In a landmark decision, a US jury on Tuesday ruled that the National Association of Realtors and multiple real estate firms, including Warren Buffett’s Berkshire Hathaway subsidiaries, must pay $1.78 billion in damages for their involvement in a conspiracy to artificially inflate commissions paid by home sellers to buyers’ brokers, reported Reuters.
This verdict was reached following a two-week trial held in the federal court of Kansas City, Missouri, garnering significant attention for challenging long-standing practices within the real estate industry. Under U.S. antitrust law, the jury’s award will automatically triple to over $5.3 billion, as stated by Michael Ketchmark, the lead attorney for the plaintiffs, who remarked, “Today was a day of accountability.”
Among the defendants were Berkshire’s HomeServices of America and its subsidiaries, along with Keller Williams.
The plaintiffs, comprising sellers of over 260,000 homes in Missouri, Kansas, and Illinois from 2015 to 2022, accused the association and the corporate defendants of inflating the commission rates, sometimes exceeding 6%, that home sellers pay to brokers representing buyers. They characterized this compensation structure as “a market-shaping and distorting rule with severe anticompetitive effects.”
According to Reuters the defendants, on the other hand, vehemently denied any wrongdoing. The National Association of Realtors argued that there was no evidence to support the claim that agents were obligated to “make offers of compensation at all, let alone at amounts that stabilize, fix, or raise commissions.”
Prior to the trial, two other defendants, Re/Max and Anywhere Real Estate, had agreed to settlements of $55 million and $83.5 million, respectively, without admitting any liability. In response to the verdict, HomeServices expressed disappointment and stated its intention to appeal, while Keller Williams’ spokesperson, Darryl Frost, emphasized that the fight was not over and they were considering options for an appeal. The National Association of Realtors also announced its plans to appeal and seek a reduction in the damages amount. This ruling is a significant development in the real estate industry, challenging traditional practices and setting the stage for potential reforms.