In a recent development that has rocked the real estate industry, a group of home sellers from the Pittsburgh area filed a lawsuit against local affiliates of Warren Buffett’s Berkshire Hathaway and Anywhere Real Estate, including subsidiaries Sotheby’s and Coldwell Banker. The lawsuit, lodged in Pittsburgh federal court, accuses these entities of conspiring to artificially inflate home-sale commissions, marking another significant case in the ongoing scrutiny over real estate brokerage practices.
At the heart of this prospective antitrust class action are allegations against Everest Consulting Group LP, an affiliate of Berkshire Hathaway’s HomeServices, and several other area real estate brokerages. The plaintiffs claim they were unfairly overcharged on commissions typically paid to a buyer’s agent during a residential home sale. This case underscores growing concerns about the standard industry practices where U.S. sellers often pay commissions ranging from 5% to 6%, or more, to brokers representing buyers under the widely accepted “buyer broker” rule.
Critics argue that this rule enables buyer-brokers to guide clients towards homes offering higher commissions, thereby potentially undermining the interests of home sellers. This practice has been a focal point of legal scrutiny, as evidenced by an Oct. 31 jury verdict in Kansas City, Missouri. In that case, a federal court awarded nearly $1.8 billion in damages to a class of home sellers for alleged overcharges in commissions. HomeServices and other defendants in the Kansas City case, including the National Association of Realtors, have expressed intentions to challenge the verdict and the damages amount.
Notably, the National Association of Realtors, which has previously defended the broker commission practice as promoting “efficient, transparent, and equitable marketplaces,” is not a defendant in the new Pittsburgh lawsuit. The complaint filed in Pittsburgh also targets West Penn Multi-List Inc., known for its online listing service where home sales are showcased and buyer’s broker commissions are indicated.
The lawsuit asserts that the actions of the defendants illegitimately restricted trade and competition, harming home sellers by inflating the cost of selling a house. It seeks triple damages under U.S. antitrust law, among other penalties. This case adds to a growing list of similar lawsuits filed in federal courts across various locations, including Manhattan and Texas, especially following the precedent-setting Kansas City verdict.
In a related development, Madison, New Jersey-based Anywhere Real Estate, one of the defendants, agreed in October to pay $83.5 million to resolve antitrust allegations in a pair of real estate cases in Illinois and Missouri federal courts. While the company did not admit liability, this settlement is pending final court approval.
As the case unfolds, representatives from Anywhere and HomeServices have yet to respond to requests for comment. Similarly, attorneys from the law firm Obermayer Rebmann Maxwell & Hippel representing the Pittsburgh plaintiffs have not commented.
This lawsuit, formally titled Spring Way Center LLC et al v. West Penn Multi-List Inc et al, filed in the U.S. District Court for the Western District of Pennsylvania (Case No. 2:23-cv-02061-CCW), is yet to see appearances from the defendants. It marks another chapter in the ongoing legal saga surrounding real estate commissions and the broader implications for industry practices and home sellers’ rights.
