A federal jury in Kansas City has found that the National Association of Realtors and large residential brokerages conspired to keep commissions for home sales artificially high and set damages at $1.78 billion, according to reports.
Bloomberg reported that Zillow Group Inc. and other real estate stocks plunged after the jury found the National Association of Realtors and other industry players guilty of colluding to maintain high brokerage commissions.
The lawsuit was filed in Kansas City, Missouri, against the Realtors association, Keller Williams and Berkshire Hathaway’s HomeServices of America. Two other brokerages, Re/Max and Anywhere Real Estate Inc., settled with plaintiffs earlier this year, agreeing to pay $55 million and $83.5 million, respectively, and to no longer require agents to belong to NAR.
In separate statements, NAR and HomeServices said they intend to appeal. Keller Williams said it “will consider all options as we assess the verdict and trial record, including avenues of appeal.”
“Today’s decision means that buyers will face even more obstacles in an already challenging real estate market and sellers will have a harder time realizing the value of their homes,” HomeServices said. “It could also force homebuyers to forgo professional help during what is likely the most complex and consequential financial transaction they’ll make in their lifetime.”
The jury awarded $1.785 billion in damages in the case, which was the smaller of two lawsuits concerning brokerage commission practices. In a third matter, the Justice Department is focused on a commission-sharing system that typically puts home sellers on the hook for a 5% to 6% cut of the sale, split between their agent and the buyer’s agent.
An NAR spokesman said that while the group plans to appeal, the matter will take years to resolve. “In the interim,” Mantill Williams said in a statement, “we will ask the court to reduce the damages awarded by the jury.”