KANSAS CITY, Mo. — The final day of the second week of the Sitzer/Barnett Commission case trial began with some procedural news.
After filing a motion for judgment as a matter of law late Thursday. National Association of Realtors The request was denied by Judge Stephen Baugh. The other defendants in the lawsuit are: Home American Services and keller williamshad previously filed motions for judgment as a matter of law, but both were denied.
Gary Keller takes the stand
Friday morning’s testimony marked the beginning of Keller Williams’ defense. The company first called co-founder and CEO Gary Keller to the stand. Like other defendants, Mr. Keller pointed out that Keller Williams as a corporation had nothing to do with setting commission rates. He told the jury that Clear Collaboration’s policies are developed locally and fee rates are set on a case-by-case basis.
Keller also said he doesn’t like it when people in the industry tell agents what to do and what not to do in their businesses.
During his testimony, Mr. Keller also discussed his books and the models he uses at conferences, which were previously discussed during plaintiff’s testimony.
Mr. Keller reiterated what he said in his affidavit that these items are templates and serve as examples of how agents practice real estate. He also noted that when his book was first published in 1996, no data existed on commissions. The example in the book assumes a commission rate of 6%, but this is just an educated guess and is rounded up from his 5.6% to 5.7% range that he saw in the industry at the time. .
Mr. Keller then discussed his presentation at the Keller Williams Family Alumni Event, which typically draws up to 15,000 attendees. Keller said he discussed various economic statistics during his presentation, including fees.
The two slides he used show average sell-side and buy-side commissions for KW agents from 2002 to 2019. This slide shows his sell-side fees fluctuating from about 2% in 2002 to about 2.5% in 2010. However, the fluctuations on the buy side are much smaller. After reaching 3% in 2008 and 2009, it dropped to 2.72% in 2019.
Mr. Keller testified that he uses these slides to dispel the notion that there is a standard commission rate.
“We started creating this to point out that there is no standard fee,” Keller said. “They vary from year to year. They reflect market conditions.”
Keller said the main message for agents is that they should recognize that local markets change and must be flexible. He also argued that the national average fee slide is independent of agents in a particular market because every market is different.
“The 6% fee is a mythical beast,” Keller said. “There is no national average.”
He also pointed out that showing sliding fees does not violate Keller Williams’ antitrust law, which aims to prevent agents from discussing commission rates with competitors. He added that the company’s “co-op” model meant that agents competed and negotiated fiercely for business, but only recognized that later in the deal they needed to work together to get the deal done. .
Keller also called the plaintiffs’ claims of collusion to keep fees at current rates “ridiculous” and lacked evidence.
According to his testimony, he is not involved with NAR or local association boards, but he is involved with agents and encourages them to become members of local associations and access their local MLS. . He calls it “the single best market created.” ” However, Keller said that if an agent does not wish to do so and the team leader agrees, the agent does not need to become a member of NAR.
In his cross-examination, lead plaintiffs’ attorney Michael Ketchmark focused on commissions and emails sent by Keller regarding Internet threats to the real estate industry.
As Ketchmark began taking the floor, he challenged Keller’s assertion that commission rates change from year to year based on market conditions, so he doesn’t know what next year will bring.
He told jurors he was “100% confident” that next year’s fees in Kansas City would be 3%, citing a Keller Williams slide showing average commissions for agents in Kansas City. He conducted a similar study of other Missouri cities, and nearly all of them had an average fee of about 3%, with the exception of St. Louis, where the average fee was reported at 2.7%.
Mr. Ketchmark then spoke about the threat of the Internet. He showed Keller and the jury an email Keller sent stating that the committee was under siege in a data battle on the Internet.
Keller responded that the comment was taken out of context. He said he was talking about Zillow and other internet companies taking what they thought was their data and selling up to 45% of the commission back to agents through lead generation.
He also testified that this was not a commission rate issue, but a net commission issue. Zillow takes money from agents, but Keller wants that to stop. He called it a “relentless battle” that won’t stop until all the data is collected and “all fees are paid out of the agents’ pockets.”
Mr. Keller told the jury that he intended to fight the issue, but to keep everything in-house, meaning he would have to form his own mortgage company, title company and real estate services company. Ta.
Mr. Ketchmark concluded his questioning by asking Mr. Keller whether he agreed with his statement that if technology companies controlled public listing data, Keller Williams would lose control and the market center’s revenue would decline. Mr. Keller did not dispute this statement.
The defense plans to wrap up its case Friday night. Closing arguments in the commission case trial are scheduled for Monday.
Editor’s note: Continue checking HousingWire.com for our editorial team’s continued live coverage of the Commission Cases Trial from Kansas City.
