Real Brokerage Agrees To Pay $9.25M To Settle Commission Suits

The Real Brokerage agreed to change business operations as part of its proposed settlement agreement in Umpa v. NAR.

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The Real Brokerage has announced that it has agreed to pay $9.25 million as part of a proposed settlement of the class action lawsuits challenging the real estate industry on Monday.

The company also agreed to make changes to its operations, including adding clarity around clients’ ability to negotiate commissions.

The company was among the relative handful of real estate firms not covered by the National Association of Realtors settlement agreement that had not yet reached its own settlement terms with the plaintiffs and their attorneys.

The settlement, reached in the pending class action lawsuit known as Umpa, would release Real, its subsidiaries and its 16,000 agents from the suit’s claims.

When NAR announced it had reached its proposed settlement, the trade organization found a way to protect an estimated 1 million of its 1.5 million members.

Brokerages weren’t included if they conducted at least $2 billion in sales volume in 2022. That year, real transacted $12.14 billion and was among the relatively short list of companies not covered.

But NAR’s proposed settlement created a pathway for the more than 90 brokerages not covered to protect themselves and their agents from the growing list of existing and proposed class action lawsuits filed across the nation in recent years.

Initially, real estate firms that were named in Umpa weren’t sure whether they were eligible to opt into the settlement.

But Michael Ketchmark, the lead attorney in the Sitzer | Burnett case, said the defendants in Umpa and another commission case called Gibson “are absolutely eligible to participate. They just need to get a hold of us.”

Brokerages that weren’t covered had two options to opt into the deal:

First, within four months of the NAR settlement being preliminarily approved by the court, the brokerage would deposit into an escrow account an amount equal to 0.0025 by the brokerage’s average annual total transaction volume over the four most recent years.

The second option was for brokerages who don’t have the ability to pay the amount required under the first option. In that case, the brokerage would participate in non-binding mediation with the plaintiffs’ attorneys.

Daniel Umpa filed his lawsuit on Dec. 27, in the wake of a verdict in the Sitzer | Burnett case, alleging that NAR and various real estate companies engaged in a conspiracy to impose and enforce anticompetitive practices that inflated commissions.

The case specifically takes aim at the practice of having sellers’ brokers offer compensation to buyers’ brokers, something known as the cooperative compensation rule or Participation Rule.

The proposed settlement wasn’t posted on the court docket Monday. Real announced the proposed settlement in a news release and didn’t immediately respond to a request for comment or a copy of the agreement, which would need to be approved in court.

Among other changes outlined in the proposed settlement, Real said it wouldn’t suggest to clients that buyer agent services are free.

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