A federal jury has found the National Association of Realtors and several residential brokerages, including units of Warren Buffett’s Berkshire Hathaway and Keller Williams, liable for $1.78 billion in damages. The verdict was reached on Tuesday by a jury in Kansas City, MO and could have significant implications for long-standing practices that allow real estate agents to increase commissions as home prices and mortgage rates rise.
The class action lawsuit included sellers of over 260,000 homes in Missouri, Kansas, and Illinois between 2015-2022 who objected to the commissions they were required to pay buyers’ brokers. The two-week trial resulted in a damages award that could potentially triple under U.S antitrust law to more than $5.3 billion.
According to Reuters reports , broker compensation typically ranges from 5% -6% of a home’s sales price with half going towards the buyer’s broker. However, plaintiffs argued that this model stifles competition by keeping commissions for buyers’ brokers at around 2.5%-3%, despite their diminishing role due to advancements such as online property searches.
An NAR spokesperson stated plans for an appeal seeking reduced damages while HomeServices (owned by Berkshire Hathaway) expressed disappointment with the verdict also planning an appeal; Keller Williams is considering its options regarding an appeal as well.
