Real estate brokerage Compass has agreed to pay $57.5 million to settle claims it conspired to overcharge US home sellers by billions of dollars.
Compass is the first major firm to reach a settlement sum since the National Association of Realtors (NAR) agreed to pay $418 million last week on behalf of smaller brokers.
Tens of millions of Americans who sold homes in recent years are likely to receive a payout from the settlements, including the latest one from Compass – but details of who will qualify are scant.
The NAR has refused to answer repeated requests from DailyMail.com asking how sellers can claim compensation, which is now almost $700 million across several cases.
Compass is one of many large home brokerages facing claims they violated antitrust laws.
A judge still needs to approve the Compass settlement – which is thought to be a formality. Once they do, news of how to claim is set to be released.
Real estate brokerage Compass has agreed to pay $57.5 million to settle claims it conspired to overcharge US home sellers by billions of dollars. It has denied any wrongdoing
Previously, the buyer’s agent could see which properties have the highest sales commission and ‘steer’ buyers to them
Compass, based in New York, also agreed to change its business practices to ensure home movers understand how brokers and agents are compensated.
CEO Robert Reffkin today said the company – which denied any wrongdoing – was pleased to resolve the claims to ‘minimize distractions.’
The decision was welcomed by Mike Ketchmark, an attorney representing the home seller plaintiffs.
He said: ‘Brokers around the country are continuing to join with NAR in abandoning the broken system. We expect many more settlements in the coming months.’
The case concerns a longstanding practice designed to keep rates high and extract as much commission as possible.
Among the changes it has agreed to make, Compass will require its brokerages and their agents to clearly disclose to clients that commissions are negotiable and not set by law.
They also must state that the services of agents representing homebuyers are not free.
It also agreed to require that its agents who represent homebuyers disclose right away any offer of compensation by the broker representing a seller.
Three other major brokerages have made similar deals to settle the litigation.
Re/Max Holdings and Anywhere Real Estate agreed to pay out $140 million combined last fall.
Meanwhile Keller Williams Realty reached a $70 million settlement in February.
Combined with the NAR’s $418 million agreement, it means the industry has agreed to pay $684 million in total.
The decision was welcomed by Mike Ketchmark (pictured), an attorney representing the home seller plaintiffs.
Americans will likely see a drastic drop in the cost of selling their houses after a landmark legal settlement was reached on Friday morning
Currently commissions for buyer’s and seller’s agents amounts to between 5 and 6 percent of a home’s sales price. This is usually divided between the two agents.
But it is much higher than in other countries – around double the average fees paid by home movers in the UK, for example.
The NAR is the largest trade association in the US and only its fee-paying members are allowed to call themselves ‘Realtors’. They are also the only people with access to its proprietary database of properties available for sale.
Those databases are referred to as ‘multiple listing services’ or MLSs and require the seller’s agent to list the amount of commission their client is paying.
That, in theory, enables the buyer’s agent to ‘steer’ buyers to houses on which the commission is higher and through which they can profit more in the event of a sale.
According to a survey by consulting firm 1000watt, more than 76 percent of 640 real estate agents in the US said buyer’s agents would be more likely to show a property if they knew the seller was paying higher commission.
This system, in turn, allows the seller’s agent to tell sellers that if they don’t offer up enough commission, buyers won’t ever see their house.
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