Redfin has agreed to pay $9.25 million to settle federal lawsuits that claim U.S. homeowners were saddled with artificially inflated broker commissions when they sold their home as a result of longstanding real estate industry practices.
The online brokerage and real estate services company disclosed the proposed settlement Monday in a regulatory filing with the Securities and Exchange Commission.
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The settlement, which Redfin agreed to Friday, would resolve pending class action lawsuits filed in federal court in the Western District of Missouri, and also shield the company, its subsidiaries and agents from similar cases around the country, according to the filing.
"Resolving this litigation now and removing uncertainty is in the best interest of the company, our employees, and our investors,” the company said in a statement Monday.
Seattle-based Redfin noted that it doesn't expect the settlement, which must be approved by the court, to have a material impact on its future operations, adding it expects to record a $9.25 million pre-tax charge for the quarter ended March 31.
Shares in Redfin were up 3.7% in afternoon trading Monday.
Redfin is the latest big brokerage to agree to settlement terms in order to put an end to lawsuits related to the real estate industry's broker compensation structure, following Re/Max, Keller Williams Realty, Compass and Anywhere Real Estate. Last month, HomeServices of America, which is owned by Warren Buffett’s Berkshire Hathaway, agreed to pay $250 million to settle the lawsuits. And in March, the National Association of Realtors agreed to pay $418 million.
All told, the real estate industry has now agreed to pay more than $950 million to make the lawsuits go away.
The lawsuits′ central claim is that the country’s biggest real estate brokerages and the NAR violated antitrust laws by engaging in business practices that required home sellers to pay the fees for the broker representing the buyer.
Attorneys representing home sellers in multiple states argued that homeowners who listed a property for sale on real estate industry databases were required to include a compensation offer for an agent representing a buyer. And that not including such “cooperative compensation” offers might lead a buyer’s agent to steer their client away from any seller’s listing that didn’t include such an offer.
In October, a federal jury in Missouri ordered the National Association of Realtors and several other large real estate brokerages to pay nearly $1.8 billion in damages. The defendants were facing potentially having to pay more than $5 billion, if treble damages were awarded.
The verdict in that case, which was filed in 2019 on behalf of 500,000 home sellers in Missouri and elsewhere, led to multiple similar lawsuits being filed against the real estate brokerage industry.