On Tuesday, the National Association of Realtors and several real estate companies were ordered to pay $1.8 billion in damages after a federal jury in Missouri ruled that they conspired to artificially inflate brokerage fees.
In addition to the Realtors Association, defendants in the lawsuit include Keller Williams, Berkshire Hathaway HomeServices of America, and two of its subsidiaries. The ruling, handed down after a two-week trial in federal court in Kansas City, could revolutionize the way Americans buy homes. It also comes at a time when the U.S. real estate market is stalling, with mortgage rates approaching 8% and existing home sales down double digits from a year ago.
The lawsuit focuses on fees paid by home sellers to buyers' real estate agents. These payments are regulated in part by his NAR rules, which require sellers to include a commission offer to the buyer's agent when listing a property. This offer is known to the real estate agent representing the prospective buyer, but the latter usually does not know the amount. This allows agents to drive buyers into transactions and maximize their own commissions.
The plaintiffs alleged that the association and other defendants conspired to inflate the fees that sellers pay to agents who represent homebuyers. Class members include sellers who sold hundreds of thousands of homes between 2015 and 2022 in parts of Missouri, Illinois and Kansas.
Michael Ketchmark, lead attorney for the plaintiffs, told CBS MoneyWatch that he expects the jury award to triple to more than $5 billion under U.S. antitrust laws.
“Today was a day of accountability. NAR has long used its market power to control home ownership,” Ketchmark told CBS MoneyWatch.
“It takes two to three times more people to sell a home in the United States than in other developed countries,” the lawyer said, citing the practice outlined during the trial of forcing sellers to pay up to 6 percent in commissions. It's expensive,” he said. .
Two other brokerages, Re/Max and Anywhere Real Estate, settled with the plaintiffs earlier this year, paying a total of $138.5 million and agreeing to no longer require their agents to be affiliated with NAR.
HomeServices expressed disappointment with the ruling and said it would appeal.
“Today’s decision means buyers will face further hurdles in an already tough real estate market, sellers will find it even more difficult to realize the value of their homes, and homebuyers will face perhaps the most complex They may be forced to decline professional help during difficult times, and will be making significant financial transactions throughout their lives,'' a spokesperson said in an email to CBS MoneyWatch. “Cooperative Coverage helps millions of people achieve the American dream of homeownership with the help of real estate professionals.”
Keller Williams said it would consider its options, including an appeal. “This is not the end,” a spokesperson said in an email.
in post NAR stated on social media that it would appeal the finding of liability. “We are optimistic that we will ultimately prevail. In the meantime, we will ask the court to reduce the damages awarded by the jury,” NAR President Tracy Kasper said in a statement. .
Shares of real estate companies, which are not named in the lawsuit, plunged following the ruling in a lawsuit challenging widespread industry practices, with Zillow falling 7% and Redfin ending trading Tuesday down nearly 6%. finished. The decline continued Wednesday, with Zillow shares down nearly 2% in early trading.
