If you are curious about how avocado Mike Ketchmark and his team have successfully won a historic $1.8 billion price-fixing class action lawsuit against the National Association of Realtors, Keller Williams and HomeServices of America, you will love this podcast episode.
It was truly a David versus Goliath moment that would change the real estate industry forever. Home buyers and sellers stand to benefit from lower commissions thanks to this verdict.
As I wrote in my article on real estate collusion, in 2017, I couldn’t believe I was paying 2.5% to a buyer’s agent when they were trying to get me to lower my asking price. The incentive commission structure was misaligned.
But my sales agent argued that we would have a harder time finding buyers if we didn’t pay their agents 2.5%. It seemed sketchy to me! But I agreed to pay an overall commission rate of 4.5% because my son was born in 2017 and I wanted to make my life easier.
After the sale, I promised not to sell another property until the commission rates dropped further. Additionally, I ended up purchasing the following three properties through dual agency. Paying the buyer’s agent a 2.5% commission left such a bad taste in my mouth that I decided to represent myself and earn the 2.5% commission instead.
Previous Affairs of Mike Ketchmark
I have a new respect for attorneys who work on a contingency fee basis. Ketchmark and his team don’t charge anything 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!
Before the brokerage dispute, Ketchmark was best known for a 2002 case involving pharmacist Robert Courtney. Courtney diluted 98,000 chemotherapy prescriptions for more than 4,200 cancer patients in the Kansas City area. Representing victims, Ketchmark sued drugmakers Eli Lilly and others. He claimed they were negligent in not revealing Courtney’s scheme.
Ketchmark won a $2.2 billion civil judgment against the companies. However, they ultimately settled for just $72.1 million.
Most recently, Ketchmark represented a Kansas City doctor who received $26 million in 2021. The doctor claimed an emergency staffing company fired him after he raised concerns about patient safety. Specifically, he took issue with the fact that a single doctor handled both the regular and pediatric emergency 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. You can also click on the embedded player and leave a comment in this article about your thoughts.
Share the episode if you want to help put downward pressure on real estate commissions
If you own a home and/or rental properties, I encourage you to share this episode with everyone you know. The more we get the word out, the more pressure we will put on the real estate industry to properly align the commission structure.
If you’re considering selling a home, just ask for a lower commission rate after this historic deal. If the potential listing agent struggles, which he will, ask him to listen to my episode with Mike Ketchmark.
If you’re considering buying a home, ask your buyer’s agent for a discount on their commission, especially if you found the home. If they refuse a discount, make them listen to this episode! I received a discount in 2005 when I completed the purchase of my house.
At 28, I didn’t know any better and let my real estate agent represent me and earn a 2.5% commission while I was the one finding the property and negotiating the price. My agent was out of town for a month. I probably could have saved at least $10,000 if I had gone dual agency. But at least I got a $3,000 discount at closing.
Let market forces decide the price of real estate commissions.
Finally, if you enjoyed the episode, I I appreciate a review! It takes hours to interview and edit each episode for you. Subscribe to never miss a new episode.
Show Notes on Fighting the Real Estate Cartel with Mike Ketchmark
- The NAR has made itself a 501(c)(6) nonprofit corporation to avoid paying taxes (4:30)
- Steering is a process by which real estate agents steer clients away from homes where commissions are not high enough (13:39)
- The real estate industry uses scare tactics to get sellers to pay commission fees. Unlike buying and selling cars, the typical owner only sells twice in their lifetime (3:00 p.m.)
- The real estate commission absorbs a massive amount of equity accumulated by owners (7:00 p.m.)
- Agents train buyers to say their services are “free”
- Real estate brokers and agents win on both sides of the transaction
- The NAR and other real estate brokers are afraid buyers will pay buyer agents what it’s worth (22:20)
- Google “your state + housing development commission” to see what kind of free money there is for first-time home buyers in your state
- When Mike thinks real estate commissions will start to drop significantly (28:10)
- The power of 7th Amendment by forming a jury of private citizens to stand up to the most powerful people in real estate (37:30)
- Where did the Department of Justice and the Antitrust Department receive this decision? Have they let us down? (38:40)
- The economics of being a contingency fee litigator (41:46)
- First expert witness bill of $1.7 million (44:10), then you’re hired
- The process by which the law firm actually gets paid after a win (46:45)
- Working together as a family to support each other (48:57)
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