Warren Buffett’s real estate brokage agrees to $250M settlement in anti-trust lawsuits
Warren Buffett’s HomeServices of America, the largest residential real estate brokerage in the United States, has agreed to settle a series of anti-trust lawsuits that could change the way real estate agents are paid commissions.
Chris Kelly, Executive Vice President of HomeServices of America, told The Dallas Morning News Friday that the company has agreed to pay $250 million over four years. A long-form settlement has not yet been filed with the court, and a judge must approve the agreement.
HomeServices of America owns four Dallas-Fort Worth firms, Allie Beth Allman & Associates and Ebby Halliday’s three real estate brands—Dallas-based Ebby Halliday, Dave Perry-Miller Real Estate and Fort Worth-based Williams Trew Real Estate.
News of the settlement was first reported by The New York Times. It adds to the growing sum of damages won by home sellers who sued real estate brokerages and the National Association of Realtors alleging they were forced to pay artificially high prices to sell their property.
“HomeServices of America has reached a significant nationwide settlement in the Sitzer/Burnett case, a development that underscores our commitment to protecting our agents, employees, and franchisees,” Kelly said in a statement. “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.”
The news comes more than a month after the National Association of Realtors agreed to a $418 million settlement that changes its rules on agent commissions and the use of home listing databases.
For decades, the standard has been this — a seller pays 5% to 6% commission of the home’s sales price. That commission is usually split between the seller’s and buyer’s agents.
Lawsuits against NAR alleged the requirement to post an offer on the MLS reduced competition. The old rules gave buyer’s agents an incentive to steer clients away from properties where their offered commission was lower, they alleged.
The NAR will no longer require a broker advertising a home on the Multiple Listing Service to list or offer any upfront compensation to a buyer’s agent. Offers of compensation can be made outside of the MLS platform, but the seller’s broker must disclose the arrangement.
The move could slash fees paid to real estate agents and save consumers $20 billion to $30 billion annually, according to estimates from the Consumer Federation of America.
A federal judge gave preliminary approval to the NAR settlement earlier this week. That agreement is still subject to a hearing for final court approval, which is expected in late November.
NAR and HomeServices of America were not the only entities to reach settlement agreements in the anti-trust lawsuits. Anywhere Real Estate, RE/MAX, and Keller Williams have agreed to pay, $208.5 million. The New York Times reports that damages set to be awarded in commission lawsuits in the United States have topped $1 billion.