The nation's largest real estate brokerage, Keller Williams Realty Inc., has agreed to pay $70 million as part of a proposed settlement to resolve multiple lawsuits across the country regarding agent commissions. The agreement, filed with federal courts in Illinois and Missouri, also includes measures aimed at increasing transparency for homebuyers and sellers regarding real estate agent commissions.
A Victory for Homeowners and Homebuyers
Representing the plaintiffs in the lawsuits, attorney Michael Ketchmark expressed his belief that this settlement is a significant win for homeowners and homebuyers nationwide. The lawsuits allege that the leading real estate brokerages in the country engage in unfair practices that result in inflated agent commissions for homeowners when they sell their properties.
Previous Ruling against National Association of Realtors and Brokerages
In October, a federal jury in Missouri ruled that the National Association of Realtors, along with several large real estate brokerages including Keller Williams, conspired to require home sellers to pay commissions to homebuyers' agents in violation of federal antitrust law.
The jury awarded almost $1.8 billion in damages to the plaintiffs. If treble damages, which could increase the amount up to three times, are awarded, the defendants may be liable for over $5 billion. Numerous similar lawsuits are currently pending against the real estate brokerage industry.
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Keller Williams Pursues Settlement in Agent Commission Lawsuits
Moving Keller Williams out from under the cloud of litigation and uncertainty has motivated the company to pursue a proposed settlement. This settlement would release Keller Williams, its franchisees, and agents from similar agent commission lawsuits nationwide. As a company based in Austin, Texas, Keller Williams operates more than 1,100 offices with approximately 180,000 agents.
Focus on Stability and Freedom
Gary Keller, the company's executive chairman, expressed the decision to settle in a companywide email on Thursday. He stated, "We came to the decision to settle with careful consideration for the immediate and long-term well-being of our agents, our franchisees and the business models they depend on." The primary goal of the settlement was to bring stability, relief, and freedom for everyone involved to focus on their mission without distractions.
Clarity in Commission Structure
One of the terms of the proposed settlement requires Keller Williams to make it clear to clients that agent commissions are negotiable. Additionally, the company must emphasize that there is no set minimum that clients are required to pay, nor is there one set by law.
Transparency in Compensation
To ensure transparency, Keller Williams has agreed that agents who work with prospective homebuyers must disclose their compensation structure. This includes providing details about any "cooperative compensation" arrangements. Cooperative compensation refers to instances where a seller's agent offers to compensate the agent representing a buyer for their services.
Freedom from Association Guidelines
As part of the settlement, Keller Williams agents will no longer be obligated to be members of the National Association of Realtors or adhere to the association's guidelines.
Resolutions among Brokerages
Last year, two other prominent real-estate brokerages reached similar settlement terms. Anywhere Real Estate Inc. agreed to pay $83.5 million, while Re/Max agreed to pay $55 million. These settlements highlight the industry-wide effort to address agent commission lawsuits.
Keller Williams' proposed settlement, subject to court approval, signifies the company's commitment to protecting the interests of its agents, franchisees, and clients.