Day: November 1, 2023

Business

[Fox Business] Realtors liable for $1.8 billion in damages for commission inflation

The National Association of Realtors and several residential brokerages were found guilty by a Missouri jury on Tuesday of conspiring to artificially inflate commissions for home sales and held liable for $1.78 billion in damages.

Plaintiffs in the case included the sellers of over 260,000 homes in Missouri, Kansas and Illinois between 2015 and 2022 who raised objections to the commissions they had to pay buyers’ brokers. The damages awarded by the federal jury in Kansas City can be tripled to over $5.3 billion under U.S. antitrust law, although the ruling is subject to appeal.

Home sellers complained that the commission model suppressed competition in the real estate industry by keeping commissions for buyer’s brokers in the 2.5 to 3% range despite the diminishing role of brokers as buyers are increasingly able to find homes online independently.

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Lead lawyer for the plaintiffs Michael Ketchmark said of the ruling that the “day of accountability has arrived in real estate.” 

Defendants denied wrongdoing and the National Association of Realtors (NAR) said that there was no evidence agents were required to “make offers of compensation at all, let alone at amounts that stabilize, fix or raise commissions.”

“This matter is not close to being final,” NAR President Tracy Kasper said in a statement. “We will appeal the liability finding, because we stand by the fact that NAR rules serve the best interests of consumers, support market-driven pricing and advance business competition. We remain optimistic we will ultimately prevail. In the interim, we will ask the court to reduce the damages awarded by the jury.”

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Berkshire-owned HomeServices of America and two of its subsidiaries, as well as Keller Williams were also defendants in the case. HomeServices said it was disappointed in the verdict and plans to appeal, while a spokesperson for Keller Williams said it will consider its options and “This is not the end.”

Re/Max and Anywhere Real Estate – which includes brands such as Century 21, Coldwell Banker and Corcoran – were initially defendants in the case but settled before trial with Re/Max paying $55 million and Anywhere paying $83.5 million without admitting liability.

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The U.S. Deptartment of Justice is separately asking a federal appeals court in Washington to let it revive an antitrust probe into the NAR’s practices.

Reuters contributed to this report.

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