RE/MAX Settles Commission Lawsuits, With Industry Bracing for Change

The dominoes continue to fall in the long-running but now fast-developing saga of real estate commission lawsuits, with RE/MAX the latest brokerage to settle, paying $55 million to resolve sweeping class action claims, according to an SEC filing today.

In the brief statement to regulators, RE/MAX said the settlement was reached last Friday, and covers both of the major lawsuits—Moehrl, and Burnett/Sitzer. RE/MAX also said part of the agreement involved the company changing business practices, without providing any further details.

In a statement provided to RISMedia, a RE/MAX spokesperson said the company “steadfastly refutes the allegations presented in the lawsuits,” but chose to settle as a “forward-looking decision…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.

The settlement would include the release of liability for RE/MAX franchisees and agents, if approved by the court, according to the spokesperson.

A spokesperson for the attorneys in the Moehrl case did not respond to emailed questions from RISMedia.

RE/MAX is now the second brokerage to settle, with the Burnett/Sitzer trial scheduled to start in just under a month. Anywhere real estate announced that they had reached an $85 million preliminary settlement earlier this month, while several other major franchisors, including HomeServices of America, Keller Williams and Long & Foster, remain defendants in the lawsuit. The National Association of REALTORS® (NAR) and more than a dozen MLSs are also named. 

With potential damages estimated in the billions, settlements seemed likely once the suits were certified as class action, as a federal judge left the door open for potentially tens of thousands of past, current and future home sellers across multiple states to join the suit. 

Maybe more important than the monetary damages is the potential for policy changes. Plaintiffs in these lawsuits and the Department of Justice have both alleged that various NAR policies and real estate practices, including the “coupling” of commission (where sellers pay both agents) and incentives for buyers’ agents to steer clients away from lower commission properties, are anti-competitive in violation of federal law.

Exactly how, when or where potential changes might happen—an NAR-independent MLS system or a decoupling of agent commission for instance—is still unclear. Additionally, these settlements on their own likely won’t have a catastrophic effect on the big real estate companies, even if they are painful—RE/MAX took in $353 million in revenue last year.

Real estate luminaries at RISMedia’s CEO & Leadership Exchange earlier this month—including RE/MAX and Anywhere executives—remained defiant, while also acknowledging that there appeared to be change coming.

James Dwiggins, CEO of NextHome, did directly address the possibility of major changes coming from the lawsuits, urging industry leaders to begin thinking about what real estate might look like in a while.

“I think we understand the severity of what these things can be,” he said. “How are we training our people to understand the reality of a different world that has been the past 40 years? I think that we, as leaders of this industry, have to start realizing that some of this stuff isn’t going to go down the way that we thought it was.”

Brian Donnellan, Bright MLS CEO, went even further, claiming that brokers are “selectively honoring” cooperation rules, and calling for MLSs to create their own policies separate from NAR.

“The first thing I would say to you is the MLS needs to move away from the broker, and it needs to move away from NAR,” he said. “The broker is still the focal point of what it is that we do, but the inherent conflict of rulemaking and other guidance is a problem. So we need to figure out how to move away—not divorce from them—but move away.”

Nick Baily, president and CEO of RE/MAX, spoke on a panel titled “Power Pivots: Lessons in Change Management,” looking at how big brokerages are adapting in the current market. Though he did not address the lawsuits directly, Bailey concluded his remarks somewhat ominously.

“There are great wartime leaders, and there are great peacetime leaders. Decide which one you are,” he said.

Editor’s note: This story was updated with comments from a RE/MAX spokesperson.

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