RE/MAX makes $55 million deal to settle commission lawsuits
The settlement agreement leaves NAR, HomeServices of America and Keller Williams as defendants with an Oct. 16 trial date looming.
- RE/MAX’s settlement agreement covers both the Sitzer/Burnett and Moehrl cases.
- Along with paying $55 million, RE/MAX will also make “massive changes” to its practices around buyer agent commissions.
- NAR said on Monday that it is standing by its plans to fight the lawsuit to the end.
RE/MAX is the latest brokerage company to settle a pair of major buyer agent commission lawsuits, further reducing the number of defendants heading to trial.
In court documents filed on Sept. 18, RE/MAX indicated it had reached a settlement agreement with the plaintiffs in both the Sitzer/Burnett and the Moehrl class action cases. The settlements are subject to the judges' approval.
According to an SEC filing also submitted on Sept. 18, RE/MAX has agreed to pay $55 million to settle the lawsuits, and the company will be making changes to its buyer-broker compensation practices. The SEC filing did not include specific details about how the brokerage intends to revise its business practices.
With RE/MAX and Anywhere Real Estate both settling, the National Association of Realtors, HomeServices of America and Keller Williams are the remaining defendants in both cases. The Sitzer/Burnett trial is set to begin Oct. 16, while a court date has not been finalized for Moehrl.
Michael Ketchmark, lead attorney for the plaintiffs in the Sitzer/Burnett case, said they were pleased with the settlement. The monetary figure was based on RE/MAX's ability to pay. Anywhere, which saw significantly higher revenue than RE/MAX last quarter, agreed to pay $83.5 million to settle the Moehrl case alone.
"The biggest part of the settlement is the massive changes to RE/MAX's business practices. The time has now come for Home Services of America, NAR, and Keller Williams to admit they are wrong in continuing to force home sellers to pay buyer's commissions," Ketchmark said.
"Our experts have shown that NAR's anti-competitive rules result in doubling the cost of commissions in the United States. The jury trial in federal court for the Western District of Missouri is only four weeks away. Unless Home Services, NAR, and Keller Williams finally admit they are wrong and change their ways, we will ask the jury to return the money to the 250,000 homeowners in Missouri who were victims of this alleged conspiracy," Ketchmark added.
Real Estate News reached out to RE/MAX and the remaining defendants for comment.
In a statement, RE/MAX rejected the claims made by the plaintiffs in the two cases but said the settlement would serve the company by "removing the uncertainty of ongoing litigation."
"While RE/MAX, LLC steadfastly refutes the allegations presented in the lawsuits, this forward-looking decision was made in the best interest of RE/MAX, LLC, its agents and its franchisees, after carefully considering the significant risks and costs associated with continued litigation," a spokesperson said.
After Anywhere announced it had settled earlier this month, NAR said it was committed to arguing its case in court.
"The practice of the listing broker paying the buyer broker's compensation saves sellers time and money by having so many buyer brokers participating in that local marketplace and thus creates a larger pool of buyers for sellers," said Mantill Willimas, vice president of communications for NAR, in response to news of the Anywhere settlement.
"For buyers, these marketplaces save them the burden of extra costs at closing, enable them to receive professional representation and make homeownership possible for more people."
When reached for comment on Sept. 18, a spokesman for NAR reiterated that the association plans to press forward.
Keller Williams is not commenting on the most recent settlement. HomeServices of America did not immediately respond to a request for comment.
Both cases have the potential to upend how buyer agents are paid. The lawsuits claim NAR and others participated in anticompetitive practices by forcing sellers into a system where they pay a commission that is split between buyer and seller agents. The plaintiffs believe this system has led to inflated buyer agent fees to the detriment of home sellers, and they argue that homebuyers should pay for their own agents.
NAR and the other defendants counter that the current system "provides transparency and market-driven pricing options for home buyers and sellers," according to NAR spokesman Wes Shaw.
If the plaintiffs prevail, agent compensation will fundamentally change, MLSs — in addition to brokerage companies — may have to alter the way they do business, and the defendants could have to pay out a massive amount in damages.
Because of the size of the cases and the likelihood of appeals, it may take years before a final outcome is reached.