HomeServices was potentially on the hook for the remaining $4.7 billion in damages from an Oct. 31 jury verdict in Sitzer | Burnett, which awarded plaintiffs $5.3 billion.
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HomeServices of America, among the largest real estate brokerages in the nation, will pay $250 million and enact changes to its business practices as part of an agreement to settle lawsuits that posed an ongoing threat to the firm.
HomeServices is the last major brokerage named in the landmark Sitzer | Burnett class action lawsuit to reach a settlement agreement, following Anywhere Real Estate and RE/MAX in September, Keller Williams in February and the National Association of Realtors last month.
The firm, which is owned by Warren Buffett’s Berkshire Hathaway, notified the court of its proposed settlement, according to Chris Kelly, HomeServices’ executive vice president, though nothing is listed on the court docket as of Friday morning.
The settlement agreement is a significant departure for HomeServices, which had vowed to continue its legal fight against the homeseller plaintiffs who alleged it took part in an illegal conspiracy to keep commissions high.
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Kelly said the settlement showed HomeServices was committed to protecting its agents, employees and franchisees.
“This settlement, subject to court approval, will protect our nearly 70,000 agents, 51 brands and over 300 franchisees and licensees from related lawsuits,” Kelly said. “The financial terms of the settlement represent a sole obligation of HomeServices, with no participation by any parent entity, to effectively conclude our involvement in the anti-trust litigation.”
Still, the settlement was largely expected by industry insiders. Michael Ketchmark, the lead plaintiffs’ attorney in the Sitzer | Burnett case, told Inman he’s been in frequent and ongoing settlement discussions with real estate defendants that weren’t covered by NAR’s March 15 settlement.
NAR’s settlement agreement offered protection to brokerages that conducted less than $2 billion in sales volume in 2022. The agreement also created a pathway for the remaining 90 or so brokerages that haven’t yet settled and weren’t covered by the settlement agreement.
The stakes were immensely high for HomeServices, which was potentially on the hook for the remaining $4.7 billion in damages from an Oct. 31 jury verdict in Sitzer | Burnett, which awarded plaintiffs $5.3 billion. The jury awarded $1.78 billion, an amount that automatically triples.
“While we have always been confident in the legality and ethics of our business practices, the decision to settle was driven by a desire to eliminate the uncertainty brought by the protracted appellate and litigation process,” Kelly said. “This resolution allows us to concentrate on our primary goal: delivering unparalleled value in the real estate market and serving home buyers and sellers with the highest standards of service.”
Its $250 million settlement amount brings the total damages from the Sitzer | Burnett lawsuit to $876.5 million, including $418 million from NAR, $70 million from Keller Williams, $55 million from RE/MAX and $83.5 million from Anywhere.
HomeServices’ brokers conducted $165.7 billion in sales volume in 2022, second only to Compass, which wasn’t named in the Sitzer | Burnett lawsuit.
Compass was named in other cases known as Umpa and Gibson. It reached its own settlement agreement last month and agreed to pay $57.5 million.
“These settlements will return hundreds of millions of dollars to home sellers and empower both sellers and buyers in the real estate negotiation process,” said Robert A. Braun, a partner at the law firm Cohen Milstein Sellers & Toll, which represented plaintiffs in a case known as Moehrl. “This is one of the most important transactions in a person’s lifetime. Confidence in the process is critical.”
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