HomeServices of America, the largest residential real estate brokerage in the United States and owned by Warren E. Buffett’s Berkshire Hathaway Energy, has agreed to settle a series of lawsuits that could change the way commissions are paid to real estate agents.
On Thursday, the brokerage signed off on adding $250 million to the mounting pile of damages won by home sellers who have successfully sued several brokerages and the National Association of Realtors over what they described as inflated commissions. The New York Times obtained a copy of the signed agreement.
Industry insiders have been anticipating the HomeServices settlement since March 15, when N.A.R., an influential trade group with 1.5 million members, agreed to settle the lawsuits that claimed the group had violated antitrust laws and had conspired to fix the rates that real estate agents charge their clients. That settlement received preliminary approval from a federal judge on Tuesday, and now N.A.R. will pay $418 million in damages and significantly change its rules on agent commissions and the databases, accessible only by those who hold membership to N.A.R. subsidiary groups, where homes are listed for sale. N.A.R. argued in court that it never operated a conspiracy around commissions, and continues to say that the home sellers’ allegations that the organization’s rules effectively set commission rates are unfounded.
The settlement will introduce competition to the market for real estate commissions, driving down the fees that consumers are required to pay when selling a home and eventually lowering home prices across the board as a result, some industry analysts say.
For more than a century, N.A.R. has been an indomitable force in the real estate industry. But the group had been under pressure to settle legal claims since October, when a jury in Missouri sided with a group of home sellers who argued they had been forced to pay their real estate agents exorbitant fees. That verdict included an order for damages of at least $1.8 billion. U.S. antitrust law allows plaintiffs to seek treble damages, which means that amount potentially stood to be tripled to $5.4 billion. More than a dozen additional claims from home sellers across the country have also been filed against the group.
But N.A.R. was not the only entity named in the lawsuits. Anywhere Real Estate, RE/MAX and Keller Williams all hatched their own settlement deals, for a total of $208.5 million, before N.A.R. inked its agreement. A number of additional plaintiffs have also settled, in several deals that have not been publicly disclosed, attorneys for the plaintiffs say. With Thursday’s settlement deal, the total amount of damages now set to be awarded in commission lawsuits in the United States is past the $1 billion mark.
Michael Ketchmark, the lawyer on the Missouri case who has been leading settlement negotiations, hailed the deal but signaled that he planned to continue to pursue legal claims against HomeServices’ parent company, Berkshire Hathaway Energy, a path that is carved out in the language of the settlement.
“The long-entrenched mandatory compensation rule is finally dead,” he said in a text message. “A jury of ordinary Missourians spoke, and the industry heard their voice. This settlement allows us to continue to pursue our nationwide case against Berkshire Hathaway Energy and a handful of large corporate brokers.”
HomeServices was the last brokerage named as a defendant in the Missouri case and still vowing to fight the claims, and in a motion filed March 18, attorneys for the plaintiffs asked that it pay $4.7 billion — triple the awarded damages, minus the settlement amounts of N.A.R. and the other brokerages.
“The decision to settle was driven by a desire to eliminate the uncertainty brought by the protracted appellate and litigation process. This resolution allows us to concentrate on our primary goal: delivering unparalleled value in the real estate market and serving home buyers and sellers with the highest standards of service,” said Chris Kelly, executive vice president of HomeServices, in an emailed statement. The settlement, he added, “Will protect our nearly 70,000 agents, 51 brands and over 300 franchisees and licensees from related lawsuits. The financial terms of the settlement represent a sole commitment by HomeServices, independent of any parent entity participation, to effectively conclude our involvement in the anti-trust litigation.”
The agreement, which is still subject to court approval, does not close the door on Mr. Buffett’s legal tussles within the real estate industry. HomeServices’ parent company, Berkshire Hathaway Energy, remains ensnared in a separate, and potentially more sweeping, lawsuit over real estate commissions.
Last month, three home sellers who filed a nationwide antitrust lawsuit in October amended their complaint to add Berkshire Hathaway Energy, the unit that controls HomeServices of America, to its string of defendants that include Compass, eXp World Holdings, Douglas Elliman and Redfin. Compass settled for nearly $58 million last month, but the other brokerages have yet to make a move.
And as part of Mr. Buffett’s multibillion-dollar empire, Berkshire Hathaway Energy is by far the biggest target.
The suit alleges that Berkshire Hathaway Energy played upon Mr. Buffett’s reputation to lure in customers and bolster business, and claims that home sellers working with representatives of Berkshire Hathaway were defrauded by as much as $4.2 billion in 2023.
N.A.R.’s legal battles are not resolved, either. This month, a three-judge panel of the U.S. Court of Appeals for the District of Columbia ruled that the Justice Department can reopen an antitrust investigation into the powerful group, presenting the government with an opportunity to scrutinize the rules on agent compensation that N.A.R. has long enforced over the industry.
With the flurry of settlements, “there’s an implicit recognition that these were not pro-consumer rules,” said Randy Airst, chief executive of the real estate analysis firm Exceedant.
Because HomeServices is part of Mr. Buffett’s empire, it did not face the same financial constraints as the other brokerages involved in the lawsuits, Mr. Airst said, so it was not under the same pressure to settle. The agreement, he added, points to a shift in public sentiment over commissions.
TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.
The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.
The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.
“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.
“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”
The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.
New listings last month totalled 15,328, up 4.3 per cent from a year earlier.
In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.
The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.
“I thought they’d be up for sure, but not necessarily that much,” said Forbes.
“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”
He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.
“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.
“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”
All property types saw more sales in October compared with a year ago throughout the GTA.
Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.
“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.
“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”
This report by The Canadian Press was first published Nov. 6, 2024.
HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.
Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.
Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.
The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.
Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.
They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.
The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.
This report by The Canadian Press was first published Oct. 24, 2024.
Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.
Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.
Average residential home price in B.C.: $938,500
Average price in greater Vancouver (2024 year to date): $1,304,438
Average price in greater Victoria (2024 year to date): $979,103
Average price in the Okanagan (2024 year to date): $748,015
Average two-bedroom purpose-built rental in Vancouver: $2,181
Average two-bedroom purpose-built rental in Victoria: $1,839
Average two-bedroom purpose-built rental in Canada: $1,359
Rental vacancy rate in Vancouver: 0.9 per cent
How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent
This report by The Canadian Press was first published Oct. 17, 2024.
