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The dominoes are beginning to fall.
RE/MAX is now the second real estate franchisor to reach a settlement with plaintiffs in two bombshell lawsuits that could upend how consumers pay agents nationwide, agreeing to fork over $55 million and adjust its business practices.
On Monday, RE/MAX and plaintiffs for the Sitzer/Burnett lawsuit, which is scheduled for trial Oct. 16, filed a notice in the U.S. District Court in Western Missouri alerting the court that RE/MAX had agreed to settle all of the claims against the company as part of a proposed nationwide class settlement. The deal was jointly negotiated with the plaintiffs in the larger bombshell suit known as Moehrl.
RE/MAX, a publicly-traded company, also notified the U.S. Securities and Exchange Commission of the deal on Monday.
“The Settlement resolves all claims in the Lawsuits and similar claims on a nationwide basis against RE/MAX … and releases RE/MAX and the Company, their subsidiaries and affiliates, and RE/MAX sub-franchisors, franchisees and their sales associates in the United States from the Claims,” the SEC filing said.
“By the terms of the Settlement, RE/MAX agreed to pay a total settlement amount of $55.0 million … into a qualified settlement fund. In addition, RE/MAX agreed to make certain changes to its business practices.”
In the filing, RE/MAX noted that the proposed settlement is subject to preliminary and final court approval and will only become effective if the court grants final approval.
“If approved by the court, the settlement paves the way for a clear path forward for the RE/MAX brand, its franchisees and its agents, removing the uncertainty of ongoing litigation related to these cases,” a RE/MAX spokesperson told Inman in an emailed statement.
“While RE/MAX, LLC steadfastly refutes the allegations presented in the lawsuits, this forward-looking decision was made in the best interest of RE/MAX, LLC, its agents and its franchisees, after carefully considering the significant risks and costs associated with continued litigation.
“Co-Founders Dave and Gail Liniger built the RE/MAX brand with Broker/Owners, agents and consumers at the center of the business and, if approved, the settlement specifically includes releases of liability for RE/MAX franchisees and agents. Given confidentiality agreements and ongoing proceedings, RE/MAX has no further comment at this time.”
RE/MAX plans to use available cash to pay the settlement amount, according to the SEC filing. The company expects to pay one-quarter of the amount on or before September 29, 2023, one-quarter within 10 business days after preliminary court approval of the deal, and half within 10 business days after the court grants final approval.
“The Settlement and any actions taken to carry out the Settlement are not an admission or concession of liability, or of the validity of any claim, defense, or point of fact or law on the part of any party,” the filing continued.
“Apart from payment of the Settlement Amount, the Company does not expect the terms of the proposed Settlement … to have a material impact on its results of operations and cash flows,” the filing added.
Sitzer/Burnett, which names the National Association of Realtors, Keller Williams, Anywhere, RE/MAX, HomeServices and HomeServices subsidiaries BHH Affiliates and HSF Affiliates as defendants, was originally filed in 2019 and won class action status in April 2022. Moehrl, which names the same defendants, was also filed in 2019 and received class certification in March 2023.
The suits allege that some NAR rules — including one called the Participation Rule that requires listing brokers to offer buyer brokers a commission in order to list a property in a Realtor-affiliated multiple listing service — violate the Sherman Antitrust Act by inflating seller costs.
In January 2022, Anywhere became the only defendant so far to publicly call for NAR to make the Participation Rule optional rather than a requirement.
Earlier this month, on Sept. 5, Anywhere settled with the Moehrl and Sitzer/Burnett plaintiffs for $83.5 million. According to the plaintiffs’ attorneys in both cases, the franchisor agreed to change its practices in the deal, though the exact terms of the settlement have not yet been made public.
The settlement notice for the Moehrl suit was filed in the U.S. District Court for the Northern District of Illinois’ Eastern Division. Attorneys for RE/MAX and for the plaintiffs in both lawsuits have asked the courts to stay — stop, at least temporarily — all deadlines and proceedings in the suits in regards to RE/MAX.
“We are pleased to announce yet another nationwide settlement in the massive class action lawsuit regarding real estate commissions in the sale of homes,” Michael Ketchmark, lead trial counsel for the plaintiffs in the Sitzer/Burnett case, told Inman in an emailed statement.
“RE/MAX has now agreed to join Anywhere Real Estate in changing its practices by no longer forcing home sellers to pay buyer’s agents. The $55.0 million dollar settlement focuses on the RE/MAX’s ability to pay. The biggest part of the settlement is the massive changes to RE/MAX’s business practices.
“The time has now come for Home Services of America, NAR, and Keller Williams to admit they are wrong in continuing to force homesellers to pay buyer’s commissions. Our experts have shown that NAR’s anti-competitive rules result in doubling the cost of commissions in the United States. This NAR rule has cost homeowners hundreds of billions of dollars in commissions over the years and put the dream of homeownership out of reach for many Americans.
“The jury trial in federal court for the Western District of Missouri is only four weeks away. Unless Home Services, NAR and Keller Williams finally admit they are wrong and change their ways we will ask the jury to return the money to the 250,000 homeowners in Missouri who were victims of this alleged conspiracy.”
After Anywhere settled earlier this month, NAR strongly suggested that it would not settle, and the trade group’s position has not changed with this new settlement.
“Settlement is always an option for any party in litigation,” NAR spokesperson Mantill Williams told Inman in an emailed statement.
“The recent settlements do not change how the case is presented to the court or NAR’s commitment to defend ourselves. We are confident we will prevail in proving the lawfulness of the rules under attack.
“Pro-competitive, pro-consumer local MLS broker marketplaces ensure equity, efficiency, transparency and market-driven pricing options for home buyers and sellers. The practice of the listing broker paying the buyer broker’s compensation saves sellers time and money by having so many buyer brokers participating in that local marketplace and thus creates a larger pool of buyers for sellers.
“For buyers, these marketplaces save them the burden of extra costs at closing, enable them to receive professional representation and make homeownership possible for more people. In fact, the U.S. model of independent, local broker marketplaces is widely considered the best value and most efficient model in the world, with no hidden or extra costs and with more complete, verified information compared to other countries. We look forward to arguing our case in court.”
Keller Williams and HomeServices declined to comment. Inman has reached out to Moehrl plaintiffs’ attorney Steve Berman for comment and will update this story if and when a response is received.
Editor’s note: This story has been updated with comments from RE/MAX and NAR, Keller Williams’ and HomeServices’ declinations to comment, and additional details from RE/MAX’s public filing.