Real Estate Company to Pay $250 Million to Settle Lawsuits Nationwide: Berkshire Hathaway’s HomeServices of America Reaches Proposed Settlement in Broker Commissions Case
A real estate company owned by Warren Buffett’s Berkshire Hathaway has agreed to pay $250 million to settle lawsuits nationwide, marking a significant development in the ongoing legal battle over allegedly inflated broker commissions.
HomeServices of America, a major player in the real estate industry with 51 brands and tens of thousands of agents, announced the proposed settlement on Friday. This move comes after several other big brokerage operators and the National Association of Realtors have also agreed to settle similar lawsuits, bringing the total payout by the real estate industry to over $943 million.
The lawsuits claim that major real estate brokerages and the NAR violated antitrust laws by forcing home sellers to pay artificially inflated broker commissions. The central argument is that listing a property for sale on industry databases required sellers to include a compensation offer for the buyer’s agent, potentially leading to unnecessary costs for sellers.
In a statement, HomeServices stated that while they were confident in the legality of their business practices, they chose to settle to eliminate the uncertainty brought by the litigation process. The proposed settlement will result in a $140 million after-tax accounting charge over four years.
The settlement also includes changes to business practices to ensure transparency in how brokers and agents are compensated. NAR has agreed to policy changes that will prohibit brokers from including offers of compensation for a buyer’s representative when listing a home for sale, marking a significant shift in industry practices.
While it remains to be seen how these policy changes will impact the housing market, they could potentially lead to lower commissions for sellers and higher upfront costs for buyers when hiring an agent. The settlement and policy changes signal a significant shift in the real estate industry and a win for American home sellers who have long been burdened by potentially unnecessary commission costs.
