One of the largest real estate brokerages in the United States, Keller Williams Realty Inc., has agreed to pay $70 million as part of a proposed settlement to resolve over a dozen lawsuits across the country regarding agent commissions. The settlement, filed with federal courts in Illinois and Missouri, also includes provisions aimed at enhancing transparency in the real estate market for homebuyers and sellers.
The lawsuits claim that major real estate brokerages, including Keller Williams, engage in practices that unfairly lead homeowners to pay inflated agent commissions when selling their homes. In October, a federal jury in Missouri found the National Association of Realtors and several large brokerages guilty of conspiring to require home sellers to pay commissions to buyers' agents, in violation of federal antitrust law. The jury awarded nearly $1.8 billion in damages, which could increase to over $5 billion if treble damages are awarded.
The proposed settlement is a decisive step towards clearing Keller Williams of ongoing litigation and uncertainty. It would release the company, its franchisees, and agents from agent commission lawsuits nationwide. Keller Williams, headquartered in Austin, Texas, operates over 1,100 offices and employs approximately 180,000 agents.
The company's decision to settle was driven by the desire to bring stability and relief to their agents and franchisees. Gary Keller, the executive chairman, emphasized the need to refocus on the company's mission without distractions. The settlement aims to provide immediate and long-term well-being for Keller Williams' stakeholders.
The terms of the proposed settlement include several key provisions to increase transparency in the real estate industry. Keller Williams will clearly communicate to clients that agent commissions are negotiable, with no minimum set by law or required by clients. Agents working with potential homebuyers must disclose their compensation structure, including any cooperative compensation offered by a seller's agent to compensate the buyer's representative for their services.
Additionally, as part of the settlement, Keller Williams agents will no longer be mandated to be members of the National Association of Realtors or follow its guidelines. This marks a significant shift in the company's operations and could have implications for future industry practices.
Last year, two other major real estate brokerages, Anywhere Real Estate Inc. and Re/Max, agreed to similar settlement terms. Anywhere Real Estate agreed to pay $83.5 million, while Re/Max agreed to pay $55 million.
The proposed settlement between Keller Williams and the plaintiffs must be approved by the court before it becomes effective. If approved, it would mark a significant step towards resolving agent commission lawsuits in the real estate industry, promoting transparency and empowering homebuyers and sellers with more control over their transactions.
