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HomeServices of America, Warren Buffett's real estate brokerage, reaches a $250 million settlement for allegedly setting commissions artificially high, a landmark antitrust law for the real estate industry. It was the last major company to settle a lawsuit.
$250 million settlement from HomeServices of America reportedly the largest ever … [+]
important facts
Chris Kelly, executive vice president of HomeServices of America, told Forbes that the settlement “understands our commitment to protect our agents, employees, and franchisees by shielding them from related litigation. “We emphasize this,” he said in a statement.
Mr. Kelly said the brokerage had “always had confidence in the legality and ethics” of its business practices and that “the decision to settle was driven by a desire to eliminate the uncertainty posed by a lengthy appeals and litigation process.” It was brought to us.”
Benjamin D. Brown, a managing partner at Cohen, Milstein, Sellers & Toll, who represented the plaintiffs in the case, said the “substantial settlement” would “shape the industry-wide broker commission system.” “We are one step closer to resolving the long-running litigation surrounding this issue.” ”
The National Association of Realtors, HomeServices and other major brokerages were sued in 2019 by a group of home sellers, alleging they pay exorbitant commissions to agents and brokers.
HomeServices is a subsidiary of Buffett's Berkshire Hathaway Energy, and the $250 million settlement is the largest ever paid by a brokerage to settle a lawsuit over the industry's fee structure, Wall Street said.・The Journal reported.
Despite the high settlement amount, the plaintiffs, who tried to improve their payout by tying the case to Berkshire Hathaway Energy, wanted even more, according to multiple reports.
big number
$418 million. That's the amount the National Association of Realtors will pay in settlements over the next four years to end lawsuits with home sellers who sued over commissions and commissions. The association also said that as part of the settlement, home seller's agents will no longer have to pay fees to buyer's agents, changing the way homes are sold. NAR's settlement was announced last month and received preliminary approval from a judge earlier this week.
Main background
In October, a Missouri jury found that home sellers paid high commissions to real estate agents, resulting in at least $1.8 billion in damages for NAR, HomeServices of America, and one other brokerage firm. ordered compensation. Two other intermediaries named in the lawsuit settled out of court for about $140 million, CNN reported. NAR recently settled a number of lawsuits over fee increases, but the association continued to deny any wrongdoing related to its compensation model. The association argued in court that there was no conspiracy over fees and that allegations about setting commission rates were unfounded, The New York Times reported.
What to watch out for
Other legal issues related to NAR. Earlier this month, the Justice Department announced it was reopening an investigation into the association. “The Antitrust Division is committed to lowering the cost of buying and selling homes,” Assistant Attorney General Jonathan Cantor said in an April 5 statement.
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