Compass is the latest major brokerage to announce that it is settling commission lawsuits, and is the first company that has only been named in copycat suits to do so, agreeing to pay $57.5 million and change practices in exchange for immunity from seller claims.
The choice potentially is a harbinger of how the remaining large real estate companies are viewing still-active litigation by sellers, with eXp, Douglas Elliman, Redfin, United Real Estate and Weichert among the biggest that are still facing claims.
In a statement shared with RISMedia, Compass CEO Robert Reffkin said he was “pleased with the decision,” and called the agreement his company took “consistent” with other companies’ settlements.
“The settlement payment and other agreements resolve all nationwide claims home sellers made against Compass and we do not expect this to have any impact on our ability to serve you. By settling, Compass is not saying that we did anything wrong. The reason we have chosen to settle is so we can minimize distractions and focus on serving you and your clients,” Reffkin said.
Like all other settlements so far, the agreement must still be approved by a judge.
According to an SEC filing, the agreement appears to be identical to settlements agreed to by Keller Williams, RE/MAX and Anywhere—mostly centered around disclosing that commissions are negotiable and banning software that allows sorting listings by offer of compensation.
The National Association of REALTORS® (NAR) agreed to much more sweeping changes to policies when it settled last week, some of which essentially supersede these changes.
While the settlement agreement offers very little in terms of new information or developments, the big picture could be shifting. Back in 2019, four big real estate companies were named in commission-focused class action lawsuits: Keller Williams, RE/MAX, Anywhere and HomeServices of America.
All but HomeServices chose to settle shortly before or shortly after a $1.8 billion verdict handed down last October that found the companies conspired with NAR on rules that inflated commissions.
But in the days and weeks after that judgment, dozens of other companies were added to copycat suits, with Compass named as a defendant in one case the same day the verdict was handed down.
And just last month, Compass and many of these new defendants seemed eager to push back and try new lines of argument to combat the allegations by sellers and their attorneys. The fact that Compass is choosing to cease litigating the seller claims in the wake of NAR’s agreement could indicate there is minimal appetite by the industry at large to keep fighting—though claims by homebuyers remain a separate threat.
The amount of the settlement is also notable—less than Anywhere and Keller Williams, who paid $83 million and $70 million, respectively, and about the same as RE/MAX, which paid $55 million.
Notably, Compass closed just slightly more in sales volume as Anywhere last year, according to RISMedia’s latest Power Broker report.
Compass had the option to opt-in to NAR’s settlement, but likely would have had to pay significantly more money to do so—somewhere around $550 million. The terms of NAR’s settlement used average total transaction volume over the last four years to calculate how much brokerages would pay to receive immunity from the seller lawsuits
The total amount paid by real estate entities to settle lawsuits is now approaching $650 million, including NAR’s $418 million settlement.
This is a developing story. Stay tuned to RISMedia for updates.
Editor’s note: an earlier version of this article incorrectly stated the amount Compass would have to pay to join the NAR settlement.
