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A US federal appeals court has upheld a more than USD 1 billion settlement resolving antitrust claims that real estate brokerages conspired to inflate agents’ commissions. The 8th US Circuit Court of Appeals rejected objections from home buyers and sellers who argued that the settlement unfairly released their claims. The settlement covers tens of millions of class members and includes USD 418 million from the National Association of Realtors, USD 250 million from HomeServices of America and USD 333 million in legal fees. The decision also keeps in place changes to long-standing rules governing real estate agent commissions.
A federal appeals court has upheld a more than USD 1 billion settlement involving claims that major US real estate brokerages conspired to keep agents’ commissions artificially high. The 8th US Circuit Court of Appeals in St. Louis ruled that a lower court judge had not acted improperly when approving the settlement, rejecting objections from home buyers and sellers who argued that their individual claims should not have been released as part of the agreement.
A three-judge panel found that the potential conflicts between buyers and sellers were not serious enough to make the settlement unfair. The court also held that changes to the way brokerages negotiate, allocate and disclose commissions would benefit the wider class of claimants.
The ruling upholds a settlement approved in November 2024 by US District Judge Stephen Bough in Kansas City, Missouri.
The agreement covers tens of millions of class members and includes USD 418 million from the National Association of Realtors (NAR), USD 250 million from Berkshire Hathaway's HomeServices of America and USD 333 million in legal fees.
As part of the settlement, NAR agreed to change long-standing rules related to the splitting of agent commissions. These commissions had generally been around 5% to 6%, with buyers and sellers arguing that the costs were excessive.
Lawyers representing some of the objectors said they could take the matter to the US Supreme Court. Their objections include claims that they were not given a proper opportunity to challenge the settlement and that the compensation provided to class members was inadequate.
NAR said it was pleased with the appeals court's decision and would continue working towards what it described as fair and transparent real estate markets. HomeServices CEO Chris Kelly also welcomed the ruling, saying it provided greater certainty for the company, its customers and agents.
The settlement follows a separate 2023 Missouri jury verdict that ordered NAR, HomeServices and Keller Williams to pay USD 1.78 billion to home sellers who alleged that they had been overcharged on commissions. The settlement helped reduce the industry's potential financial exposure from that case.
Other major brokerages, including Brown Harris Stevens, were subsequently permitted to join the settlement by providing additional funds and changing their business practices.
The legal dispute over real estate commissions is not fully over. Berkshire Hathaway Energy, the immediate parent of HomeServices, continues to defend a separate proposed class action before Judge Bough. That case alleges that the company also participated in efforts to inflate real estate commissions, despite the USD 250 million settlement involving HomeServices.
Source Reuters
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