HomeServices makes $250 million deal to settle commissions lawsuits
The last defendant standing in the Sitzer/Burnett case reaches a whopping settlement that will protect its 70,000 agents plus brands and franchises.
Key points:
- HomeServices opted for the massive settlement rather than continuing litigation against home sellers who had won a $1.8 billion verdict in Sitzer/Burnett.
- Plaintiffs still plan to pursue damages against HomeServices’ parent company, Berkshire Hathaway Energy, which was added to the Gibson case in March.
- The settlement pool in the commissions cases is now more than $940 million.
The last brokerage standing in the Sitzer/Burnett case has agreed to settle.
HomeServices of America filed court documents on April 26 saying it had reached a settlement in the commissions lawsuits, agreeing to pay a whopping $250 million in damages over a four-year period and make the changes that largely align with other settlements previously filed, said Chris Kelly, executive vice president at HomeServices.
The settlement with HomeServices will protect nearly 70,000 agents, 51 brands and more than 300 franchisees, Kelly said.
What this settlement does not cover, however, is Warren Buffett's Berkshire Hathaway Energy — the brokerage's parent company — which was added in March to the nationwide Gibson lawsuit and is still on the hook in that case.
Michael Ketchmark, lead attorney for the plaintiffs in the Sitzer/Burnett and Gibson cases, told The New York Times that he planned to pursue legal claims against the energy company as well as a "handful of large corporate brokers."
Plaintiffs in the Sitzer/Burnett case had previously filed a motion asking HomeServices to pay a much larger sum — $4.7 billion. That amount reflected the difference, at the time, between the potential $5.4 billion in damages in the case and the settlements already reached by other defendants.
After reviewing dueling motions from home sellers and HomeServices, the judge ultimately declined the plaintiffs' request for judgment, saying he wasn't ready to issue a final judgment against the brokerage while other settlements were still being resolved.
What this means for HomeServices
Kelly said there was no specific development that led to the settlement occurring at this time.
"We had always been pursuing multiple paths to resolve these cases, settlement being one of them," Kelly said in an email. "We've been engaged in meaningful and productive discussions with the plaintiffs for a period of time, and given the uncertainty inherent in litigation and appeals, we believed this was the best resolution for our companies, agents and employees."
Taking the settlement path was a way to eliminate the uncertainty of what was expected to be a lengthy court process. The Sitzer/Burnett case — in which HomeServices was the lone defendant after NAR, Keller Williams, RE/MAX and Anywhere reached settlements — was originally filed five years ago, and litigation could have continued for some time with appeals factored in.
"This resolution allows us to concentrate on our primary goal: delivering unparalleled value in the real estate market and serving home buyers and sellers with the highest standards of service," Kelly said.
Settlement tally
With HomeServices settling, the pool of money in the commissions cases is now up to more than $942 million. Here are the brokerages and organizations that have announced settlements to this point:
National Association of Realtors: $418 million
HomeServices of America: $250 million
Anywhere Real Estate, RE/MAX, Keller Williams: $208.5 million
Compass: $57.5 million
Real Brokerage: $9.25 million
Realty ONE, @properties: Damage total not announced yet