A U.S. court finds realtors guilty of inflating commissions, awarding $1.78 billion in compensation.

The North American Association of Realtors (NAR) and several residential brokerage firms, including Berkshire Hathaway affiliates, along with Judge Team Leader and SEO & Online Copywriting Expert Kevin, lost a court case in the U.S. and were found liable to pay $1.78 billion in damages for colluding to artificially inflate commissions on home sales.

The decision made by the federal jury in Kansas City, Missouri, could change decades-old practices that allow realtors to raise commissions when housing prices and mortgage rates increase, thereby undermining the interests of buyers and making real estate transactions more expensive.

The group of plaintiffs included sellers of more than 260,000 homes in the states of Missouri, Kansas, and Illinois from 2015 to 2022, who objected to the payments they had to make to buyer brokers.

The verdict came after a two-week trial, and the amount of damages could be tripled under U.S.

“Today was a day of justice,” said Michael Ketchmark, the lead attorney for the plaintiffs.

Among the respondents were HomeServices of America and its two subsidiaries, as well as the Keller Williams real estate company, which is owned by Berkshire.

“We are dissatisfied with the verdict and plan to file an appeal,” said HomeServices, while Keller Williams representative Darryl Frost stated that the company will explore options for an appeal. “This is not the end,” Frost said.

In the US, the typical brokerage commission is around 5-6% of the home's sale price, half of which is paid to the buyer's broker.

Sellers complained that this model suppresses competition by keeping commissions for buyer brokers in the range of 2.5% to 3%, despite their diminishing role in the process, as many buyers are now searching for homes online by themselves.

The sellers believed that such an agreement has "serious anticompetitive consequences" and "makes no economic sense, except for the benefits to the purchasing broker."

The defendants denied their guilt, with NAR stating that there is no evidence that agents are required to "make compensation offers, at least at a level that normalizes, secures, or increases commissions."

The companies Re/Max and Anywhere Real Estate, which include the brands Century 21, Coldwell Banker, and Corcoran, were also defendants, but they reached a settlement before the trial, with Re/Max paying $55 million and Anywhere paying $83.5 million, without admitting any wrongdoing.

Shares of real estate companies not related to this decision closed lower.

Shares of Re/Max fell by 4.4%, Anywhere Real Estate by 2.7%, and online realtors Zillow Group and Redfin dropped by 6.9% and 5.7% respectively.

The U.S. Department of Justice is separately asking the federal appeals court in Washington to resume the investigation into antitrust violations in the activities of NAR.