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A federal court gives final approval to the antitrust settlement reached between the National Association of Realtors and major real estate franchisor HomeServices of America, closing a tumultuous chapter in the history of the real estate industry. There is a possibility.
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The deal resolves antitrust claims brought by home sellers in a case known as “Sitzer.” Barnett, Mehl and others have filed similar lawsuits across the country alleging NAR, HomeServices and other major real estate companies engaged in illegal collusion to raise brokerage fees.
Judge Stephen R. Baugh of the U.S. District Court for the Western District of Missouri gave final oral approval to the deal Tuesday afternoon in Kansas City, said Robbie Brown of Cohen Milstein, an attorney for the Mail plaintiffs.
robbie brown
“We are pleased that the court has approved a settlement that provides financial relief and important practice changes that will benefit millions of home sellers and buyers across the country,” Brown told Inman.
Brown added that Baugh did not make any changes to the settlement before giving final approval.
Prior to the hearing, plaintiffs’ attorneys requested approximately $233 million in attorney’s fees, one-third of the settlement between NAR and HomeServices, plus $16.5 million in costs. Brown said Baugh did not rule on the request during Tuesday’s hearing, nor did he say when he would do so.
Baugh plans to issue a formal written order “in the near future,” NAR said.
Kevin Sears | NAR Chairman
“This is an important time for NAR members, home buyers and sellers, and the real estate industry,” NAR Chairman Kevin Sears said in a statement.
“As consumer advocates, NAR members have worked tirelessly throughout this transition to implement the practice changes sought by settlements and consumers.
“The principles of transparency, competition and choice are at the core of the settlement agreement, which will enable real estate professionals and consumers to negotiate the services and compensation that are right for them.”
NAR added that to remain free of claims under the settlement, members must adhere to the practice changes in the agreement “in good faith.”
“NAR strongly opposes any attempt to avoid settlement,” the industry group said.
HomeServices confirmed that the settlement has received final approval.
Chris Kelly (Credit: Ebby Halliday)
“HomeServices of America is pleased that the settlement has received final court approval. This marks an important milestone in this transformational period for the real estate industry,” said HomeServices Executive Director Vice President Chris Kelly told Inman in a statement.
“We remain committed to supporting our employees as they continue to provide excellent service to our clients and communities across the country. Our local business leaders, agents and employees have overcome the challenges of the past year. He deserves a lot of credit for his outstanding ability to overcome this.”
The ruling comes after a Kansas City jury found that NAR, HomeServices, Keller Williams, Anywhere and RE/MAX conspired to inflate brokerage fees, and the Sitzer|Barnett plaintiffs are seeking $1.8 billion in damages. , had the lawsuit not been resolved, the damages would have tripled to $5.4 billion. Sitzer/Burnett and Moehrl were both first filed in March 2019.
“After five years of intense litigation and nearly a year after the jury verdict, all settlements have now been approved,” said Michael Ketchmark of Ketchmark & McCreight, attorney for the Sitzer/Barnett plaintiffs. he told Inman in a statement.
“We are excited to move forward and watch the market work for the benefit of home sellers.”
The ruling will almost certainly be appealed, but final approval would require the removal of compensation offers from multiple listing services and the requirement for buyer agents to sign contracts with buyers before inspecting properties. NAR’s $418 million settlement represents changes in business practices, including obligations. The program will remain in place for the time being, with NAR required to pay the first $197 million within 90 days. These funds will come at least in part from NAR’s operational, advocacy, and advertising campaign reserves.
NAR, HomeServices, brokers, and the MLSs that opted into NAR’s deal agreed to pay just under $700 million in settlements. NAR will provide $418 million to cover approximately 1 million real estate agents and 547 realtor-related MLSs, while HomeServices will provide $250 million and nearly $30.6 million. From 15 non-real estate MLS companies and 13 major brokerages. This amount does not include more than $300 million in settlements from other companies, including RE/MAX, Keller Williams, and Anywhere.
If Baugh approves the plaintiffs’ request for attorneys’ fees, about $450 million would remain for millions of class members nationwide, but not all of them will file claims.
As of mid-November, 491,450 people had filed claims for their portion of the NAR-HomeServices settlement, with six months left until the May 2025 deadline, according to the plaintiffs’ filing last week. are. If the number of claims remains the same, each home seller would receive about $913, but that amount would decrease as more home sellers file claims.
Ahead of the final approval hearing, the industry waits with bated breath to see if the U.S. Department of Justice (DOJ) agrees to an offer of compensation from NAR after federal regulators expressed dissatisfaction with NAR’s proposed settlement. was. Listing a broker with a non-MLS buyer broker is not prohibited.
In the end, the Justice Department filed a five-page statement of interest in the case Sunday evening, although it did not take a position on whether Baugh should approve Tuesday’s settlement. , balked at a change in practice that would require buyers and buyer brokers to enter into a written agreement before visiting a home. .
Federal regulators asked Mr. Baugh to either remove that provision or make clear that the settlement does not create “any immunity or defense under antitrust law.”
Justice Department lawyers also cautioned that the agreement’s practice changes do not preclude further legal challenges, and Baugh said the settlement agreed to by most industry players does not protect against future enforcement. asked for clarification.
During Tuesday’s hearing, Chris Bauer, a trial attorney with the Justice Department’s Antitrust Division, told Baugh that the agency would not “waive any right” to bring suit in other federal districts, according to RIS Media.
More than a dozen home sellers objected to the NAR and HomeServices settlement before the final approval hearing, arguing that the deal sought to cover too many claims with too little money and that the industry’s He claimed he was trying to give many people a “free pass” to participate in the alleged conspiracy. .
Notably, Tanya Monestier, a contract law professor at the University of Buffalo, filed a 136-page objection to the NAR settlement, calling it “the worst possible world” for consumers and subsequently filing a contract objection. The case was an objection to a court order forcing a person to appear in court. During the final approval hearing, he said the order was “unconstitutional” and a “clear appellate issue.”
Plaintiffs’ lawyers then asked the court to consider and reject Monestier’s objections, regardless of whether he appeared in person at the hearing.
Tuesday’s final approval hearing is not the end of NAR and HomeServices’ antitrust litigation, or even the end of these lawsuits. Tuesday’s ruling will almost certainly be appealed, and any settlement money raised will be held in escrow until all legal avenues are exhausted.
Even if the settlement is not appealed, the Justice Department could decide to take more definitive action against NAR’s rules through other channels, such as filing its own lawsuit.
Additionally, NAR and HomeServices remain defendants in the Homebuyer Litigation with similar antitrust claims that are not resolved by these settlements. In addition, other NAR rules are also subject to antitrust scrutiny, including NAR’s clear cooperation policy, no-mixing policy, tripartite agreements, and the linking of MLS services to real estate agent members.
Editor’s note: This article has been updated with comments from NAR, additional comments from plaintiffs’ attorneys Robbie Brown and Michael Ketchmark, and the appearance of Justice Department attorneys at Tuesday’s hearing.
Email Andrea V. Brambilla.
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