A Missouri jury delivered a momentous verdict on Tuesday, holding the National Association of Realtors (NAR), a prominent real estate industry trade group, and several residential brokerages accountable for nearly $1.8 billion in damages. Their guilt lay in an alleged conspiracy to artificially inflate home sales commissions.
This legal battle encompassed home sales occurring from April 2015 to June 2022. Reflecting on the outcome, lead attorney for the plaintiffs, Michael Ketchmark, conveyed, “We view it as a tremendous day of accountability for these companies.”
Despite the jury’s decision, the matter remains far from its conclusion. Tracy Kasper, President of NAR, issued a statement following the verdict, stating, “This matter is not close to being final. We will appeal the liability finding because we stand by the fact that NAR rules serve the best interests of consumers, support market-driven pricing, and advance business competition.”
Kasper also mentioned that NAR can’t elaborate on the specifics of their appeal until it is formally filed. In the interim, they plan to request the court to reduce the damages awarded by the jury.
Other real estate groups found guilty in this case included Warren Buffett’s Berkshire Hathaway-owned HomeServices of America and two subsidiaries, along with Keller Williams Realty. A spokesperson from HomeServices expressed disappointment with the court’s ruling and stated their intention to appeal. They argued that the decision would create additional challenges for buyers in an already difficult real estate market and make it more challenging for sellers to realize the value of their homes.
Addressing the opposition’s stance, Ketchmark asserted that groups like HomeServices are clinging to a system they’ve allegedly rigged against everyone.
“They made that same argument in court for the last couple of weeks and it took a jury all of two and a half hours to disregard it,” he said.
The appeals process could extend for up to three years, according to Jaret Seiberg, a housing policy analyst at TD Cowen. The losing party is likely to pursue having the case tried by the Supreme Court.
However, Tuesday’s verdict does not signify the end of buyer commissions. The presiding judge will have to determine the scope of the injunction, potentially resulting in minor adjustments to the current commission-sharing system. Seiberg suggested that this may have a limited impact, as most brokers are expected to continue offering commission sharing to stimulate interest in properties.
Shortly after securing Tuesday’s victory, Ketchmark wasted no time and filed a new class-action lawsuit against real estate companies such as Douglas Elliman, Compass, and Redfin. This fresh lawsuit alleges that these companies violated antitrust laws by conspiring to maintain high commissions.
Both Douglas Elliman and Compass chose not to comment on the new case, while Redfin CEO Glenn Kelman dismissed it as “a copycat lawsuit.”
Information for this story was found via CNN and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.