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A Missouri jury’s recent decision has shaken the real estate industry, holding the National Association of Realtors (NAR) and various residential brokerages accountable for nearly $1.8 billion in damages. They were found to have engaged in a conspiracy to artificially inflate home sales commissions. The lawsuit encompassed home sales from April 2015 to June 2022.
Michael Ketchmark, the lead attorney for the plaintiffs, emphasized,
“We view it as a tremendous day of accountability for these companies.”
However, despite this verdict, the case is far from being concluded. NAR President Tracy Kasper immediately stated their intention to appeal the liability finding. Kasper emphasized that NAR believes its rules are in the best interests of consumers, supports market-driven pricing, and promotes healthy business competition. Specifics of the appeal basis will be provided once it is filed. Kasper also indicated they would request a reduction in the damages awarded by the jury.
Notably, Warren Buffett’s Berkshire Hathaway-owned HomeServices of America and two subsidiaries, along with Keller Williams Realty, were also implicated in the conspiracy. HomeServices expressed disappointment with the court’s ruling and plans to appeal. They warned that the verdict would result in additional obstacles for buyers in an already challenging real estate market and make it more challenging for sellers to realize the value of their homes.
Keller Williams Realty did not immediately respond to requests for comment.
Michael Ketchmark, the plaintiffs’ attorney, countered the claims of these real estate groups, suggesting they are desperate to maintain a rigged system. He remarked that despite these arguments in court, it took a mere two and a half hours for the jury to dismiss them.
The appeals process is expected to be protracted, potentially spanning up to three years. Housing policy analyst Jaret Seiberg at TD Cowen suggested that the losing party would likely attempt to have the case tried by the Supreme Court.
However, it’s important to note that this verdict does not signal the end of buyer commissions. The judge overseeing the case will determine the scope of the injunction, which may result in only minor adjustments to the existing commission-sharing system. Most brokers are expected to continue offering commission sharing to generate interest in properties.
Shortly after the verdict, Michael Ketchmark filed a new class-action lawsuit against additional real estate companies, including Douglas Elliman, Compass, and Redfin. This new lawsuit alleges violations of antitrust laws in their efforts to maintain high commissions. Douglas Elliman and Compass declined to comment on the new case, while Redfin’s CEO, Glenn Kelman, dismissed it as a “copycat lawsuit.”
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