A jury in the pivotal real estate agent commission trial has ruled in favor of home sellers and awarded the class $1.785 billion in damages, according to parties involved.
Jurors today determined the National Association of Realtors, Keller Williams and HomeServices of America participated in a conspiracy to inflate commissions, lead attorney for plaintiffs Michael Ketchmark confirmed to National Mortgage News Tuesday. The verdict had yet to be filed in federal court records as of the afternoon.
The jury reached its verdict Tuesday morning in just under two-and-a-half hours, an indication of how overwhelming the evidence was, Ketchmark said. The four-year long case challenged longstanding broker commission rules, and attorneys sought payback for home sellers in Missouri who paid under the alleged anti-competitive structure for the past eight years.
"I think it's a day of accountability," said Ketchmark. "It's a glorious day for homeowners across Missouri and our nation."
A jury could award up to $4 billion in damages that would be paid out by some of the nation's largest real estate players.
NAR in a statement Tuesday said it would appeal the verdict in a process it suggested could take years to resolve. It will also in the interim ask the court to reduce the damages, which could reach up to $4 billion according to court rules.
"We stand by the fact that NAR's guidance for local MLS broker marketplaces ensures consumers get comprehensive, equitable, transparent and reliable home information and that brokerages of any size, service or pricing model get a fair shot at competing," said Mantill Williams, NAR vice president of communications, in the statement.
Keller Williams in a statement Tuesday suggested it followed the law, and will mull an appeal. Ketchmark said counsel for plaintiffs will be comfortable in handling an appeal.
The three defendants last week attempted to squash the lawsuit through a series of filings posted amid daily witness testimony. U.S. District Judge Stephen Bough quickly denied the real estate firms' moves last week, which suggested there was sufficient evidence for the jury to rule in favor of the home sellers.
The case is one of two active class action lawsuits challenging NAR's rules for associated multiple listing services, determining how compensation is dealt at a home sale's closing. Plaintiffs argued the longstanding coupled commissions system was anticompetitive, and attacked numerous mechanisms including how brokers could allegedly misrepresent their fees.
NAR, shortly before the trial began, updated its rules to allow brokers to offer no compensation to buy-side brokers. Ketchmark, ahead of trial, dismissed that move and characterized the Sitzer/Burnett proceedings as a "refund case" for home sellers who sold properties under the selected Missouri MLS.
Anywhere Real Estate and RE/MAX ahead of the October trial agreed to rule changes and to pay $83.5 million and $55 million settlements, respectively. They did not participate in the proceedings and will not be a part of a similar Minnesota class action trial next year.
"Anywhere and RE/MAX have taken corporate responsibility for what happened, and they led the way and did the right thing," Ketchmark said Tuesday. "We're going to call upon all the other large corporations to follow them and do the right thing."
The Sitzer verdict won't enforce rule changes, but NAR has already suffered from the scrutiny. As a result of the case, Anywhere and RE/MAX won't require its agents to be NAR members, while major real estate player Redfin announced a separate exit from NAR over its commission policies and other recent sexual harassment allegations.
NAR also faces the more threatening possibility of a probe and enforcement action by the Department of Justice, which pulled out of a settlement agreement with the association in 2021.
NAR and Redfin will be under fire again in a new suit by Ketchmark filed Tuesday in Missouri federal court, targeting five additional brokerages for damages and rule changes. The class, according to the filing, consists of home sellers who listed properties on MLS nationwide between 2019 and the present.
That lawsuit is seeking unspecified damages and a permanent injunction preventing brokerages from requiring sellers to pay buyer brokers. Defendants include Compass, eXp, Weichert Realtors, United Real Estate, Howard Hannah and Douglas Elliman.
Investors in real estate firms not involved in the trial reacted Tuesday afternoon, sending shares of Zillow, Redfin and Compass down. Zillow stock took the biggest hit, falling 10% around 2 p.m. Eastern time before rebounding slightly to $35.70 a share.
