Realtors Hit with $1.8 Billion Verdict Over High Commissions Conspiracy

The National Association of Realtors (NAR), an influential trade group in the real estate industry, along with several residential brokerages, has been deemed responsible by a Missouri jury for a staggering $1.8 billion in damages. The group and brokerages were found to have colluded to sustain high commissions for home sales.

This litigation pertains to home sales that occurred from April 2015 up to June 2022.

Michael Ketchmark, who headed the legal team for the plaintiffs, hailed the outcome as a notable instance of holding these corporations accountable.

Nevertheless, the NAR contends that the verdict isn't the final word. NAR president Tracy Kasper voiced the organization's intent to challenge the decision, emphasizing their belief that NAR regulations cater to consumer interests, endorse market-pricing, and foster healthy competition. Kasper also mentioned plans to appeal for a reduction in the awarded damages.

Prominent real estate entities like HomeServices of America, owned by Warren Buffett’s Berkshire Hathaway, two of its subsidiaries, and Keller Williams Realty were among those the jury identified as culpable. A representative from HomeServices voiced their disagreement with the judgment and confirmed their plans to appeal. The firm argued that the ruling could potentially make the real estate market more complex for both buyers and sellers.

However, Ketchmark dismissed such assertions, suggesting that such entities are merely keen on preserving their advantageous status quo. He added that the jury swiftly rejected similar arguments made during the trial.

Jaret Seiberg, a housing policy expert at TD Cowen, indicated that the appeals process could stretch on for years, potentially even reaching the Supreme Court. However, he also noted that the recent verdict doesn’t signify the end of buyer commissions. The overseeing judge will need to clarify the injunction's range, which might involve minor adjustments to the existing commission-sharing model. If so, most agents might continue to offer commission-sharing to pique property interest.

Noteworthy is that shortly after the landmark ruling, Ketchmark initiated another class-action lawsuit against other realty firms, including Douglas Elliman, Compass, and Redfin, claiming similar antitrust infringements. While Douglas Elliman and Compass chose not to comment, Redfin's CEO, Glenn Kelman, dismissed it as a “duplicate lawsuit.”