Warren Buffett's real-estate firm will spend $250M to get out of legal hot water
Charlie Rose
- HomeServices of America agreed to settle a lawsuit over alleged inflated commission fees.
- It's the biggest real estate brokerage in the country.
- A series of class-action settlements are overhauling how agents get paid.
A real-estate brokerage owned by Warren Buffett's Berkshire Hathaway has agreed to pay $250 million to settle a lawsuit over its commission fees, according to plaintiffs in the case.
Home sellers had sued HomeServices of America, alleging it conspired to force sellers to pay inflated agent commissions.
"This is another significant settlement for American home sellers who have been saddled with paying billions in unnecessary commission costs," said plaintiff attorney Benjamin D. Brown, managing partner of Cohen Milstein Sellers & Toll and co-chair of its Antitrust practice. "This brings us a step closer to resolving this long-running case involving the industry-wide brokers' commission scheme."
In a statement to Business Insider, HomeServices Executive Vice President Chris Kelly said the brokerage settled the case to "eliminate the uncertainty brought by the protracted appellate and litigation process."
"As we move beyond this settlement, our focus remains steadfast on ethical operations, industry integrity, and delivering value," Kelly said. "Our long-standing principle of helping agents build careers that positively impact the communities and consumers they serve continues."
The group of home sellers, in this case, had also sued other brokerages and have scored millions in settlements already.
The massive lawsuits alleged that sellers typically end up paying the commissions for both their own agents and those of buyers — in a somewhat circuitous payment that the two agents split.
The suits argued that buyers should pay their agents directly, which would increase competition, slash commissions, and save consumers money.
Among the payouts is a whopping $418 million from the National Association of Realtors that has shaken up the real-estate industry.
NAR settled in March after a yearslong battle. In addition to the commission structure, the agreement by the NAR could enable more buyers and sellers to negotiate different commissions beyond the decades-long standard of 5% to 6%.