Berkshire Hathaway Brokerage Pays $250M in Antitrust Deal

Berkshire Hathaway Brokerage Pays $250M in Antitrust Deal

In a significant development, a real estate brokerage under Warren Buffett’s Berkshire Hathaway, known as HomeServices of America, finalized a $250 million settlement in a nationwide antitrust litigation. This agreement is poised to reshape how real estate agents receive payments.

The settlement with HomeServices, the largest real estate brokerage in the US, marks the conclusion of a legal battle involving the National Association of Realtors (NAR) and four other brokerages. By reaching this agreement, HomeServices successfully averted the possibility of facing a substantially larger compensation, following a jury ruling in Kansas City, Mo., favoring home sellers. These sellers alleged that the industry colluded to maintain artificially high real estate commissions within the state.

Warren Buffett’s Berkshire Hathaway Energy, the parent company of HomeServices, found itself entangled in a case against the NAR and four brokerages, with jurors awarding a staggering $1.78 billion in damages, a figure that the judge could have tripled. The settlement reached by HomeServices now necessitates court approval.

On the plaintiffs’ side, lawyers representing the affected sellers have not yet commented on the settlement. Additionally, the NAR recently agreed to settle a separate nationwide antitrust lawsuit for $418 million, with preliminary approval from a judge received just last Tuesday.

This recent development also entails a revision of the protocols governing the compensation of buyers’ and sellers’ agents. Experts anticipate that these alterations could potentially lead to a reduction in commissions by a minimum of 25%.

Following the latest settlement, the cumulative amount that the NAR, along with brokerages like HomeServices Anywhere Real Estate and Re/Max, will pay to address antitrust allegations surpasses $943 million. Berkshire Hathaway holds a majority stake, at 92%, in Berkshire Hathaway Energy, which owns HomeServices along with various utility assets, pipelines, and renewable energy ventures.

Chris Kelly, a spokesperson for HomeServices, emphasized that the settlement reflects the sole responsibility of HomeServices, without any involvement from the parent company. This resolution is expected to incur a $140 million after-tax accounting charge.

While HomeServices has concluded its part in this lawsuit, Berkshire Hathaway Energy remains embroiled in a similar case in Kansas City involving multiple brokerages. Legal representatives for the plaintiffs in that jurisdiction have yet to respond to inquiries.

As of the end of 2023, Warren Buffett’s conglomerate, Berkshire Hathaway, possessed a substantial $167.6 billion in cash reserves and equivalents. The ripple effects of this latest settlement are likely to reverberate throughout the real estate sector, potentially influencing how commissions are structured and paid, with implications for agents and clients alike.

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