Compass Agrees to $58M Settlement Over Commission Practices

Home brokerage giant Compass has reached a settlement totaling nearly $58 million to address accusations of conspiring to overcharge U.S. home sellers on commissions paid to agents. The proposed settlement, disclosed by plaintiffs’ lawyers in Missouri federal court on Friday, marks a pivotal moment in a nationwide legal battle over commission practices.

The agreement, which awaits approval by a judge, follows a wave of litigation targeting major players in the residential real estate market. Earlier this month, the National Association of Realtors (NAR) and several other prominent brokerages agreed to pay over $626 million in related lawsuits involving home-seller commissions, per Reuters.

Compass CEO Robert Reffkin, while emphasizing the company’s non-admission of wrongdoing, expressed satisfaction with resolving the claims to mitigate disruptions. This settlement underscores the growing pressure on industry leaders to address concerns about commission structures and antitrust violations.

Mike Ketchmark, an attorney representing the home-seller plaintiffs, highlighted the momentum building against traditional commission practices, stating, “Brokers around the country are continuing to join with NAR in abandoning this broken system. We expect many more settlements in the coming months.”

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At the heart of the legal disputes are allegations that large residential home brokerages, including Compass, enforced practices that compelled home sellers to pay commissions to buyer’s agents to list their properties for sale. These commissions, typically ranging from 5% to 6% of a home’s sale price, have drawn scrutiny for their potential to inflate costs for sellers.

The settlement with Compass follows a landmark jury decision in October, where a Kansas City, Missouri, jury awarded $1.8 billion in damages to a class of Missouri-area home sellers in a case against the National Association of Realtors and other entities. Plaintiffs’ attorneys are now poised to seek preliminary approval from a U.S. judge in Kansas City for the recent settlement, which not only involves a substantial financial payout but also includes commitments from NAR to revise its policies regarding compensation to buyer’s brokers.

Source: Reuters