Agencies pay millions to settle lawsuit over agent commissions

US real estate firms have settled four class-action lawsuits filed against them over agent commission payments.

Most recently, RE/MAX agreed to pay US$55 million to settle the claims filed in Kansas City and Chicago, according to a document filed with the Securities and Exchange Commission (SEC).

According to Inman, RE/MAX and plaintiffs for the Sitzer/Burnett lawsuit, which is scheduled for trial in October, filed a notice in the US District Court in Western Missouri, alerting the court that RE/MAX had agreed to settle all of the claims against the company as part of a proposed nationwide class settlement. 

The real-estate brokerage has also agreed to make “certain changes to its business practices,” in light of the settlement.

The two lawsuits had taken aim at the National Association of Realtors (NAR) Participation Rule, which requires listing agents to make a blanket offer of compensation to buyers’ agents in order to list the property on a realtor-affiliated multiple listing service (MLS). 

According to the plaintiffs, commission sharing inflates the costs for consumers, in violation of the Sherman Antitrust Act. 

NAR said the current commission structure, which has been in place for more than 100 years, actually helps consumers.

RE/MAX said the settlement isn’t an admission of liability or a concession of the validity of any claims in the litigation, and that it continues to deny the suits’ allegations.

“The settlement resolves all claims in the lawsuits and similar claims on a nationwide basis against RE/MAX … and releases RE/MAX and the company, their subsidiaries and affiliates, and RE/MAX sub-franchisors, franchisees and their sales associates in the United States from the claims,” the SEC filing said.

“By the terms of the settlement, RE/MAX agreed to pay a total settlement amount of $55 million … into a qualified settlement fund. In addition, RE/MAX agreed to make certain changes to its business practices.”

In the filing, RE/MAX said that the proposed settlement is subject to preliminary and final court approval and will only become effective if the court grants final approval.

“If approved by the court, the settlement paves the way for a clear path forward for the RE/MAX brand, its franchisees and its agents, removing the uncertainty of ongoing litigation related to these cases,” a RE/MAX spokesperson told Inman in an emailed statement.

“While RE/MAX, LLC steadfastly refutes the allegations presented in the lawsuits, this forward-looking decision was made in the best interest of RE/MAX, LLC, its agents and its franchisees, after carefully considering the significant risks and costs associated with continued litigation.”

The US-listed company plans to use available cash to pay the settlement amount, according to the SEC filing.

It comes after Anywhere Real Estate chose to pay an estimated $83.5 million settlement to the plaintiffs earlier this month, according to The Real Deal.

The settlement by the parent company of Corcoran, Coldwell Banker, Century21 and Sotheby’s International Realty leaves other defendants including NAR, Keller Williams, and HomeServices of America as participants in the suit, which is scheduled to start trial in Kansas City on October 16.

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Rowan Crosby

Rowan Crosby is a senior journalist at Elite Agent specialising in finance and real estate.