Topline
HomeServices of America, Warren Buffett’s real estate brokerage, reached a $250 million settlement over allegations it kept fees artificially high—marking the last major company to settle in the landmark antitrust case against the real estate industry.
The $250 million settlement from HomeServices of America is reportedly the highest amount a real ... [+]
Key Facts
Chris Kelly, executive vice president of HomeServices of America, told Forbes in a statement the settlement “underscores our commitment to protecting our agents, employees, and franchisees” by protecting them from related lawsuits.
Kelly said the brokerage has “always been confident in the legality and ethics of” its business practices and “the decision to settle was driven by a desire to eliminate the uncertainty brought by the protracted appellate and litigation process.”
Benjamin D. Brown, managing partner at Cohen Milstein Sellers & Toll—which represented the plaintiffs in the case—said the “significant settlement” brings them “a step closer to resolving this long-running case involving the industry-wide brokers’ commission scheme.”
The National Association of Realtors, HomeServices, and a number of other major brokerages were sued in 2019 by groups of home sellers who alleged they were paying oversized fees to brokers and agents.
HomeServices is a subsidiary of Buffett’s Berkshire Hathaway Energy, and the $250 million settlement is the highest amount any brokerage has paid to settle suits over the industry’s commission structure, the Wall Street Journal reported.
Big Number
$418 million. That’s how much the National Association of Realtors will pay in settlement fees over the next four years to end litigation with home sellers who sued over broker commissions and fees. As part of the settlement, the association also said agents for home sellers will no longer be required to give commission to buyers’ agents, changing the way homes are sold. The NAR settlement was announced last month and got preliminary approval from a judge earlier this week.
Key Background
In October, a Missouri jury found home sellers had been paying inflated fees to their real estate agents and the verdict ordered damages of at least $1.8 billion from NAR, HomeServices of America and one other brokerage. Two other brokerages named in the suit settled out of court for about $140 million, CNN reported. Though NAR recently settled a number of lawsuits over the heightened fees, the association continued to deny any wrongdoing related to its compensation model. In court, the association argued it didn’t have a conspiracy around commissions and that allegations of set commission rates were unfounded, the New York Times reported.
What To Watch For
Other legal troubles for the NAR. Earlier this month, the Department of Justice announced it was reopening its investigation into the association. “The Antitrust Division is committed to fighting to lower the cost of buying and selling a home,” Assistant Attorney General Jonathan Kanter said in a statement on April 5.
