Keller Williams' move brings broker fee cases near end

Keller Williams is the latest company to settle a real estate broker fee commission lawsuit, reducing its liability to $70 million following a jury verdict against it and two other defendants for $1.785 billion.

Unlike Remax and Anywhere, Keller Williams went to trial along with the National Association of Realtors and HomeServices of America in a case known as Sitzer/Burnett. The settlement also covers cases known as Moehrl and Nosalek.

"We think settlements are the most logical route for defendants to avoid significantly higher damages and/or a lengthy and uncertain appeals process," Ryan Tomasello, an analyst with Keefe, Bruyette & Woods, said in a note following the announcement of this agreement.

KBW remains of the opinion that the current practice of the seller paying the buyer's agent commission will be banned, either through a court-ordered injunction, a court settlement with NAR or the Department of Justice intervening. The DOJ at one time agreed to a settlement with NAR during the Trump Administration but pulled out following Pres. Biden's election.

"Based on various court deadlines, we believe it's possible that this legal contest nears resolution by mid-year," Tomasello wrote.

However, several in the mortgage industry have expressed concern that a change in the structure of real estate commission payment will negatively impact many buyers who were already struggling with affordability.

While HomeServices and NAR remain as defendants in these cases, "substantially all the nation's other leading brokerages have also been named in roughly 20 'copycat' lawsuits, including public brokerages Compass and Redfin," he continued.

Meanwhile, the deal following the verdict releases not just Keller Williams, but its agents and franchisees from litigation related to commissions paid to buyers' agents, a statement from Gary Keller, executive chairman said.

"Keller Williams has always been focused on building a place where entrepreneurs can thrive," he added. "As part of this, agents have always been free to run their businesses, including deciding what to charge for their services and negotiating compensation with their clients."

Judge Stephen Bough granted a motion for preliminary approval of the settlement, pending a hearing, according to the case's docket. The settlement agreement added that Anywhere and Remax do not oppose it as long as the current May 9 final approval date for their matters is not changed.

That was required because certain notices from those cases are being revised to include Keller Williams to reduce costs.

Separately, Redfin, which ended its NAR membership over the fee issue, has come out with a homebuyer refund program called Sign & Save.

Buyers who sign an agreement with a Redfin broker before taking a second tour would be entitled to get back between 25 basis points and 50 basis points of a home's purchase price at closing

"Homebuyers are becoming more aware of the high cost of agent fees and less apologetic about negotiating commissions," said Jason Aleem, Redfin's senior vice president of real estate operations, in a press release. "We've helped usher in this new era of price transparency by advertising our low listing fee and publishing the buyers agent commission on every listing on our website. Sign & Save is another opportunity for our agents to explain the fees involved in the transaction"