Redfin will give home sellers who say they were forced to pay inflated commissions access to its vast, nationwide trove of data on payments made to real estate agents, under a proposed settlement in an ongoing legal fight that has shaken the real estate industry.
The online brokerage has access to information from real estate databases, known as multiple listing services or the M.L.S., which is otherwise only available to real estate agents — a restriction that has made the way commissions are set opaque to average consumers.
A group of home sellers who sued Redfin, several other brokerages and the National Association of Realtors are hoping to use the information from those databases to help them in ongoing litigation.
Redfin filed a fact of settlement with the U.S. Securities and Exchange Commission on Monday, following its earlier proposed agreement to resolve pending class action lawsuits filed in federal court in the Western District of Missouri. As a publicly traded company, Redfin was required to disclose the deal to the SEC.
As part of the agreement, which still must be approved in federal court, Redfin has also pledged to make several of its top executives available as key witnesses in the ongoing commission trials.
Redfin now joins a number of major brokerages, including Compass, Keller Williams and Re/Max, who have all agreed to settlement deals in the wake of a slew of landmark antitrust cases against them and the National Association of Realtors. The lawsuits accuse N.A.R., the country’s largest professional organization with 1.5 million members, of setting rules surrounding how real estate agents are paid. The rules have stifled competition and inflated fees, home sellers claim. As members of N.A.R., brokerages followed those rules so they were named in the suits.
On March 15, N.A.R. agreed to settle the lawsuits that claimed the group had violated antitrust laws and had conspired to fix the rates that real estate agents charge their clients. That settlement received preliminary approval from a federal judge in April, and now N.A.R. will pay $418 million in damages and significantly change its rules on agent commissions and the databases, accessible only by those who hold membership to N.A.R. subsidiary groups, where homes are listed for sale. N.A.R. argued in court that it never operated a conspiracy around commissions, and continues to say that the home sellers’ allegations that the organization’s rules effectively set commission rates are unfounded.
The Department of Justice in April reopened its own inquiry into how the trade group operates.
Individual brokerages also named in the suits have been slowly hatching their own deals with plaintiff attorneys, and the pile of damages that have accumulated from all multiple parties is now over $1 billion. Compass will pay $57.5 million and Keller Williams will pay $70 million. HomeServices of America, the largest residential real estate brokerage in the United States and owned by Warren E. Buffett’s Berkshire Hathaway Energy, agreed in late April to pay $250 million to extricate itself from the suits.
Redfin, which severed many of its ties with N.A.R. in October after The New York Times revealed widespread allegations of sexual harassment within the organization, is the first brokerage to offer data in addition to cash as part of a settlement deal. And hard numbers about how much has been paid in real estate commissions across the country, and how agents are sharing information about those commissions on real estate databases out of sight of the public, could provide significant supporting evidence in the courtroom, said Stephen Brobeck, a former executive director of the Consumer Federation of America. He now serves as a senior fellow for the organization.
“What’s been revealed in the lawsuits, and also to the Department of Justice, deals with price offers to buyer agents,” Mr. Brobeck said. “But we’ve lacked actual price data on the commissions that are paid and collected. Redfin has that data, and what’s very significant is they have the data not just on the offers of commissions that are made, but on what’s actually been paid.”
The offering presents a significant boon to the plaintiffs’ attorneys, who continue to pursue a separate nationwide lawsuit over real estate commissions that names Warren E. Buffett’s Berkshire Hathaway Energy as a defendant. That case is scheduled to go to trial in September 2027.
“Redfin has agreed to turn over its massive nationwide database on buyers’ commissions that sellers paid as part of this price-fixing conspiracy,” said Michael Ketchmark, lead attorney for the plaintiffs, in a text message. “We finally have an insider willing to talk about this scheme.”
Berkshire Hathaway Energy declined to comment on the settlement.
Representatives for Redfin declined to comment on the brokerage’s agreement to provide data to the plaintiffs. But in a statement provided to the media, representatives wrote, “We always have been, and always will be, advocates for transparency and saving consumers money, directly selling homes to buyers to bring down fees, and broadly publishing commission data so consumers understand how much they are paying. Resolving this litigation now and removing uncertainty is in the best interest of the company, our employees, and our investors.”
