A U.S. jury has ruled against the National Association of Realtors and several residential brokerages, including Berkshire Hathaway’s subsidiaries, awarding $1.78 billion in damages. The verdict was reached in a federal court in Kansas City, Missouri, where these entities were found guilty of conspiring to artificially inflate commissions for home sales. This decision has the potential to disrupt long-standing industry practices that have allowed real estate agents to increase commissions in tandem with rising home prices and mortgage rates, ultimately leading to higher transaction costs for consumers.
The class action lawsuit was filed by sellers of over 260,000 homes in Missouri, Kansas, and Illinois from 2015 to 2022, who objected to the commissions they were required to pay to buyers’ brokers. Under U.S. antitrust law, the awarded damages could be tripled, potentially reaching more than $5.3 billion.
Lead attorney for the plaintiffs, Michael Ketchmark, hailed the verdict as a day of accountability. The defendants, which included Berkshire Hathaway’s HomeServices of America and Keller Williams, have indicated their intentions to appeal the decision and seek reduced damages.
The real estate industry has traditionally seen broker compensation at around 5% to 6% of a home’s sales price, with roughly half going to the buyer’s broker. Home sellers argued that this pricing model suppressed competition and made little economic sense, particularly in an era when many buyers could find homes independently online.
The defendants denied any wrongdoing, with the NAR asserting that there was no evidence agents were compelled to fix or increase commissions. Prior to the trial, Re/Max and Anywhere Real Estate settled, with Re/Max paying $55 million and anywhere paying $83.5 million without admitting liability. The verdict had a negative impact on the stock prices of various real estate brokerages, including Re/Max, Anywhere, Zillow Group, and Redfin. Meanwhile, the U.S. Department of Justice is pursuing an antitrust investigation against the NAR separately.