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Court Gives Green Light to $110M Deal in Real Estate Commission Dispute

By  |  November 3, 2024
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Online real estate platforms Redfin Corp. and Compass Inc., along with seven other companies, have secured court approval for a $110 million settlement aimed at resolving allegations of inflating real estate commission fees in violation of antitrust laws. This settlement, approved by Judge Stephen R. Bough of the U.S. District Court for the Western District of Missouri, adds to a broader array of settlements now totaling over $1 billion across related cases, according to Bloomberg.

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    The case, spearheaded by plaintiffs represented by attorney Steve Berman of Hagens Berman Sobol Shapiro LLP, accuses the defendants—who include prominent real estate brokerage companies and the National Association of Realtors (NAR)—of conspiring to artificially maintain high brokerage fees for homes listed by NAR-affiliated multiple listing services. In a landmark ruling last year, a Missouri jury awarded nearly $1.8 billion in damages, finding that the NAR had played a central role in the alleged scheme. Per Bloomberg, Berman expressed optimism about the approval of the settlement, calling it “a historic settlement that will change the way commissions are charged in the real estate industry.”

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    Redfin, which has touted itself as a consumer-friendly alternative in real estate, defended its role in the case. In a statement to Bloomberg, the company highlighted its efforts to reduce consumer costs, noting that it has saved clients over $1.6 billion in fees to date. “Redfin never belonged in this case, and we’re glad to resolve it and move forward,” the company stated.

    Related: US Judge OKs $110 Million Settlements in Antitrust Case Against Major Real Estate Brokerages

    In addition to Redfin and Compass, other companies involved in the settlement include Real Brokerage Inc., Realty ONE Group, At World Properties, Douglas Elliman, Engel & Völkers, HomeSmart, and United Real Estate. Each of these firms has agreed to the terms of the settlement, though there were objections from certain parties questioning whether the deal met standards of fairness and adequacy. However, the settlement ultimately moved forward, according to Bloomberg, despite these concerns.

    The approval of the settlement marks a pivotal point in the broader legal battle surrounding real estate commissions. The case, Gibson v. National Association of Realtors, continues to be one of the most closely watched in the industry. The defendants are represented by a legal team that includes firms such as Paul, Weiss, Rifkind, Wharton & Garrison LLP, Crowell & Moring LLP, and Kasowitz Benson & Torres LLP. As the real estate industry faces increased scrutiny over commission structures, this settlement may signal broader shifts in how brokerage fees are set and could prompt additional regulatory changes.

    Source: Bloomberg