Seattle-based real estate tech company Redfin Corp. (Nasdaq: RDFN) on Friday agreed to pay $9.25 million to settle a class-action lawsuit.
Redfin, which disclosed the settlement in a Monday regulatory filing, was a co-defendant in the lawsuit with the National Association of Realtors and a handful of other real estate brokerages. The suit alleges the defendants engaged in anticompetitive practice by forcing home sellers to pay blanket commissions to buyers' agents.
"Redfin never belonged as a defendant in this litigation, and we're glad to have settled it. We always have been, and always will be, advocates for transparency," Redfin said in a statement to the Business Journal. "Resolving this litigation now and removing uncertainty is in the best interest of the company, our employees and our investors.”
The suit, filed in October in the U.S. District Court for the Western District of Missouri, alleges that NAR rules force sellers to "make a blanket, unilateral and effectively non-negotiable offer of buyer broker compensation" when they list a home on a multiple listing service. Because NAR associations control multiple listing services, according to the lawsuit, and because the other defendants encourage their brokers to join NAR, these offers to the buyers' agents are essentially unavoidable.
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The suit alleges buyer broker fees would be much lower if buyers paid their agents, forcing agents to compete on price. Instead, sellers are paying someone who is a de-facto adversary, plus sellers are afraid buyers' agents will steer clients away from certain homes if the commission offer isn't high enough, which inflates commission fees, according to the suit.
The lawsuit noted buyers' agents have a diminished role with new online tools, yet their fees remain the same, meanwhile travel agent and stock broker services have provided significant cost savings for consumers due to the internet.
The other defendants in the suit are eXp, Compass, Weichert Realtors, United Real Estate, Howard Hanna Real Estate Services and Douglas Elliman.
Lawsuits against this NAR rule date as far back as 2019. This particular lawsuit was consolidated with a separate lawsuit in April.
In March, NAR agreed to pay $418 million to settle lawsuits brought by home sellers regarding these blanket commission fees. Redfin CEO Glenn Kelman at the time wrote a blog post supporting rules changes.
"If it becomes easier for buyers to understand how their agent is paid and easier for them to choose their agent based on the agent’s fee, that’s almost certainly good news for real estate consumers. Such a change would also be good for Redfin," Kelman wrote. "But it’s still unclear if the settlement will end cooperation entirely. ... A seller can anticipate that a buyer will have to pay her agent 2.5% of the sales price, and promise to support that fee in agent-only remarks."
Redfin left NAR in October over dues requirements, listing fees and alleged sexual harassment within the association.
Redfin, which launched in 2006, offers brokered listings, a home search tool, mortgages and a service for high-end homes called Redfin Premier. The company started listing rentals in 2022 after acquiring Atlanta-based RentPath in 2021 for $608 million.
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