Homeservices of America, one of the country's largest real estate brokerages, has become the latest to settle a class action lawsuit claiming they conspired to force home sellers to overpay commissions to their real estate agents.
In the process, the $250 million expected payout from Berkshire Hathaway-affiliated Homeservices will bump the total payouts from realtors, their trade association and firms to nearly $950 million amid the sprawling antitrust litigation that has raged in court for years.
On April 26, attorneys for plaintiffs told federal judges in Kansas City and Chicago that they had reached the deal with Homeservices of America. Terms of the settlement have not yet been filed in a formal motion to the court. However, the notices filed in court indicated the terms will be spelled out in a motion expected soon.
However, in statements released to the press, both plaintiffs' attorneys and Homeservices confirmed the deal would be worth $250 million.
It is unclear at this point what relief may be obtained by home sellers or others who may be affected. It is also unknown how much plaintiffs' lawyers may receive in fees. If the settlement follows a traditional path through court, plaintiffs' lawyers may seek to claim one-third of the settlement as fees. This could equate to more than $82 million in fees.
Those fees would come on top of potentially more than $200 million in attorney fees that could be paid out of more than $600 million in settlements announced earlier this year with the National Association of Realtors and other large real estate brokerages.
All settlements and any attorney fee requests have yet to be approved by judges in the cases.
The litigation has continued in federal courts for five years, since the first lawsuit was filed in 2019 in Chicago federal court. Similar actions followed within weeks in the Western District of Missouri court in Kansas City.
The plaintiffs are represented in the actions by large class action firms, including Susman Godfrey, of Los Angeles, New York and Seattle; Hagens Berman Sobol Shapiro, of Seattle and Chicago; and Cohen Milstein Sellers & Toll, of Chicago and Washington, D.C.
The lawsuits all accused the NAR and its large broker members and partners of violating federal antitrust law by allegedly conspiring to improperly use their control of the Multiple Listing Services (MLS) - the central hub for homes listed on local real estate markets - to force home sellers to pay inflated commissions to real estate agents.
The lawsuits claimed such activity allegedly inflated the price of homes in the process.
Judges in Chicago and Kansas City repeatedly rejected attempts by the NAR and the large brokerages to dismiss the cases.
A trial was held in one of the cases against Homeservices, the NAR and brokerage Keller Williams in Kansas City, resulting in a jury verdict worth $1.8 billion.
Settlements ended the jury verdict against NAR and Keller Williams.
Under a settlement with the NAR and a host of smaller brokerages, the NAR agreed to pay $418 million and agreed to a host of changes to policies that largely control the way Americans buy and sell home, including prohibiting home sellers from making non-negotiable offers of compensation to agents representing home buyers. This would effectively end the traditional 6% commission for real estate agents, which historically has been split between the agents representing home sellers and those representing buyers.
And real estate agents generally can no longer advertise to home buyers that they can purchase homes without paying commissions to their agents.
The settlement with the NAR included specific language excluding Homeservices of America from the deal.
That set the stage for Homeservices to reach its own separate deal, setting aside the portion of the jury verdict against them.
In all, the brokerages and NAR have so far agreed to pay more than $943 million to settle the litigation.
Statements from plaintiffs' lawyers indicated the settlement only ends the litigation against Homeservices of America itself. It does not release Berkshire Hathaway Inc. or Berkshire Hathaway Energy, they said. Additional defendants still remain in the litigation.
“These settlements will return hundreds of millions of dollars to home sellers and empower both sellers and buyers in the real estate negotiation process.” said Robert A. Braun, a partner in Cohen Milstein’s Antitrust practice, in a prepared statement. “This is one of the most important transactions in a person’s lifetime. Confidence in the process is critical.”
Homeservices of America Executive Vice President Chris Kelly said the new settlement will allow the brokerage firm to "protect our nearly 70,000 agents, 51 brands and over 300 franchisees and licensees from related lawsuits" and "effectively conclude our involvement in the antitrust litigation."
Homeservices statement continued: "While we have always been confident in the legality and ethics of our business practices, the decision to settle was driven by a desire to eliminate the uncertainty brought by the protracted appellate and litigation process. This resolution allows us to concentrate on our primary goal: delivering unparalleled value in the real estate market and serving home buyers and sellers with the highest standards of service.
"As we move beyond this settlement, our focus remains steadfast on ethical operations, industry integrity, and delivering value. Our long-standing principle of helping agents build careers that positively impact the communities and consumers they serve continues. We are grateful for the unwavering support of our team and look forward to continuing to grow and transform the real estate industry together."