Homebuyers Challenge Agent Commissions Settlement Again

After the National Association of Realtors and real estate brokerages reached massive settlements with home sellers regarding agent commissions, those on the buyers’ side are continuing their fight for an equally sized bite of the apple.

Buyers have filed their second appeal in less than a month to challenge the $626 million settlement, arguing that its approval could negatively impact their separate claims, Crain’s reported.

The contention revolves around a settlement that, if approved, might also be interpreted to dismiss buyers’ claims in their own lawsuits. Attorneys representing homebuyers made a similar claim in early May when they sought an injunction against the settlement, which a judge subsequently denied.

Both buyers and sellers have sued prominent brokerages and the NAR over longstanding commission standards in which sellers pay a commission to their agent, who then shares it with the buyers’ agent. Typically, each agent receives 2.5 percent to 3 percent of the sale price. Opponents of this commission structure argue that it stifles competition and inflates home prices.

The sellers’ settlement came months after a Kansas City jury in October found major brokerages and the NAR guilty of conspiring to maintain this commission structure. On May 31, lawyers from Korein Tillery, representing buyers, filed a motion in the U.S. Court of Appeals in the Eighth Circuit to prevent the settlement’s final approval.

If the court sides with the buyers, it could delay the settlement’s approval. The $626 million settlement involves significant payments from the NAR ($418 million), Coldwell Banker’s parent company Anywhere ($83 million), Keller Williams ($70 million) and Re/Max ($55 million).

The appeal was filed on behalf of James Mullis, a Nevada resident involved in the buyers’ lawsuit and also a member of the sellers’ class.

In their previous filings, buyers’ attorneys have claimed that the settlement should explicitly state it only applies to sellers, to no avail. They argue that buyers have distinct claims, as their agents could compete by lowering commissions, unlike sellers’ agents who incur additional costs like photography and advertising.

The judge overseeing the settlement now faces a decision: to hold off on approving the settlement until the appeals court rules on the motion, or to proceed with approval at the risk of a successful appeal reversing the settlement. The more common practice would be to wait for the appeal’s resolution, a legal expert who wasn’t identified told the outlet.

—Quinn Donoghue