Achi news desk-
LOS ANGELES (AP) – The real estate company owned by Warren Buffett’s Berkshire Hathaway has agreed to pay $250 million to settle lawsuits across the country alleging longstanding practices by real estate brokers forced homeowners from the U.S. States to pay artificially inflated broker commissions when they sold their homes.
HomeServices of America said Friday that the proposed settlement would protect its 51 brands, nearly 70,000 real estate agents and more than 300 franchisees from similar litigation.
The real estate company had been a major holding after several other major brokerage operators, including Keller Williams Realty, Re/Max, Compass and Anywhere Real Estate, agreed to settle. Last month, the National Association of Realtors agreed to pay $418 million.
“While we have always been confident in the legality and ethics of our business practices, the decision to settle was motivated by a desire to remove the uncertainty brought about by the lengthy appeals and litigation process,” the company said. in a statement.
HomeServices said its proposed settlement payment represents a current after-tax accounting charge of about $140 million, although it will have four years to pay the full amount. The real estate company also noted that its parent company is not part of the settlement.
Buffett said in February in his annual letter to shareholders that Berkshire had $167.6 billion in cash on hand at the end of last year. That makes Berkshire, based in Omaha, Nebraska, an attractive target for litigation, but the company largely lets its subsidiaries run themselves and does not interfere in directly in litigation involving his many companies, which include Geico insurance, BNSF railroad and See’s Candy.
Including HomeServices’ proposed payment, the real estate industry has now agreed to pay more than $943 million to make the lawsuits go away.
“This is another significant settlement for American home sellers who have been saddled with paying billions in unnecessary commission costs,” Benjamin Brown, managing partner at one of the law firms that represented plaintiffs in a case filed in Illinois, said in a statement. .
The central allegation of the lawsuits is that the nation’s largest real estate brokers and the NAR violated antitrust laws by engaging in business practices that required home sellers to pay the fees for the broker representing’ r buyer.
Attorneys representing home sellers in multiple states argued that homeowners who listed properties for sale on real estate industry databases were required to include a compensation offer for an agent representing a buyer. And that not including such “cooperative compensation” offers could lead a buyer’s agent to steer their client away from any seller’s listing that did not include such an offer.
In October, a federal jury in Missouri ordered HomeServices, the National Association of Realtors and several other major real estate brokerages to pay nearly $1.8 billion in damages. The defendants faced the possibility of having to pay more than $5 billion, if treble damages were awarded.
The ruling in that case, filed in 2019 on behalf of 500,000 home sellers in Missouri and elsewhere, led to similar lawsuits being filed against the real estate brokerage industry.
The major brokerages that have reached proposed settlements in these cases have also agreed to change their business practices to ensure that home buyers and sellers can more easily understand how brokers and agents are compensated for their services, and that brokers and agents representing homebuyers must disclose immediately. any offer of compensation by the broker representing a seller.
HomeServices said it also agreed to make “substantially similar new or revised business practice changes that are contained in the other corporate defendants’ settlement agreements,” said Chris Kelly, a spokesman for HomeServices.
NAR also agreed to make several policy changes, including prohibiting brokers who list a home for sale on any of the NAR-affiliated databases from including compensation offers to a buyer’s representative. The new rules, due to come into effect in July, represent a major change to the way estate agents have operated dating back to the 1990s.
Although many housing market watchers say it is too soon to tell how the policy changes will affect home sales, they could lead to estate agents paying lower commissions for their broker’s services. Buyers, in turn, may have to bear more upfront costs when they hire an agent to represent them.
Alex Veiga, The Associated Press
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