A real estate company owned by Warren Buffett’s Berkshire Hathaway has agreed to pay $250 million to settle lawsuits nationwide alleging that longstanding practices by real estate brokerages led to artificially inflated broker commissions for U.S. homeowners.
HomeServices of America, a subsidiary of Berkshire Hathaway, announced the proposed settlement on Friday, which would protect its 51 brands, nearly 70,000 real estate agents, and over 300 franchisees from similar litigation. The company stated that while they were confident in the legality and ethics of their practices, they chose to settle to eliminate uncertainty from ongoing legal battles.
The $250 million settlement payout represents a current after-tax charge of about $140 million for HomeServices, with a four-year timeline for payment. The parent company, Berkshire Hathaway, is not part of the settlement.
This settlement adds to the total amount paid by the real estate industry to over $943 million to resolve these lawsuits. Benjamin Brown, a managing partner at one of the law firms representing plaintiffs, called it a significant win for American home sellers who have been burdened with unnecessary commission costs.
The lawsuits alleged that major real estate brokerages and the National Association of Realtors violated antitrust laws by requiring home sellers to pay fees for the buyer’s agent. The settlements also include changes to business practices to ensure transparency in how brokers and agents are compensated, with new rules set to go into effect in July.