Yahoo Finance Real estate brokerages granted final approval of landmark settlements with homebuyers
Three big real estate brokerage firms received a judge's approval Thursday to finalize sweeping settlements that promise dramatic changes to real estate commissions across the US.
Keller Williams, RE/MAX (RMAX), and Realogy (HOUS) were granted the green light to go forward with the settlements during a fairness hearing in a Missouri federal court over objections from home sellers who are unhappy with the accord.
Pat Knie, a lawyer who represents South Carolina home sellers in a separate case, said the sellers will appeal the Missouri district court's approval to the 8th Circuit Court of Appeals.
The real estate brokers entered three separate agreements with home sellers that amount to roughly $209 million.
Similar preliminary settlements of $418 million from the National Association of Realtors (NAR) and $250 million from Berkshire Hathaway (BRK-A) Energy’s HomeServices of America are set for final fairness hearings in November.
The NAR and the real estate firms also agreed to changes in business practices that home sellers and buyers across the country allege are anticompetitive and led to a $1.8 billion damages award in the first of a group of antitrust cases to go to trial.
The NAR, for example, will no longer require a broker listing a home for sale on the group’s MLS databases to offer any compensation to a buyer’s agent.
Read more: What the NAR settlement means for home buyers and sellers
The landmark antitrust lawsuit in Missouri named each of the parties as defendants.
RE/MAX and Realogy, now known as Anywhere Real Estate, settled before trial. Keller Williams, NAR, and HomeServices faced a jury that in October found them guilty of illegally depriving home sellers of $1.8 billion.
Anywhere Real Estate owns some of the largest real estate brokerages across the country, including Century 21, Coldwell Banker, Corcoran, ERA, Better Homes and Gardens Real Estate, and Sotheby’s.
The near $2 billion verdict, along with the pre-trial settlements, could dismantle the NAR’s hold over a system that has long been criticized for disadvantaging sellers and buyers.
For decades, the NAR has controlled national and local MLS databases that house more than 90% of all US homes listed for sale. Use of the database is restricted to NAR members, and NAR requires sellers' agents to share sales commissions with brokers on the buyer’s side.
The Missouri case — the first in a string of similar lawsuits to go to trial — alleged those rules amounted to collusion between the NAR and brokerage firms that violated US antitrust law.
Michael Downer, a broker with Coldwell Banker in New Jersey and Florida, said the NAR’s conditions created a paywall that incentivized brokers and agents to promote homes that paid higher commissions.
"When agents were making a listing, they would say, 'If you want to sell your house, if you don't offer out 3%, let’s say, to the buyer’s agent, then nobody will show your house,'" Downer said.
Sellers who tried to negotiate a lower fee were at a disadvantage too, Downer said. "They’re going to show your house last, or not even show it."
Opponents of the settlements say the court should reject the proposals because they’re out of step with the law and out of proportion with the jury’s verdict.
The damages in the Missouri trial allowed for "treble" or triple damages, meaning that a judge could require the defendants to pay up to $5.3 billion.
But it now looks like the defendants will pay considerably less. The settlements reached thus far amount to roughly $900 million and expand the class to 60 times its original size.
"The settlements are far less than the $1.8 billion that the jury awarded, but that's not the problem," Knie told Yahoo Finance.
"The problem is that this money — instead of going to 500,000 people in Missouri, which was the class in the case — is going to a national class of 30 million people."
As proposed, the settlements block future lawsuits from home sellers both within and outside of Missouri who used the defendants' services and did not opt out of the agreement by April 13, 2024.
Laws that govern settlements do permit expanding a class of plaintiffs to a "somewhat" larger group. But the plaintiffs doubt that those rules allow for the group to balloon so far beyond its original size.
If all 30 million eligible sellers file a claim, after attorneys' fees totaling one-third of the broader settlement, each seller would be entitled to roughly $20.
The settlement funds are offered to people who sold a home on a "qualified MLS” between April 29, 2014, and Feb. 1 of this year. More restrictive dates apply for some of the MLSs within the group.
May 9, 2025, is the last day for eligible home sellers to file a claim.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
