Compass cuts $58M deal to settle broker commission lawsuits

Compass is pulling out of the antitrust battle over broker commissions. 

The company on Friday announced an agreement to pay $57.5 million to settle class-action lawsuits accusing it of conspiring with other brokerages and trade groups to hike agents’ fees, according to a filing with the Securities and Exchange Commission.

In the filing, Compass denied any wrongdoing and claimed the sum would not materially affect its operations. 

“The reason we have chosen to settle is so we can minimize distractions and focus on serving you and your clients,” CEO Robert Reffkin said in an emailed statement. 

The news comes a week after the National Association of Realtors agreed to pay $418 million to settle similar antitrust claims brought by homesellers. A Kansas City jury ruled against the organization and two major brokerages in October and awarded the plaintiffs $1.8 billion in damages. 

Homesellers and buyers nationwide filed dozens of copycat lawsuits in the wake of the verdict. This included cases in Illinois, Missouri and New York, which named Compass as a defendant. 

Compass is the fourth brokerage to reach a settlement agreement. All are pending court approval. The firm joins Anywhere Real Estate, Keller Williams and RE/MAX, which agreed to pay a combined total of $209 million. 

Similar to the other companies’ agreements, Compass’ includes minor practice changes, including clarifying its communication about commissions to agents and clients and developing training materials to support the revisions. 

Brokerages with transaction volumes exceeding $2 billion were excluded from the proposed terms in NAR’s settlement. The agreement does include an option for companies with higher transaction volumes to buy in to the settlement’s coverage.

However, under the formula outlined in the agreement, Compass may have had to pay more than $500 million to qualify. 

If approved, the agreement requires Compass to transfer half of the settlement amount to a court-controlled fund within 30 days of the agreement’s preliminary approval, which the brokerage expects to happen in the second quarter. The company will deposit the second half within a year of the preliminary approval date.

— Sheridan Wall

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