Compass Real Estate logo and a gavel and hundred-dollar bills
Illustration by Lanette Behiry/Real Estate News; Shutterstock

Compass agrees to $57.5 million settlement in commissions suits 

The first of 90-plus brokerages not included in the NAR settlement reaches a deal that includes changes to its business practices as well as a monetary payout.

March 22, 2024
2 minutes

Compass is the latest of a growing number of firms in the residential real estate world to settle in the ongoing commissions class action cases. 

Announced this morning via an SEC filing, the New York-based brokerage has agreed to pay $57.5 million and make some changes to its business practices to settle the Umpa and Gibson class action litigation. 

Compass's settlement is the first deal to be announced since NAR's major settlement agreement was revealed just a week ago on Mar. 15. Compass had been one of more than 90 brokerages that wasn't covered by the NAR settlement terms. 

As with all other settlements, the Compass agreement is still pending final court approval, but it is expected to clear the company and its agents from future litigation in similar class action suits.

In the SEC filing, Compass said that the company "does not expect the terms of the proposed settlement to have a material impact on its future operations" and that the "proposed settlement is not an admission of liability."

The rule changes and business practices Compass has agreed to include reminding all agents and brokers that "the company has no rule requiring agents to make or accept offers of compensation," requiring its agents to "clearly disclose to clients that commissions are not set by law and are fully negotiable," and prohibiting agents from "claiming buyer agent services are free."

Additionally, agents and brokers will be prohibited from using technology or other methods to search for listings by compensation level — "unless requested by the client."

Compass shares were down only 1.5% Friday morning. In the company's most recent earnings announcement, the firm reported that agent count was up and it expects to be cash-flow positive in 2024.

CEO Robert Reffkin told shareholders that the industry had seen the worst of the market and shared an optimistic forecast.

"Over the past two years, we have successfully navigated the worst residential real estate market in decades and significantly reset our operating expense levels, positioning Compass for what we believe will be a significant upside when the market begins to recover," he said.

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