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More big brokerages likely to cut their own settlements, skip NAR’s terms
Compass announced $58M deal after settlement would have cost more than $500M
The deal proposed by the National Association of Realtors to settle the antitrust lawsuits didn’t get all of its members — some of the biggest names in residential brokerage — out of the woods.
The $418 million agreement, pending court approval, only covers brokerages that handled under $2 billion in deal volume in 2022, a tiny amount for many of the residential behemoths the trade group represents. More than 90 brokerages don’t qualify for the settlement, including Redfin, @properties, Real Brokerage, Brown Harris Stevens and the Agency.
NAR said it pushed for all of its members to be released by the settlement, which also excludes the remaining defendant in the Sitzer/Burnett case, HomeServices of America, but landed on “the best outcome we could achieve in the circumstances.”
Under the terms of the settlement, large brokerages that belong to NAR could opt in by paying the average of their total volume from 2020 to 2023 and multiplying it by 0.0025 — prohibitively expensive for the nation’s largest brokerages.
That’s likely why Compass settled separately for $57.5 million in a deal announced Friday. If it had agreed to the terms of the NAR agreement, it would have had to pay around $509 million.
Even for brokerages with far less volume, NAR’s settlement terms would have meant steep payments. Douglas Elliman, with $42 billion in sales in 2022, would likely have to pay north of $100 million to take part in the settlement.
Elliman declined to comment.
The $2 billion cut-off was aimed at picking out the sector’s largest players to pay in proportion to their footprint and enact rule changes that would make waves across the residential market, according to plaintiffs’ attorney Michael Ketchmark.
“The focus is on the large corporate real estate brokers,” Ketchmark told Inman. “That seemed to be the logical place for the cut-off. The biggest thing is that they need to agree to these practice changes and they need to agree to change the way that they’re doing things.”
Beyond the numbers, the settlement marks a clear divide between the industry’s reigning authority and its biggest members, according to analyst and RealTrends President Steve Murray
“I’m sure right now [NAR] think it’s good news,” Murray told The Real Deal last week of the settlement. “But if they think it’s going to be business as usual after they dropped their largest members on the coals, so to speak, they better think more carefully.”
Brokerages that qualify for the buy-in option have until 60 days after the first motion for preliminary approval is filed to decide whether they plan to be included. If they do opt-in, the firms have to deposit the requisite sum within 120 days of approval.
The agreement also stipulates that if brokerages can’t pay the amount indicated in the formula, then they can participate in non-binding mediation with the plaintiffs within 110 days following the judge’s preliminary approval of the agreement.
Under the opt-in terms, brokerages are also required to enact certain rule changes in relation to commission, similar to those proposed by Anywhere and Compass. The provisions include barring buyer’s agents from representing their services as free and prohibiting them from using technology to filter or restrict listings based on the compensation offer.