HomeServices of America, the largest residential real estate brokerage in the United States, will settle the claims brought by home sellers who said they were forced to pay inflated commissions, pending court approval.
HomeServices of America, the largest residential real
estate brokerage in the United States and owned by Warren E. Buffett’s
Berkshire Hathaway Energy, has agreed to settle a series of lawsuits that could
change the way commissions are paid to real estate agents.
On Thursday, the brokerage signed off on adding $250
million to the mounting pile of damages won by home sellers who have successfully sued several
brokerages and the National Association of Realtors over what they described as
inflated commissions. The New York Times obtained a copy of the signed
agreement.
Industry insiders have been anticipating the
HomeServices settlement since March 15, when N.A.R., an influential trade group
with 1.5 million members, agreed to settle the lawsuits that claimed the group had
violated antitrust laws and had conspired to fix the rates that real estate
agents charge their clients. That settlement received preliminary approval from a federal judge on
Tuesday, and now N.A.R. will pay $418 million in damages and significantly
change its rules on agent commissions and the databases, accessible only by
those who hold membership to N.A.R. subsidiary groups, where homes are listed
for sale. N.A.R. argued in court that it never operated a conspiracy around
commissions, and continues to say that the home sellers’ allegations that the
organization’s rules effectively set commission rates are unfounded.
The settlement will
introduce competition to the market for real estate commissions, driving down
the fees that consumers are required to pay when selling a home and eventually
lowering home prices across the board as a result, some industry analysts say.
For more than a century, N.A.R. has been an
indomitable force in the real estate industry. But the group had been under
pressure to settle legal claims since October when a jury in Missouri sided
with a group of home sellers who argued they had been forced to pay their real
estate agents exorbitant fees. That verdict included an order for damages of at
least $1.8 billion. U.S. antitrust law allows plaintiffs to seek treble
damages, which means that the amount potentially stood to be tripled to $5.4
billion. More than a dozen additional claims from home sellers across the
country have also been filed against the group.
But N.A.R. was not the only entity named in the
lawsuits. Anywhere Real Estate, RE/MAX and Keller Williams all hatched their
own settlement deals, for a total of $208.5 million, before N.A.R. inked its
agreement. A number of additional plaintiffs have also settled, in several
deals that have not been publicly disclosed, attorneys for the plaintiffs say.
With Thursday’s settlement deal, the total amount of damages now set to be
awarded in commission lawsuits in the United States is past the $1 billion
mark.
Michael Ketchmark, the lawyer on the Missouri case who
has been leading settlement negotiations, hailed the deal but signalled that he
planned to continue to pursue legal claims against HomeServices’ parent
company, Berkshire Hathaway Energy, a path that is carved out in the language
of the settlement.
“The long-entrenched mandatory compensation rule is
finally dead,” he said in a text message. “A jury of ordinary Missourians
spoke, and the industry heard their voice. This settlement allows us to
continue to pursue our nationwide case against Berkshire Hathaway Energy and a
handful of large corporate brokers.”
HomeServices was the
last brokerage named as a defendant in the Missouri case and still vowing to
fight the claims, and in a motion filed March 18, attorneys for the plaintiffs
asked that it pay $4.7 billion — triple the awarded damages, minus the
settlement amounts of N.A.R. and the other brokerages.
https://www.nytimes.com/2024/04/26/realestate/warren-buffett