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Court Certifies Class Against Boise Realty Agencies Alleging Illegally Inflated Commission Scheme Main Idaho Real Estate Insights

Thousands of Boise Homeowners Now Included in Suit Against Realty Agencies

BOISE, Idaho, June 26 /PRNewswire/ -- A United States District judge certified a class-action lawsuit late last week against a number of Boise's largest real estate agencies, claiming the organizations have been illegally charging home buyers commissions on the undeveloped property using a technique called 'tying.'

 

The class action now represents thousands of home purchasers in the Boise area.

According to the suit filed in May 2005, home purchasers are duped into paying commissions not only on an undeveloped lot they purchase but on the cost of a house subsequently built on the property.

The suit names defendants Coldwell Banker Aspen Realty Inc. -- a subsidiary of Coldwell Banker, the nation's oldest real estate agency -- Holland Realty Inc., Sel-Equity Co., and Park Pointe Realty Inc, and accuses them of violating federal and state antitrust and unfair competition laws, among other charges.

"These brokers control a very large percentage of the real estate market in the red-hot Boise market," said Steve Berman, the attorney leading the legal challenge on behalf of consumers. "We intend to show that the defendants use their market leverage to force homebuyers to pay these additional commissions but provide no market value."

The complaint also claims that the defendants conspire to maintain exclusive listings for undeveloped subdivision lots, limit the number of builders who can build on the lots, and refuse to sell lots without payment of commission tied to the construction of the house.

"For example, under a standard six-percent commission schedule, if a homebuyer pays $50,000 for a lot from a broker and then constructs a $150,000 house on the site, that purchaser should pay $3,000 in commissions for the land purchase," Berman said. "What we are alleging in our complaint is the brokers are illegally charging $12,000 -- six percent of cost of the land and the house construction."

Berman noted that using this example, this scheme could lead to $1.8 million in ill-gotten commissions in a 200-lot subdivision.

The lawsuit -- filed in U.S. District Court in Boise, Idaho -- seeks to recover excessive commissions charged by the defendant real estate agencies, and an injunction to stop this practice.


Source: Firmani + Associates Inc.

 

 
Posted by tlangford at 6/26/2006 9:59:00 PM
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Comments (3)
Re:Court Certifies Class Against Boise Realty Agencies Alleging Illegally Inflated Commission Scheme
I heard about the additional commissions for the not-yet-built home. It did not seem right to me and I was curious about how they were able to pull it off.
Posted by on 6/26/2006 4:55 PM
Re:Court Certifies Class Against Boise Realty Agencies Alleging Illegally Inflated Commission Scheme
This is very interesting information from a business standpoint and a personal one
Posted by on 6/27/2006 8:58 AM
Re:Court Certifies Class Against Boise Realty Agencies Alleging Illegally Inflated Commission Scheme
Thank you, Thank you, Thank you.....it's about time!
Posted by on 6/27/2006 12:30 PM

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