According to a Friday filing with the Securities and Exchange Commission, the real estate brokerage company Compass Inc. will pay $57.5 million as part of a proposed settlement to resolve lawsuits over real estate commissions.
The filing said the New York-based company also approved to adjust its business methods to ensure clients can more easily understand how brokers and agents are paid for their services.
Compass to Pay $57.5 Million
Compass has agreed to make several policy adjustments, requiring its brokerages and agents to notify clients that commissions are negotiated and not fixed by law and that brokers' services are not gratuitous for homebuyers.
It also committed to mandating that any compensation offer from the broker representing a seller be disclosed immediately by its agents working on behalf of homebuyers.
The court must consent to the terms of the settlement.
The company has agreed to resolve federal claims launched on behalf of property sellers nationwide, joining several large real estate brokerages and the National Association of Realtors.
Keller Williams and Anywhere Real Estate, which owns brokerage brands such as Century 21 and Coldwell Banker, have reached separate settlement agreements that include more openness regarding agent commissions for sellers and homebuyers.
The lawsuit claimed that the largest real estate brokerages in the nation have been forcing homeowners to pay inflated agent commissions when they sell their homes.
Furthermore, the plaintiffs claimed that homeowners needed to add a compensation offer for a buyer's agent when listing a property for sale on real estate industry databases.
A buyer's agent may advise their client to avoid any seller's listing that does not have one of these "cooperative compensation" offers.
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NAR Approves Policy Changes
Last week, the NAR agreed to pay $418 million and modify its policies to resolve several lawsuits, including one in which a Missouri jury determined in late October that the trade association and many real estate brokerages had colluded to demand that home sellers pay fees to homebuyers' agents.
In that case, the jury ordered the defendants to pay almost $1.8 billion in damages, with a possible $5 billion if the plaintiffs were granted treble damages.
NAR has approved several policy changes, one of which is that offers of pay for a buyer's agent cannot be included by brokers who list a home for sale on any NAR-affiliated databases.
Implementing the new rule in mid-July will mark a significant departure from the practices of real estate brokers since the 1990s.
The regulatory changes may result in sellers paying less commission for their agents' services, even though many housing market observers believe it is too soon to know how they will impact home sales.
Therefore, hiring an agent may result in higher upfront expenditures for buyers.
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