Court approves settlements, payouts, and practice changes
A federal judge has granted final approval to the settlement agreements reached by real estate giants Anywhere Real Estate (formerly Realogy), RE/MAX, and Keller Williams in the long-running commission lawsuits against the industry.
In a ruling on Thursday, Judge Stephen Bough approved the settlements totaling $208.5 million - $83.5 million from Anywhere, $55 million from RE/MAX, and $70 million from Keller Williams. The settlements will become effective after any potential appeals process.
As part of the agreements, the brokerages agreed to various policy changes, including no longer requiring agents to be members of the National Association of Realtors (NAR) or follow its Code of Ethics and MLS Handbook. They also committed to making clear to clients that commissions are negotiable and allowing agents to freely negotiate their fees.
While nearly 200,000 claims have been filed by class members and 61 have opted out, fewer than 60 filed formal objections with the court over the settlement terms.
Among those were homebuilder PulteGroup, attorneys representing plaintiffs in related “copycat” lawsuits in South Carolina and Pennsylvania, and James Mullis - a plaintiff in the separate Batton lawsuit brought by homebuyers.
PulteGroup argued there were “procedural factors” impacting their decision and a lack of clarity around the potential recovery amount and work required. The South Carolina attorneys sought to subpoena financial records from Keller Williams to evaluate objections over the settlement amount but were denied by the judge.
Read more: Commission-sharing lawsuit – will it lead to major changes?
Mullis and the Batton plaintiffs objected that the settlements could release damages claims from home purchase transactions, not just home sales. On Wednesday, Judge Andrea Wood, overseeing the Batton case, rejected the plaintiffs’ request to block final approval, saying it would be “inappropriate” to interfere with the other court’s process.
“The final approval of these settlements by the court was expected,” said Marty Green, principal at mortgage law firm Polunsky Beitel Green. “Although there were some objections that the court had to address, the momentum of the case has been rapidly moving toward a nationwide resolution, and it was very unlikely that the court was interested in deviating from a process that furthered that outcome.”
RE/MAX Holdings CEO Erik Carlson commented: “Since entering into the settlement last fall, RE/MAX has been committed to obtaining final approval. We are thrilled to be leading the way in moving forward, maintaining our focus on supporting RE/MAX affiliates and continuing to foster greater transparency in the industry on behalf of homebuyers and sellers.”
“I am pleased the court has granted Anywhere final approval of our nationwide settlement,” said Ryan Schneider, Anywhere CEO and president. “This is a significant milestone on our path to put these claims behind us, begin to implement agreed upon practice changes, and move forward with our affiliated agents and franchisees as, together, we continue helping home buyers and sellers move to what’s next.”
The settlements are the largest so far from the high-profile commission lawsuits alleging real estate companies conspired to inflate fees paid by home sellers through antiquated rules. The NAR previously reached a $781 million settlement that awaits final approval in November.
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