A federal appeals court on Wednesday upheld a more than $1 billion settlement to resolve antitrust claims that real estate brokerages conspired to inflate agents' commissions, rejecting objections by home buyers and sellers who said their claims should not have been released.
The 8th U.S. Circuit Court of Appeals in St. Louis said a federal district judge did not abuse his discretion in finding that any conflicts of interest between buyers and sellers were not severe enough to undermine the settlement's fairness.
Circuit Judge Lavenski Smith wrote for a three-judge panel that changes to how brokerages negotiate, allocate and disclose commissions "will benefit the entire class."
Wednesday's decision upheld the November 2024 settlement approval by U.S. District Judge Stephen Bough in Kansas City, Missouri.
The settlement covering tens of millions of class members includes $418 million from the National Association of Realtors, $250 million from Berkshire Hathaway's (BRKa.N) HomeServices of America, and $333 million in legal fees.
As part of the settlement, the NAR agreed to revamp decades-old rules governing the splitting of agent commissions, which hovered around 5% to 6%. Many buyers and sellers found those commissions too high.
Patrick Knie, a lawyer for some of the objectors, said his clients may appeal to the Supreme Court. He said they weren't allowed to properly raise their objections, and the payout was too low.
"Everyone got next to nothing for the sake of settling," he said. "There's something just not right about that."
The NAR said it was pleased, and would continue efforts to "foster fair, transparent, and pro-consumer real estate markets."
HomeServices Chief Executive Chris Kelly said he was also pleased, and the decision provided "additional certainty" to the company, customers and agents.
The settlement saved the industry some money, after a Missouri jury in October 2023 ordered the NAR, HomeServices and the realty Keller Williams to pay $1.78 billion to home sellers who claimed they were overcharged.
Other sizable brokerages, including Brown Harris Stevens, were allowed to join the settlement and provide additional cash if they changed their business practices.
Berkshire Hathaway Energy, the immediate parent of HomeServices, is still defending against a separate proposed class action before Judge Bough claiming it also conspired to inflate commissions, despite the $250 million settlement.
