BREAKING NEWS: Jury in Commissions Case Finds NAR, Brokerages Guilty
A federal jury on Tuesday found the National Association of Realtors and some residential brokerages, including units of Warren Buffett’s Berkshire Hathaway and Keller Williams, liable for $1.78 billion in damages for conspiring to artificially inflate commissions for home sales. Reuters reported the verdict by a jury in Kansas City, MO could upend decades-old practices that have allowed real estate agents to boost commissions as home prices and mortgage rates rise.
Plaintiffs in the class action included sellers of more than 260,000 homes in Missouri, Kansas and Illinois between 2015 and 2022, who objected to the commissions they were obligated to pay buyers’ brokers. The verdict followed a two-week trial, and the damages award could triple under U.S. antitrust law to more than $5.3 billion.
Broker compensation in the U.S. has typically been about 5% to 6% of a home’s sales price, with about half paid to a buyer’s broker, reported Reuters. Home sellers complained that this model suppressed competition by keeping commissions for buyers’ brokers in the 2.5% to 3% range despite the brokers’ diminishing role, with many buyers able to find homes independently online.
An NAR spokesperson told Reuters the trade group plans to appeal and seek reduced damages. Berkshire Hathaway-owned HomeServices said it was disappointed in the verdict and planned to appeal, while a Keller Williams spokesperson said the realty company would consider its options for an appeal.