Homeservices of America reaches $250M commissions settlement

Homeservices of America will pay $250 million to resolve real estate commissions claims, an agreement that will cover around 70,000 agents.

The company admits no wrongdoing in reaching the agreement with consumers across multiple lawsuits that alleged anti-competitive practices, said Chris Kelly, executive vice president of the firm. The settlement, pending court approval, follows massive deals between home sellers and three other corporate defendants Anywhere Real Estate, RE/MAX, and the National Association of Realtors. 

"We very firmly believe that our business practices have always been ethical and transparent with the consumer," said Kelly. "But we also recognize inherently over time that with litigation and appeals, there's just uncertainty that comes with it."

HomeServices' settlement will include business practice changes in line with what other companies have proposed. Kelly emphasized that real estate commissions have always been negotiable, and that the new landscape will allow real estate agents to have more dialogue with homebuyers.

"I don't think it's a bad thing for agents to have the opportunity to have conversations with buyers and sellers on what their compensation does for the consumer and what they bring to the table," he said. "There's just no downside to increasing those types of conversations."

The $250 million sum will be paid over four years and also applies to Homeservices' approximately 51 brands and around 300 franchises. It doesn't include HomeServices parent company Berkshire Hathaway Energy, the Warren Buffet-owned firm, which was named in one of the commissions lawsuits last month.

A notice of settlement was filed Friday in a docket for a case known as Gibson v. National Association of Realtors, in a Missouri federal court. Kelly said the notice was filed there, rather than in the Sitzer/Burnett case, because of the Gibson case's national reach. 

Parties will work on the terms of the long-form settlement over the next month, Kelly clarified. Attorneys for both parties didn't immediately respond to requests for comment Friday. 

A federal court earlier this week also granted preliminary approval of NAR's $418 million settlement. Friday's announcement represents more momentum toward a global resolution of the commission's rule changes proposed, said Marty Green, a mortgage industry attorney and principal with Polunsky Beitel Green. NAR beginning in July will bar offers of compensation on Multiple Listing Services.

"The real question is going to be how the market reacts to those rules once they're implemented, and whether or not consumers are going to be well-served," he said.

The Department of Justice meanwhile looms, as a U.S. Court of Appeals earlier this month allowed it to reopen a probe into the Association. Green suggested the DOJ would not interfere with the settlement to preserve their right to continue their investigation.

The final approval may not come until late this year or early 2025, the attorney said.