Compass has agreed to a US$57.5 million settlement to resolve class-action lawsuits alleging the company, along with other brokerages and trade groups, engaged in anticompetitive practices to inflate agent fees.
The settlement, disclosed in a Securities and Exchange Commission filing comes without an admission of guilt from Compass.
According to The Real Deal, the firm emphasised the decision to settle was made to avoid further distractions and concentrate on client services, according to CEO Robert Reffkin’s statement.
This development follows closely on the heels of the National Association of Realtors (NAR)’s agreement to a hefty US$418 million payout to settle similar allegations.
A significant verdict came last October when a Kansas City jury found NAR and two leading brokerages liable, resulting in US$1.8 billion in damages awarded to the plaintiffs.
The fallout led to a surge in similar legal actions across various states, including Illinois, Missouri, and New York, with Compass named among the defendants.
Compass’s settlement marks it as the fourth brokerage to opt for a resolution, joining the ranks of Anywhere Real Estate, Keller Williams, and RE/MAX, which have collectively agreed to pay US$209 million.
The agreements entail modest adjustments in how these companies communicate commission details to agents and clients and necessitate the development of new training resources to reinforce these changes.
Interestingly, brokerages with transactions over US$2 billion were not covered by the NAR’s proposed settlement terms, though they were offered an option to opt in.
For Compass, opting in under the outlined terms would have required a payment exceeding US$500 million, a significantly higher sum than the agreed US$57.5 million.
Upon court approval, Compass is set to pay half of the settlement amount into a court-supervised fund within 30 days of preliminary agreement approval, expected in the second quarter, with the remainder to follow within a year.
