HomeServices of America logo and the scales of justice
Illustration by Lanette Behiry/Real Estate News; Shutterstock

HomeServices stays the course in commissions lawsuits 

Now the lone defendant in at least two cases, the brokerage vows to "aggressively pursue options" to resolve litigation even as it faces billions in damages.

March 20, 2024
3 minutes

Key points:

  • Following NAR’s Mar. 15 settlement, HomeServices of America is the lone defendant in the Sitzer/Burnett and Moehrl cases.
  • HomeServices has chosen a different path, including taking its case to the Supreme Court.
  • As the only defendant in major cases, the company faces greater financial exposure, including a request from the Sitzer/Burnett plaintiffs for more than $4.7 billion.

As the twists and turns of the buyer agent commission lawsuits continue to shake up the real estate industry, an unlikely brokerage has become the last defender in two of the original cases.

HomeServices of America has chosen to fight on in the Sitzer/Burnett and Moehrl lawsuits — the cases likely to have the greatest impact in the short term because they are closer to a conclusion than the copycat suits that followed.

Being the only defendant left standing in these cases has put the brokerage, which is part of Warren Buffett's Berkshire Hathaway empire, in a difficult position: In addition to facing a potential judgment of more than $4.7 billion in the Sitzer/Burnett case, the company could incur substantial monetary damages if it loses in other cases.

The court cases have reeled in more than just the brokerage business. In March, Berkshire Hathaway Energy — the parent company of HomeServices — was added as a defendant to the Gibson case, which was filed in Missouri following the Sitzer/Burnett verdict and is national in scope.

Since Sitzer/Burnett and Moehrl were filed five years ago, the National Association of Realtors has led the charge in defending the current commissions model of cooperative compensation. Now, NAR is stepping away from the fight, reaching a settlement on March 15. The other defendants in the two cases — Anywhere, RE/MAX and Keller Williams — previously reached their own settlement agreements, leaving HomeServices on its own.

Where HSoA goes from here

For now, HomeServices "continues to aggressively pursue all available options to resolve its involvement in the underlying class action cases," said Chris Kelly, executive vice president at HomeServices of America. The company is currently preparing its reply to the Sitzer/Burnett plaintiffs' request for a multibillion-dollar judgment, which is expected to be filed in Missouri's U.S. District Court in April.

The company has won some victories during this era of commissions litigation. In February, it was dismissed from the Batton 1 case in Chicago, which is a potentially pivotal case because the plaintiffs are homebuyers alleging a conspiracy, rather than sellers. The two Batton cases are not part of the settlements agreed to by NAR, KW, Anywhere and RE/MAX.

HomeServices has also charted a different path than the other defendants, taking its fight to the Supreme Court. The company is arguing that the Sitzer/Burnett trial should never have taken place because the plaintiffs had signed arbitration agreements.

Agents who can show their value will be the ones who succeed

In communicating its position following NAR's March 15 settlement announcement, which includes several rule changes, HomeServices has emphasized that the proposed changes are still in the preliminary stages, and the company is working to ensure every agent is prepared and ready to adapt.

"It is simply too early to determine any impact the amended business practices will have on the industry," Kelly said. "What is known is that agents who consistently demonstrate and articulate their value to both buyers and sellers will be able to successfully navigate the changes that will come as a result of the settlement."

The company also notes that cooperative compensation is still permissible, as long as it's not included on the MLS, and that the increased use of buyer representation agreements is a positive for the industry.

"Numerous markets across HomeServices have utilized buyer representation agreements successfully for years and have allowed a more transparent and clear working relationship between buyers and agents," Kelly said.

Get the latest real estate news delivered to your inbox.