Three Utah brokerages were left out of massive Realtor settlement

Stephen Roney, CEO of BHHS Utah Properties, Tony Ketterling, CEO of Equity Real Estate and Paul Benson, CEO of Gestalt Group

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The National Association of Realtors shocked the country in recent days when it announced it had reached an agreement to settle a string of lawsuits that posed an existential crisis to the real estate industry.

It was welcome news for over 1 million Realtors, including many in Utah, who are now covered from the threat of litigation under the proposed terms. 

But not everyone was protected.

Under the terms brokered by NAR, three brokerages in Utah and a handful of teams working for national outfits still face the threat of lawsuit from home sellers or buyers looking to claw back part or all of the commissions they paid on real estate transactions in recent years.

In nearly two-dozen lawsuits, including one filed last month in Utah, homesellers and homebuyers have accused NAR, Realtors and the multiple listing services of creating and enforcing rules that have led to commissions that are unnaturally high.

NAR and most in the industry have denied the claims, saying the rules ensure buyers and sellers each have equal representation in a complex and pricey transaction. 

Regardless, NAR, the nation’s largest trade organization, agreed to pay $418 million and enact sweeping changes to the rules Realtors follow by this summer. In exchange, all but a relative handful of real estate companies received protection under the proposal.

Equity Real Estate, BHHS Utah Properties and Engel & Völkers Gestalt Group each transacted so much real estate that they weren’t included in the settlement class.

Equity Real Estate, based in Sandy, was Utah’s largest independent brokerage that year. It facilitated $6.37 billion in real estate transactions in 2022, the year chosen to decide which firms would be covered by the proposed settlement. The firm was in the lawsuit filed last month by a man who sold a home in Utah County in 2022 and is now claiming the rules were illegal.

BHHS Utah Properties, based in Park City, conducted $4.89 billion in sales volume in 2022. Still, it wouldn’t have been covered by the proposed settlement anyways.

Under the terms NAR reached with plaintiffs’ attorneys, any brokerage or franchise that conducted over $2 billion in 2022 wasn’t covered by the settlement.

The proposed settlement specifically excluded any firm that was affiliated with Berkshire Hathaway, the conglomerate owned by legendary investor Warren Buffett. Berkshire’s affiliated companies were named as defendants in a federal class action case in Missouri. 

The jury in that case ruled NAR, Berkshire and other real estate defendants violated antitrust laws by creating and then following rules the plaintiffs said amounted to an illegal conspiracy.

The jury ordered the defendants to pay $1.8 billion in damages, which would automatically be tripled to $5.3 billion. Keller Williams, Anywhere Real Estate and RE/MAX had all already when NAR made its announcement on Friday. Berkshire has maintained that it plans to appeal the verdict.

Engel & Völkers Gestalt Group, which has 47 agents in Utah, conducted $3.67 billion in sales volume in 2022 and wasn’t covered.

NAR’s proposed settlement created a path for any brokerages and franchises not covered to join.

Messages to the heads of the three firms weren’t immediately returned on Tuesday.

They won’t be the only Utah Realtors impacted, either. Agents working at huge national organizations like eXp, Compass, Redfin and United Real Estate also weren’t covered by the settlement. That doesn’t necessarily mean they face any active threats, but it could leave them vulnerable to the wave of real estate litigation that’s sweeping the country.

The proposed settlement must still be approved in court and will likely be scrutinized by the U.S. Department of Justice, which has signaled it wants to see more transparency and negotiation in the process of setting the commissions that are paid on real estate transactions.

The real estate industry has long maintained that commissions are negotiable. But research has shown that commissions are very often between 5-6 percent, a rate that is much higher than in other countries.

Email Taylor Anderson

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Posted by Taylor Anderson

Taylor Anderson grew up near Chicago and made his way West to study journalism at the University of Montana. He's been a staff writer for the Chicago Tribune, Bend Bulletin and Salt Lake Tribune. A move from Portland, Oregon, to Salt Lake City opened his eyes to the importance of good urban design for building strong neighborhoods. He lives on the border of the Liberty Wells and Ballpark neighborhoods.