In a landmark verdict, a federal jury in Kansas City, Missouri found the National Association of Realtors (NAR) and several residential brokerages, including subsidiaries of Warren Buffett's Berkshire Hathaway, liable to pay $1.78 billion in damages for their involvement in a conspiracy to artificially inflate commissions for home sales. The jury's decision could have far-reaching implications for the real estate industry, potentially disrupting long-standing practices that have allowed real estate agents to increase commissions as housing prices and mortgage rates rise.

The class-action lawsuit was brought by sellers of over 260,000 homes in Missouri, Kansas, and Illinois between 2015 and 2022. These sellers objected to the commissions they were obligated to pay buyers' brokers, and the jury's ruling was seen as a victory for consumers who have faced higher costs in housing transactions.

The trial, which lasted for two weeks, resulted in the $1.78 billion damages award, which can potentially be tripled under U.S. antitrust law to over $5.3 billion. The defendants named in the lawsuit included HomeServices of America and two of its subsidiaries, which are owned by Berkshire Hathaway, as well as real estate company Keller Williams.

Reacting to the verdict, the NAR spokesperson Mantill Williams announced that the trade group plans to appeal the decision and seek reduced damages. HomeServices expressed disappointment with the ruling and also stated their intention to appeal. Keller Williams spokesperson Darryl Frost stated that the company will contemplate its options for an appeal, emphasizing that "this is not the end" for them.

Under the prevalent brokerage compensation model in the U.S., real estate agents typically receive around 5% to 6% of a home's sales price, with approximately half paid to a buyer's broker. Home sellers argued that this model restricts competition as it maintains commissions for buyer brokers between 2.5% to 3% despite diminishing their role, as more buyers are now able to find homes independently through online platforms.

It is worth noting that Re/Max and Anywhere Real Estate, which includes Century 21, Coldwell Banker, and Corcoran, were originally defendants in the lawsuit but settled before the trial. Re/Max agreed to pay $55 million, while Anywhere Real Estate paid $83.5 million, without admitting liability.

Furthermore, the U.S. Department of Justice has requested a federal appeals court in Washington to allow it to revive its antitrust probe into the NAR's practices, highlighting the continued scrutiny of the real estate industry by regulatory authorities.

The decision by the federal jury marks a significant victory for home sellers and could initiate transformative changes in the real estate industry's commission structure. As the NAR and Berkshire Hathaway units plan to appeal, the final resolution of this case remains uncertain.