If you are curious how attorney Mike Ketchmark and his team were able to win a landmark $1.8 billion class-action lawsuit on price fixing against the National Association of Realtors, Keller Williams, and HomeServices of America, you’re going to love this podcast episode.
This was truly a David vs. Goliath moment that will change the real estate industry forever. Both home buyers and home sellers should benefit from lower commissions thanks to this verdict.
As I wrote in my real estate collusion post, back in 2017, I couldn’t believe I was paying a buyer’s agent 2.5% while he was trying to hammer me down on my asking price. The commission incentive structure was misaligned.
But my selling agent argued we’d have a tougher time getting buyers if we didn’t pay their agents 2.5%. Sounded sketchy to me! But I went with paying an overall 4.5% commission rate because my son was born in 2017 and I wanted to simplify life.
After the sale, I promised to not sell another property until commission rates dropped further. In addition, I ended up buying the next three properties via dual agency. Paying the buyers agent a 2.5% commission left such a bad taste in my mouth that I decided to basically represent myself and earn the 2.5% commission instead.
Mike Ketchmark’s Previous Cases
I have a newfound respect for lawyers who work on a contingency fee. Ketchmark and his team don’t charge a thing unless their clients win. Can you imagine working on a case for years and spending millions of dollars only to lose? Talk about taking big risks for what you believe in!
Prior to the brokerage litigation, Ketchmark was best known for a 2002 case involving pharmacist Robert Courtney. Courtney diluted 98,000 chemotherapy prescriptions for over 4,200 cancer patients in the Kansas City area. Representing the victims, Ketchmark sued drugmakers Eli Lilly and others. He claimed they were negligent in not uncovering Courtney’s scheme.
Ketchmark won a $2.2 billion civil judgment against the companies. However, they ultimately settled for just $72.1 million.
More recently, Ketchmark represented a Kansas City doctor who was awarded $26 million in 2021. The doctor claimed an ER staffing company had fired him after he raised concerns about patient safety. Specifically, he took issue with having just one doctor covering both the regular and pediatric ER departments at the hospital where he worked.
My Conversation With Attorney Mike Ketchmark
You can subscribe and listen to the episode on Apple, Spotify, Google or wherever you listen to podcasts. Or you can also click the embedded player and leave a comment in this post about your thoughts.
If you own a home and/or rental properties, I encourage you to share this episode with everyone you know. The more we can spread the word, the more pressure we will put on the real estate industry to properly align the commission structure.
If you plan to sell a house, simply ask for a lower commission rate after this landmark case. If the potential listing agent puts up a fight, which they will, have them listen to my episode with Mike Ketchmark.
If you plan to buy a house, ask your buyers agent for a rebate on their commission, especially if you found the place. If they push back on a rebate, make them listen to this episode! I got a rebate in 2005 when I closed on my house purchase.
At 28, I didn’t know better and let my real estate represent me and earn a 2.5% commission when I was the one who found the property and negotiated the price. My agent was out of town for a month. I probably could have saved at least $10,000 if I went the dual agency route. But at least I got a $3,000 rebate at closing.
Let’s let market forces decide real estate commission pricing.
Finally, if you enjoyed the episode, I’d appreciate a review! It takes hours to interview and edit each episode for you. Subscribe so you never miss a new episode.
- The NAR made itself a 501(c)(6) not-for-profit corporation to avoid paying taxes (4:30)
- Steering is a process where real estate agents steer their clients away from homes where commissions aren’t high enough (13:39)
- The real estate industry uses scare tactics to get home sellers to pay the commission fee. Unlike buying and selling cars, the typical homeowner might only sell twice in their lifetimes (15:00)
- Real estate commission takes a massive amount of equity built up by homeowners (19:00)
- Agents train buyers to say their services are “free”
- Real estate brokerages and agents are earning both sides of the transaction
- The NAR and other real estate brokers are afraid buyers will pay buyers agents what it’s worth (22:20)
- Google “your state + housing development commission” to see what type of free money there is for first-time homebuyers in your state
- When Mike thinks real estate commissions will begin to materially come down (28:10)
- The power of the 7th Amendment in forming a jury of private citizens to stand up to the most powerful people in real estate (37:30)
- Where was the Department of Justice and the Anti-Trust department given this ruling? Did they fail us? (38:40)
- The economics of being a trial lawyer on a contingency fee (41:46)
- First bill from expert witnesses for $1.7 million (44:10), then you’re pot committed
- The process of the law firm actually getting paid after a win (46:45)
- Working together as a family to keep each other going (48:57)
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