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.
The brokerage on Thursday approved adding $250 million to the growing pile of damages won by home sellers who successfully sued several brokerages and the National Association of Realtors for what they described as inflated commissions. The New York Times obtained a copy of the signed agreement.
Industry insiders have been awaiting the HomeServices settlement since March 15, when NAR, an influential trade group with 1.5 million members, agreed to settle lawsuits that claimed the group violated antitrust laws and conspired to fix the rates that real estate agents charge their clients. clients. That settlement received preliminary approval from a federal judge Tuesday, and now NAR will pay $418 million in damages and significantly change its rules on agent commissions and databases, accessible only to those who are members subsidiary groups of NAR, where homes are listed for sale. NAR maintained in court that it never organized a conspiracy around commissions and continues to assert that home sellers’ allegations that the organization’s rules actually set commission rates were unfounded.
The regulation will introduce competition to the real estate commission market, reducing the fees consumers are required to pay when selling a home and ultimately lowering home prices across the board, some say. industry analysts.
For more than a century, NAR has been an indomitable force in the real estate industry. But the group had been under pressure to settle disputes since October, when a Missouri jury sided with a group of home sellers who claimed they were forced to pay exorbitant fees to their real estate agents. That verdict included an order for damages of at least $1.8 billion. U.S. antitrust law allows plaintiffs to seek treble damages, meaning the amount could potentially triple to $5.4 billion. More than a dozen additional claims from home sellers across the country have also been filed against the group.
But NAR wasn’t the only entity named in the lawsuits. Anywhere Real Estate, RE/MAX and Keller Williams all entered into their own settlement agreements, totaling $208.5 million, before NAR signed its agreement. A number of other plaintiffs also reached a settlement, in several settlements that have not been publicly disclosed, according to the plaintiffs’ attorneys. With Thursday’s settlement agreement, the total amount of damages now expected to be awarded in U.S. lawsuits exceeds $1 billion.
Michael Ketchmark, the lawyer in the Missouri case who led the settlement negotiations, welcomed the agreement but indicated he planned to pursue legal action against HomeServices’ parent company, Berkshire Hathaway Energy, a path traced in the language of the regulation.
“The long-standing mandatory compensation rule is finally dead,” he said in a text message. “A jury of everyday Missourians spoke, and the industry heard their voices. This settlement allows us to continue our nationwide action against Berkshire Hathaway Energy and a handful of large broker-dealers.
HomeServices was the last brokerage named as a defendant in the Missouri case and has remained committed to fighting the claims. In a motion filed March 18, plaintiffs’ attorneys asked it to pay $4.7 billion, triple the damages awarded, less settlement amounts from NAR and other brokerages.
“The decision to settle was motivated by a desire to eliminate the uncertainty created by the lengthy appeal and litigation process. This resolution allows us to focus on our core purpose: delivering unmatched value in the real estate market and serving home buyers and sellers with the highest standards of service,” said Chris Kelly, Executive Vice President of HomeServices , in a press release sent by email. The settlement, he added, “will protect our nearly 70,000 agents, 51 brands and more than 300 franchisees and licensees from related lawsuits.” The financial terms of the settlement represent a single commitment by HomeServices, independent of any parent entity involvement, to effectively conclude our involvement in the antitrust litigation.
The agreement, which is still subject to court approval, does not close the door to Mr. Buffett’s legal tussle within the real estate industry. HomeServices’ parent company, Berkshire Hathaway Energy, remains ensnared in a separate, potentially larger, lawsuit over real estate commissions.
Last month, three home sellers who filed a nationwide antitrust suit in October amended their complaint to add Berkshire Hathaway Energy, the unit that controls HomeServices of America, to its series of defendants that include Compass, eXp World Holdings, Douglas Elliman and Redfin. Compass settled for nearly $58 million last month, but other brokerages have yet to make a move.
And as part of Mr. Buffett’s multibillion-dollar empire, Berkshire Hathaway Energy is by far the biggest target.
The suit alleges that Berkshire Hathaway Energy played on Mr. Buffett’s reputation to attract clients and bolster his business, and claims that home sellers working with Berkshire Hathaway representatives were defrauded out of $4.2 billion. dollars in 2023.
The NAR’s legal battles are also unresolved. This month, a three-judge panel of the U.S. Court of Appeals for the District of Columbia ruled that the Justice Department could reopen an antitrust investigation into the powerful group, giving the government an opportunity to examine the rules on agent compensation that NAR has in place. imposed on the industry for a long time.
With the wave of regulations, “there’s an implicit recognition that these rules are not consumer-friendly,” said Randy Airst, chief executive of real estate analytics firm Exceedant.
Because HomeServices is part of Mr. Buffett’s empire, it did not face the same financial constraints as other brokerages involved in the lawsuits, Mr. Airst said, and therefore was not subject at the same pressure to adjust. The agreement, he added, reflects a shift in public opinion toward the commissions.
“We live in a different world now,” he said.
News Source : www.nytimes.com
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