Last Friday, RE/MAX unveiled the terms of its settlement of two major class action lawsuits targeting agent commission that will resolve all claims against the company (and its agents and franchises).
The agreement, unsurprisingly, mirrors the terms that Anywhere Real Estate affirmed in a settlement struck only a couple weeks earlier. Most notably, both RE/MAX and Anywhere will cease requiring franchises to be part of the National Association of REALTORS® (NAR) and will provide education and disclosures around commission “transparency,” along with disallowing software that sorts listings by buyer commission.
RE/MAX also agreed to pay $55 million, less than the $83 million Anywhere agreed to. Both companies said they do not expect any major financial impact due to these payments.
“We continue to deny the allegations made in the complaints and in no way acknowledge any wrongdoing. We also continue to believe in buyer agency, cooperative compensation and the idea that consumers are best served when they are working with real estate professionals,” said RE/MAX President and CEO Nick Bailey.
This broadly aligns with comments made by Anywhere executives, who also reiterated their commitment to the current commission model in real estate, which is the main focus of the lawsuits (both still slated to go to trial in the coming months).
HomeServices of America and its subsidiaries, along with Keller Williams and NAR remain defendants in the lawsuits, which allege that NAR rules, broker policy and other industry practices, including agent training, enforce an anti-competitive and anti-consumer structure that inflates commissions.
One trial, in a case known as Burnett/Sitzer, is scheduled to start one week from today, while the other, known as Moehrl, will take place early next year.
But as the lawsuits go forward, RE/MAX at least won’t be able to fully move on from the litigation. In the company’s settlement agreement, there is a stipulation requiring RE/MAX corporate (not franchises) to “provide valuable cooperation to plaintiffs” in the lawsuits, even as it is no longer a target of claims.
Specifically, RE/MAX is required to withdraw expert witnesses it retained for the trials, disallowing them from testifying for the other brokerages still fighting the suits. The company must also provide three of its own current employees as witnesses for the Moehrl suit.
Additionally, the agreement requires RE/MAX to assist in verifying documents either before or during hearings and trials.
A spokesperson for Anywhere provided a portion of its settlement agreement, which contained very similar stipulations and language around cooperation.
A RE/MAX spokesperson said that costs associated with the cooperation portions of the agreement are already baked in to the $55 million total, but declined to comment on other details, adding that the company “assert(s) that protecting the U.S. RE/MAX network of Broker/Owners and agents from costly litigation and the risk of further damages makes this settlement the right course of action.”
Even with these settlements, the road ahead in the ongoing saga of commission lawsuits is likely a long one, with other interrelated issues. As some companies call for further distancing from NAR, these suits, and a dormant Department of Justice investigation, could potentially push for further changes and penalties.
Another lawsuit, specifically targeting NAR’s “clear cooperation” policy and some of the country’s largest MLSs, is scheduled for trial in early 2025.
I entered as a Realtor in 1973, the Listing Brokerage received all of the fee they had contracted for, with the Seller, at the closing and transfer of title(deed)!
It meant, usually the check had to clear before my Brokerage would receive the agreed upon co-brokerage fee!
You won’t believe it, but sometimes you never got paid…because the funds from closings went into Brokerage operating accounts and funds were not paid out of a trust account!
In order to be sure selling Brokerages got paid, permission was given to the closing companies, attorneys and title companies to separate the co-operating Brokerage at the closing…what an ingenious revelation!
It was then that the Listing Brokerage could avoid the extra accounting they were required to do, and Selling Brokerages were being paid in a timely fashion!
O M G how did this simple change turn into the fiasco of lawsuits!
Sellers agree to pay a Brokerage to Market and Sell their home…low and behold another Brokerage has a Buyer!
The Brokerage and Seller have a contract for a certain amount to be paid when the Closing is consummated, even though a Buyer may come through a co-operating Brokerage!
Through decades of Co-operation between Brokerages many Sellers and Buyers have successfully made the market flow work…I have personally seen it succeed!
Our profession as Realtors is governed by a code of ethics that has kept our standards of business conduct in check!
There are many Licensees that have a license to offer services to Sellers and Buyers with out regard to good ethical business practices!
Fortunately the National Association of REALTORS was formed to promote business ethics!
I went into the real estate business in 1978.. I loved the business. Today there is so much Crapp going on with Virtual offices, Agents not licensed in the state, selling. This is not the way to run a service. No one understands. how hard we work for our money. Something should change.