Manhattan Real Estate Hit by Lawsuit Over High Commission Rates
In a groundbreaking legal move, a lawsuit in Manhattan has been initiated against the influential Real Estate Board of New York (REBNY) and an array of major brokerages, accusing them of collusion in maintaining high commission rates for agents involved in Manhattan’s residential real estate transactions.
This lawsuit, submitted for consideration as a class action, targets not only the REBNY but also prominent players like the Corcoran Group and Douglas Elliman, among others. This legal action mirrors a recent Missouri case outcome, where a court ordered the National Association of Realtors (NAR) and several brokerages to pay $1.78 billion. This verdict could significantly impact longstanding real estate practices, particularly concerning commission payments to buyers’ brokers.
Challenging the Status Quo: Manhattan’s Real Estate Commission Rates Under Legal Scrutiny Amid Market Disparities and Policy Changes
The plaintiff, Monty March, highlights a concerning trend in the Manhattan market, where despite soaring property prices – the average apartment price exceeding $2 million – commission rates persistently hover between 5% to 6%. He contrasts this with more competitive markets like Brooklyn, where commission rates are notably lower and negotiated separately.
March’s lawsuit, filed in a federal court in Manhattan, also scrutinizes REBNY’s upcoming policy change, set to take effect from January 1, which requires sellers to directly pay any commissions to buyers’ brokers. While this move aims to enhance transparency and trust in the residential marketplace, its actual impact on commission rates and sales dynamics remains uncertain.
Seeking damages for Manhattan residential property sellers who have paid buyer broker commissions under REBNY’s rules in the past four years, this lawsuit could potentially reshape the landscape of real estate commissions in one of the world’s most prestigious markets.