Redfin Settles $9.2M Commission Inflation Lawsuits

Technology-powered brokerage Redfin has agreed to a $9.2 million settlement to resolve two nationwide class-action lawsuits. The suits alleged that Redfin conspired to artificially inflate commissions paid by home sellers across the United States.

Redfin disclosed the settlement on Monday in Missouri federal court, amidst a backdrop of similar claims faced by other major residential brokerages. These claims, which have amassed billions of dollars, center around allegations of overpaid sales commissions. The company did not admit wrongdoing as part of the settlement, which remains subject to judicial approval.

The crux of the legal dispute lies in the customary practice wherein home sellers must cover the costs of a buyer’s agent to list their homes on multiple listing services, the primary platforms for real estate transactions in the U.S. Commissions, often reaching as high as 6% of a home’s sale price, are then divided between the buyer’s and seller’s agents.

Plaintiffs in the Redfin case, along with those in similar lawsuits, have accused brokerages of leveraging listing rules to drive up commissions. These actions allegedly form part of an antitrust conspiracy involving the industry’s trade group, the National Association of Realtors (NAR). Notably, in October, a group of home sellers secured a nearly $1.8 billion jury verdict in a Missouri case related to sales commissions.

Read more: DOJ Wants National Association Of Realtors Probe Revived

While defendants consistently deny these claims, recent weeks have witnessed a series of substantial settlements. The National Association of Realtors, headquartered in Chicago, agreed in March to a $418 million settlement and pledged to implement changes in the home buying and selling process. Moreover, HomeServices of America, under Warren Buffett’s Berkshire Hathaway, announced a $250 million settlement this month to address home sellers’ grievances.

U.S. District Judge Stephen Bough, presiding over the Kansas City federal court, is set to consider final approval for additional settlements totaling $208 million with Anywhere, RE/MAX , and Keller Williams.

Source: Reuters