Tax Planning for Realtors: Texas Real Estate Lawsuit: Texas real estate associations and a group of home brokers face new claims that they artificially inflated sales commissions in the state. Moreover, this opens another front in litigation over real estate commissions after a $1.8 billion verdict against the residential brokerage industry last month.
Two home sellers in Texas, QJ Team and Five Points Holdings, on Monday filed a prospective class-action complaint in Sherman, Texas, federal court against the Texas Association of Realtors, and several regional associations including in Austin and Houston.
Brokerages Keller Williams, which is based in Austin, and HomeServices of America, owned by Warren Buffett’s Berkshire Hathaway (BRKa.N), are defendants.
A Kansas City, Missouri, federal jury on Oct. 31 said Keller Williams, HomeServices and the National Association of Realtors conspired to inflate the commission that home sellers pay to brokers representing buyers. The jury awarded $1.8 billion in damages to a class of Missouri home sellers.
The Missouri case could upend a long-standing home real estate industry’s practice that requires home sellers to pay a commission of sometimes up to 6% to the broker representing the buyer. The verdict could be tripled to more than $5 billion under U.S. antitrust law.
Texas Realtors Response
The Texas realtors’ association in a statement said it “stands by the value of the professional expertise that its members provide to their clients.”
The lawsuit seeks damages for sellers of Texas residential property in the last four years who paid buyer brokers’ commissions.
“Many sellers do not understand how and why they are paying the buyer’s agent a 3% commission,” the lawsuit said.
Keller Williams, HomeServices and National Association of Realtors are planning to contest the Missouri trial verdict, including through appeals. They have denied any wrongdoing.
On Tuesday, U.S. District Judge Stephen Bough, who presided over the Missouri litigation, set a post-trial schedule. It would keep the case in his court at least through March of next year.
The defendants have hired prominent appellate lawyers as part of the post-trial process.
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Tax Planning for Realtors: Texas Real Estate Lawsuit
Source: Reuters