Keller Williams reaches $70M settlement in commissions cases
The deal, which leaves just NAR and HomeServices of America as defendants in the Sitzer/Burnett and Moehrl cases, releases KW from all sell-side litigation.
With copycat court cases and costs multiplying, Keller Williams has reached a $70 million deal to settle major class action commission lawsuits that have shaken the industry.
The nationwide deal, which still requires a judge's OK, "releases the company — and all of our agents and franchisees — from litigation related to commissions paid to buyers' agents," said Gary Keller, Keller Williams executive chairman and co-founder.
"We are thankful that this settlement provides our agents and franchisees with much-needed relief, stability, and freedom from distraction while preserving their ability to run their businesses independently," Keller said. "As we move past this settled lawsuit, all of us at Keller Williams are focused on what we do best: empowering our entrepreneurs to continue delivering exceptional value in this rapidly evolving market."
Keller Williams spokesperson Darryl Frost emphasized that the brokerage was on solid ground despite the large payout. "This will not impact our operations or our ability to support our franchisees and agents," Frost said.
The agreement leaves just one brokerage company — HomeServices of America — still in the high-stakes Sitzer/Burnett court battle alongside the National Association of Realtors. HomeServices declined to comment, while NAR has not yet responded to a request for comment.
What's at stake? Billions of dollars, potentially. An Oct. 31 verdict in the Sitzer/Burnett case awarded Missouri home sellers nearly $1.8 billion in damages, an amount that could be tripled because it is an antitrust case.
Who else has settled? Anywhere and RE/MAX reached settlement agreements before the Sitzer/Burnett trial began last October. Anywhere agreed to pay $83.5 million in damages and RE/MAX settled for $55 million.
Will KW be changing its policies? In addition to the monetary payout, Keller Williams pledges to "periodically remind franchisees and agents affiliated with those franchises that it does not require them to make offers of compensation or to accept offers of compensation from cooperating brokers."
Similar to the previous settlements involving Anywhere and RE/MAX, Keller Williams will require transparency around compensation and "not express or imply a minimum commission requirement in franchise agreements, training materials or other policies." KW will also not require NAR membership among its agents or franchisees.
What's been happening in court? Keller Williams, alongside NAR and HomeServices of America, had requested a new trial in the Sitzer/Burnett case in motions filed earlier this month. They also asked the court to decertify the class action, saying that evidence in the trial did not meet the standard for antitrust damages.
Also, NAR has asked that all 19 commissions-related cases be consolidated, and that the trial be held in Illinois or Texas, not Missouri, where the Sitzer/Burnett trial took place.
What's next? Potentially more settlements, with the Moehrl trial looming sometime this year. NAR seems to have softened its stance on settlements. A statement in a lawsuits-focused FAQ on the NAR site says the organization "always has been open to resolutions that maintain a way for buyers and sellers to continue to benefit from the cooperation of real estate professionals and eliminates members' risk of liability for the claims alleged."
NAR President Kevin Sears said in January that NAR recognizes the significance of the Sitzer/Burnett decision and understands "what is at stake for our members, brokerages, associations, and most importantly, consumers," adding that NAR leadership "is focused on executing the best strategy moving forward."