One of the nation’s largest real estate brokerages has agreed to pay $70 million as part of a proposed settlement to resolve more than a dozen lawsuits related to agent commissions across the country.
The agreement, filed Thursday in federal courts overseeing the cases in Illinois and Missouri, also calls for Keller Williams Realty Inc. to take several steps aimed at providing home buyers and sellers with greater transparency about commissions paid to real estate agents.
“We think this is a tremendous victory for homeowners and homebuyers across the country,” said Michael Ketchmark, one of the attorneys representing the plaintiffs in the lawsuits.
The central allegation made in the lawsuits is that the nation’s largest real estate brokers engaged in practices that unfairly forced homeowners to pay artificially inflated agent commissions when selling their homes.
In October, a federal grand jury in Missouri found that the National Association of Realtors and several major real estate brokerages, including Keller Williams, conspired to require home sellers to pay homebuyers’ agent commissions, in violation of federal antitrust law.
The jury awarded the defendants approximately $1.8 billion in damages. If awarded treble damages, which would potentially allow plaintiffs to receive up to three times actual or compensatory damages, defendants could have to pay more than $5 billion.
More than a dozen similar lawsuits are pending against the real estate brokerage industry.
Getting Keller Williams out from under this cloud of litigation and uncertainty motivated the company to pursue the proposed settlement, which would save its franchisees and agents from similar agency kickback lawsuits across the country. Headquartered in Austin, Texas, the company operates more than 1,100 offices with approximately 180,000 agents.
“We came to the agreement after careful consideration of the immediate and long-term well-being of our agents, franchisees, and the business models on which they depend,” Gary Keller, the company’s chairman, wrote in a companywide email on Thursday. . “This was a decision that would bring us all stability, relief, and the freedom to focus on our mission without distraction.”
Among the terms of the proposed settlement, Keller Williams agreed to make clear that its representatives would advise customers that commissions are negotiable and that there is no set minimum amount that customers must pay or a legally prescribed minimum amount.
The company also agreed to ensure that agents working with potential home buyers disclose their compensation structures, including “collaborative compensation,” in which the seller’s agent offers to compensate the agent representing the buyer for their services.
As part of the agreement, which must be approved by the court, Keller Williams representatives will no longer be required to become members of the National Association of Realtors or abide by the trade association’s rules.
Two other major real estate brokerages agreed to similar settlement terms last year. Anywhere Real Estate Inc. in related agreements. They agreed to pay $83.5 million, while Re/Max agreed to pay $55 million.