eXp pushes back on ‘sweetheart deal’ allegations 

Following months of scrutiny, eXp Realty is defending its $34 million settlement with the Hooper plaintiffs, arguing that negotiations were "entirely proper."

In a Feb. 4 filing in the Hooper commissions case in Georgia, the brokerage said the settlement was not a result of a reverse auction — where a defendant shops around to find the best deal — but came together after attorneys for the Gibson/Umpa plaintiffs in Missouri walked out of mediation, and insisted that the $34 million in damages was "within the range of possible recoveries." 

How we got here: Soon after eXp announced its settlement in early October, plaintiffs in the Gibson/Umpa case — in which eXp is also a defendant — filed an objection accusing the firm of securing "an improper sweetheart deal that is not fair or reasonable to the class." Judge Stephen Bough, who is overseeing Gibson/Umpa, refused to issue a stay in the case, instead allowing "further discovery into whether a reverse auction occurred."

Meanwhile, the parties in the Hooper case have asked Judge Mark Cohen to preliminarily approve the eXp settlement, along with the settlements reached by other defendants in the case, which total $44.05 million.

Sellers will actually get more, eXp argues: In the filing, attorneys for eXp said $34 million is a reasonable settlement amount, comparing it to other deals reached in the Gibson/Umpa case. 

Using the T3 Sixty Almanac as a reference, attorneys noted that as a percentage of sales volume, eXp's settlement is slightly less than what Compass and Redfin paid, but more than the damages paid by Realty One and Douglas Elliman. In terms of total dollars, eXp's proposed settlement is the second-largest among the Gibson/Umpa defendants, trailing only Compass' $57.5 million.

Attorneys for eXp also pointed out that the attorney fees in the Hooper settlement are 20%, significantly lower than the 33% cut taken by the Gibson/Umpa attorneys.

"Thus, the class will benefit substantially more from the eXp settlement than a comparable settlement reached in Gibson," according to the filing.

No shopping around: eXp disputed Bough's assertion that eXp was negotiating with two groups of plaintiffs simultaneously, noting that mediation with the Gibson plaintiff attorneys had been over for months before the brokerage started negotiating with the Hooper plaintiffs.

In making the case that eXp did not shop around for the best deal, attorneys pointed to the fact that the brokerage is a named defendant in seven commissions lawsuits. Five are regional, and only two — Gibson and Hooper — include a nationwide class. The company chose to only pursue a settlement in the nationwide cases, preventing a regional case from becoming a nationwide suit. 

Additionally, during the two sets of settlement negotiations, eXp attorneys said they did not discuss the other case at any time.

"This is entirely proper and weighs against finding a reverse auction," the filing states.