Real estate brokerage to pay $70 MILLION to settle nationwide lawsuits over grossly inflated broker’s fees – has the bubble burst for greedy realtors?
One of the nation’s largest real estate brokers has agreed to pay $70 million to resolve a lawsuit over excessive broker commissions.
Keller Williams Realty will pay the amount and also take several steps to provide home buyers and sellers with more transparency about real estate commissions.
The Austin-based agency will add the money to a settlement fund to be distributed by the courts. Home sellers who sold a home through a Multiple Listing Service (MLS) between 2015 and 2019 may be eligible for a portion of the fund.
The bumper settlement resolves more than a dozen lawsuits across the country over commissions charged by U.S. real estate agents.
In some cases they can be as high as 6 percent – about double the global average.
Attorney Michael Ketchmark, who represents the plaintiffs in the lawsuit, called the development a “huge victory for homeowners and homebuyers across the country.”
Keller Williams Realty will pay the amount and also take several steps to provide home buyers and sellers with more transparency about real estate commissions
The bumper settlement resolves more than a dozen lawsuits across the country over commissions charged by U.S. real estate agents. In some cases they can be as high as 6 percent – more than double the global average
The central claim in the lawsuit is that the nation’s largest real estate brokers engage in practices that unfairly force homeowners to pay artificially inflated real estate agent commissions when they sell their homes.
In October, a federal jury in Missouri found that trade group National Association of Realtors and several major real estate brokers, including Keller Williams, conspired to require home sellers to pay home buyers’ broker commissions, in violation of federal antitrust law.
The jury ordered the defendants to pay nearly $1.8 billion in damages. If treble damages are awarded – potentially allowing plaintiffs to receive up to three times actual or compensatory damages – defendants may have to pay more than $5 billion.
There are more than a dozen similar lawsuits pending against the real estate brokerage industry.
The lawsuit has sparked controversy in the industry, with one report estimating that up to 80 percent of real estate agents would lose their jobs.
Estate agent Desirae Wykoff, 36, told DailyMail.com last year: ‘I feel like this gives estate agents an unfair reputation.
“I saw a lot of these people hang up their driver’s licenses.”
Keller Williams executive chairman Gary Keller said the company had “full confidence in the strength of an appeal” but that a settlement would remove longstanding uncertainty for its agents and franchisees. The ruling also means that the company cannot be involved in copycat lawsuits.
“We made the decision with careful consideration of the short- and long-term well-being of our agents, our franchisees and the business models on which they depend,” Keller said in a companywide email.
Real estate agent Desirae Wykoff (pictured) told DailyMail.com last year: ‘I feel like this gives real estate agents an unfair reputation’
Keller Williams said the company had “full confidence in the strength of an appeal,” but that a settlement would remove longstanding uncertainty for its agents and franchisees. Pictured: CEO Mark Willis
“It was a decision to bring stability, relief and the freedom for all of us to focus on our mission without distraction.”
The company has more than 1,100 offices and approximately 180,000 agents.
Under the terms of the proposed settlement, Keller Williams agreed to clarify that its agents inform clients that commissions are negotiable, and that there is no minimum established that clients must pay, nor a minimum set by law.
The company also agreed to ensure that agents who work with potential homebuyers disclose their compensation structure, including any “cooperative compensation,” which is when a seller’s agent offers to compensate the agent representing a buyer for its services.
As part of the settlement, which must be approved by the court, Keller Williams agents are no longer required to be members of the National Association of Realtors or follow the trade association’s guidelines.
Two other major real estate brokerages agreed to similar settlement terms last year. In their respective agreements, Anywhere Real Estate Inc. agreed. agreed to pay $83.5 million, while Re/Max agreed to pay $55 million.
In recent years, obtaining a real estate license has become a popular side hustle for Americans. In 2020 and 2021 — when the pandemic left many unemployed — a record 156,000 people became real estate agents, according to the NAR.
DailyMail.com contacted NAR and Keller Williams for comment.