. Plaintiffs, in multiple cases, appear to have vanished. We believe Joshua Sitzer, Amy Winger, Sawbill Companies, Inc, and its principal, Mark Petersen (attorney), Shelly Dreyer (attorney), Hollee Ellis, and Frances Harvey, are missing.

One can only surmise that Mark Petersen (attorney) become aware of defective claims on 7/15/2020 and Shelly Dreyer (attorney) on 7/6/2022 at 8:46 PM. It is possible they consulted with Alfio Conti. This buyer sought class-action status and subsequently filed a voluntary dismissal stating, “PLEASE TAKE NOTICE THAT under Rule 41(a)(1)(A) of the Federal Rules of Civil Procedure, plaintiff Alfio Conti voluntarily dismisses this action without prejudice. Dated:  May 27, 2021”

Delusions Of Damages

Burnett states, “Plaintiffs seek treble damages under federal antitrust law, threefold damages under the Missouri Antitrust Law, punitive damages under the MMPA, injunctive relief, and the costs of this lawsuit, including reasonable attorneys’ fees, and demand a trial by jury.”

Burnett v. The National Association Of Realtors seeks an extraordinary sum of damages. The plaintiff has invoked the application of “treble damages under federal antitrust law, threefold damages under the Missouri Antitrust Law, punitive damages under the MMPA, injunctive relief, and the costs of this lawsuit, including reasonable attorneys’ fees,” and even goes as far as to demand a trial by jury.

It is important to emphasize that the concept of treble damages, as raised in the case of Burnett v. The National Association Of Realtors, operates on the premise that the plaintiff has suffered quantifiable damages. However, if the plaintiffs fail to demonstrate and quantify any actual damages, their claim for treble damages becomes moot.

SIMPLY PUT, TREBLE DAMAGES OF ZERO REMAIN ZERO.

Conclusion

In conclusion, “The Phillips Report | Burnett v. The National Association Of Realtors” firmly underscores that the litigation lacks substantial merit and largely mirrors erroneous assertions put forth in similar, fundamentally flawed lawsuits. While the plaintiff’s claims might initially appear compelling, a thorough and comprehensive analysis exposes significant gaps and incongruities.

Moreover, as per the ethical responsibilities outlined in Rule 3.3 of the Model Rules of Professional Conduct, Plaintiff’s counsel is obligated to ensure accuracy and truthfulness in all proceedings before the court. Given these circumstances, it is incumbent upon Plaintiff’s counsel to take remedial measures to correct these misrepresentations. These measures may include but are not limited to revising the statements in question, withdrawing inaccurate evidence, or even communicating directly with the tribunal to rectify the misrepresentation. Failure to adhere to these duties can lead to severe repercussions, including sanctions and disciplinary action. Swift attention to this matter is advised.

About Anthony Phillips

Carrying forward a rich legacy rooted in the heart of New England, Anthony Phillips upholds the revered family tradition of contributing to various fields like law, academia, business, politics, and consumer rights. Phillips’s illustrious heritage includes founders of the esteemed Phillips Andover and Phillips Exeter schools, Presidents of Harvard University, pioneers in the 19th-century abolition movement, and countless local and national legislators.

Mr. Phillips does not speak on behalf of the defense.