Compass to Pay $57.5 Million in Real Estate Commissions Settlement

Compass Inc. to pay $57.5 million in real estate commission settlement

Real estate brokerage company Compass Inc. has agreed to pay $57.5 million as part of a proposed settlement to resolve lawsuits over real estate commissions, the company announced in a regulatory filing on Friday.

The New York-based company has also agreed to change its business practices to ensure that clients can more easily understand how brokers and agents are compensated for their services, according to the filing with the Securities and Exchange Commission.

Among the policy changes, Compass has agreed to require its brokerages and agents to clearly disclose to clients that commissions are negotiable and not set by law, and that services provided by agents representing homebuyers are not free. Additionally, agents representing homebuyers must disclose any offer of compensation by the broker representing a seller right away.

This settlement comes as Compass joins other big real estate brokerages and the National Association of Realtors in reaching agreements to resolve federal lawsuits brought on behalf of home sellers across the U.S.

The central claim in the lawsuits is that major real estate brokerages have been engaging in business practices that unfairly force homeowners to pay artificially inflated agent commissions when selling their homes. Plaintiffs argue that requiring sellers to include a compensation offer for a buyer’s agent on real estate industry databases could steer buyers away from listings that didn’t include such an offer.

Last week, the NAR agreed to pay $418 million and make policy changes to settle multiple lawsuits, including one where a jury in Missouri found that the trade group and several brokerages conspired to require home sellers to pay homebuyers’ agent commissions. The NAR also agreed to prohibit brokers from including offers of compensation for a buyer’s agent on affiliated databases.

These rule changes, set to go into effect in mid-July, could significantly impact the way real estate agents operate and potentially lead to lower commissions for sellers and higher upfront costs for buyers. It remains to be seen how these changes will affect the housing market moving forward.