HomeServices of America, the largest residential real estate brokerage in the United States and owned by Warren E. Buffett’s Berkshire Hathaway Energy, is now at the center of a nationwide antitrust lawsuit with potential implications on the structure of real estate commissions nationwide.
On March 4, three home sellers who filed an antitrust lawsuit in October amended their complaint to add Berkshire Hathaway Energy, the unit that controls HomeServices of America, to its string of defendants that include Compass, eXp World Holdings, Douglas Elliman and Redfin. The plaintiffs, who live in Florida, Missouri and Kansas, each sold a home within the last three years and paid 3% of the purchase price to their buyer’s broker in commission.
The complaint claims that in the real estate business, the brokerages engaged in price-fixing by following National Association of Realtors rules and requiring home sellers to pay commission to their buyers’ agents.
Buffett’s Reputation
With the cachet that comes from being part of Buffett’s multibillion-dollar empire, Berkshire Hathaway Energy is by far the biggest target of the lawsuit now.
And according to the lawsuit, the company played upon Buffett’s reputation to lure in customers and bolster business. The suit estimates that home sellers working with representatives of Berkshire Hathaway were defrauded by as much as $4.2 billion in 2023.
“Berkshire Hathaway has long touted the ‘Halo Effect’; of using its name and association with Warren Buffett to create customer trust. Berkshire Hathaway took advantage of this public trust by rebranding HomeServices’ franchises using the name ‘Berkshire Hathaway HomeServices’,” the complaint reads.
Representatives for Berkshire Hathaway declined to comment.
Faulty Commission Structure?
The three home sellers are represented by Michael Ketchmark, the same lawyer who in October successfully argued that the National Association of Realtors and several large brokerages, including HomeServices and two subsidiaries, operated a price-fixing conspiracy against home sellers. A federal jury ruled that the plaintiffs in that statewide case, all of whom live in Missouri, were owed $1.8 billion, and the case triggered a series of similar lawsuits, which now number more than a dozen. All take aim at the NAR rule requiring a home seller to pay commissions to the agent representing the buyer.
The complaint, which notes that the U.S. Department of Justice is also currently investigating the commission structure of residential real estate, accuses defendants of “agreeing, combining, and conspiring to impose and enforce an anticompetitive restraint that requires home sellers to pay the broker representing the buyer of their homes, and to pay an inflated amount, in violation of federal antitrust law.”
Representatives for NAR and the other brokerages named in the suit were also not immediately available for comment.
Ketchmark, who has been assailed and praised in the real estate industry since his October court triumph against NAR and real estate commissions, said that with this amended complaint, he is hoping to bring attention to what he believes amounts to industrywide collusion to exploit home sellers.
“Berkshire Hathaway is the leader of the pack. It’s much bigger than NAR,” he said in a phone interview. “The money didn’t flow to NAR from this conspiracy. The money flowed to the corporate coffers of Berkshire Hathaway. If you want to bring about change in corporate America, hit them in the pocketbook. And that’s exactly where this is aimed.”
c.2024 The New York Times Company. This article originally appeared in The New York Times.
