By Laura Kusisto and Nicole Friedman
A real estate brokerage firm that is part of Warren Buffett's conglomerate has reached a settlement in the landmark antitrust case against the industry, though the amount was a fraction of what the plaintiffs once aimed to recover.
HomeServices of America reached a nationwide $250 million settlement, the company said Friday. That figure is higher than what any other individual brokerage has agreed to pay to settle claims that the real-estate industry used a commission structure that kept fees for agents artificially high.
But since the residential broker is a subsidiary of Buffett's Berkshire Hathaway, the plaintiffs hoped to collect a payout many times that amount. They had tried in court filings to tie the brokerage to its parent company, Berkshire, which has many billions of dollars in cash.
Christopher Dusseault, an outside counsel for HomeServices, said the company convinced plaintiffs that Buffett wasn't going to write a large check to settle the matter.
HomeServices was the last remaining defendant in the antitrust case against the National Association of Realtors trade organization and four major brokerage firms. With this latest settlement, real estate firms and NAR have agreed to pay more than $940 million to resolve the antitrust claims.
In October, plaintiffs won a $1.8 billion verdict in Missouri after alleging that NAR and residential brokerages used a commission structure that kept fees for Missouri agents artificially high. A judge could have tripled that amount to more than $5 billion.
Though additional brokerages are expected to reach settlements, it is clear that the plaintiffs are unlikely to collect on anything close to the amount that has been pledged so far.
Still, NAR has agreed to change the way the real-estate industry does business, namely through a settlement in March in which the powerful trade group agreed to rewrite the rules for how agents are compensated that could ultimately reduce the cost of buying and selling a home.
After legal expenses, the remaining settlement payments will eventually be distributed to recent home sellers around the U.S., a class of some 50 million people. Individual sellers are likely to receive nominal payouts.
The relatively modest financial settlements reflect what these companies and NAR could afford to pay without being pushed into bankruptcy, plaintiff lawyers have said.
Dusseault said HomeServices faced potential bankruptcy if it didn't settle. To even appeal the verdict it would have needed to post a bond, which a judge could have set in the billions of dollars.
But if Berkshire had instead stepped in to bail out its subsidiary, it would have set a precedent that could make other companies under its umbrella an appealing target for litigation.
(END) Dow Jones Newswires
April 26, 2024 10:00 ET (14:00 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
Comments