Last month, Anywhere rocked the real estate world by becoming the first company to announce that it would be settling two major class action lawsuits that have targeted commission structures. Along with paying a total of $83 million, the company agreed to change certain practices—unnamed at the time.
Today, the real estate giant announced the full terms of a settlement, which—pending final court approval—absolves in the Burnett and Moehrl antitrust class action litigation, and will require some significant changes to policy.
Notably, the company will no longer require company owned brokerages, franchisees or affiliated agents to belong to the National Association of REALTORS® (NAR) or follow the NAR Code of Ethics or MLS Handbook. It will also “recommend and encourage” other changes to independently owned and operated franchise networks across the Better Homes and Gardens® Real Estate, CENTURY 21®, Coldwell Banker®, Corcoran®, ERA® and Sotheby’s International Realty® brands.
“I am pleased that Anywhere has reached a nationwide settlement with the plaintiffs in the Burnett and Moehrl cases,” said Ryan Schneider, Anywhere president and CEO, in a statement.
In a statement provided to RISMedia, NAR VP of communications Mantill Williams emphasized that nothing in the settlement agreement “change(s) how our case is presented in court,” adding that much of what Anywhere is agreeing to aligns with the NAR Code of Ethics and MLS rules.
“Brokerages are independent, legal entities that make their own business decisions,” Williams said. “It is incumbent on every REALTOR® association—local, state and national—to continue to communicate and provide true value to our members. If these brokers continue to find value in belonging to the association, then they will choose to belong.”
Williams argued that belonging to a local REALTOR® associations offers “incredible benefits,” mentioning standardized forms, networking opportunities, MLS access and dispute resolution.
As far as the financial hit, Anywhere said it does not expect the terms of the proposed settlement to have a material impact on its results of operations, liquidity or cash flows.
The timeline for a final court approval is also still uncertain, with a potential for that resolution to come in mid-2024, according to Anywhere’s release.
And the proposed settlement resolves, on a nationwide basis, all claims asserted against Anywhere in the Burnett/Sitzer and Moehrl cases and releases all subsidiaries, brands, affiliated agents and franchisees, the company emphasized. The proposed settlement is not an admission of liability, nor does it concede or validate any of the claims asserted against Anywhere, the company noted.
There still remains the possibility that the Department of Justice (DOJ) could intervene, as it did recently in a class action settlement with an MLS also related to commissions. The DOJ successfully petitioned for that settlement to be postponed as it continued its investigation of alleged antitrust behavior.
Under the terms of the proposed Anywhere settlement, the company agreed to deposit into the settlement fund $10 million within 14 business days after preliminary court approval is granted; $20 million within 14 business days after the court approval of fees and costs, which is typically granted with final approval; and the remaining balance within 21 business days after final court approval and all appellate rights are exhausted.
As far as the specific policy changes, Anywhere agreed to several changes, some of which are “consistent with positions for which Anywhere has previously indicated support in the industry,” according to Sue Yannaccone, president and CEO of Anywhere Brands and Anywhere Advisors.
“Anywhere has been adopting or calling on the industry to adopt many of the settlement’s proposed practice changes, which promote more transparency and simplification for both consumers and real estate agents,” continued Yannaccone. “As an industry leader, Anywhere strongly believes in the value of both buyer and seller agents to help consumers successfully navigate one of life’s most expensive and impactful transactions, and that consumers will make the choice to pay for their valuable service without mandatory rules. We remain fully committed to supporting all agents as they expertly serve their clients.”
The first three practice changes are consistent with rule changes that the NAR made in its 2020 settlement with the DOJ, which the DOJ subsequently revoked. These changes are:
-Anywhere will prohibit company owned brokerages and their affiliated agents from claiming buyer agent services are free.
-Anywhere will require company owned brokerages and their affiliated agents to include the listing broker’s offer of compensation for prospective buyers’ agents as soon as possible in each active listing, consistent with MLS rules and/or capabilities of third-party website operators.
-Anywhere will prohibit company owned brokerages and their affiliated agents from using any technology (or manual methods) to sort listings by offers of compensation, unless requested by the client.
Second, Anywhere has agreed to advise and remind company owned brokerages, franchisees and affiliated agents that the company has no rule requiring offers of compensation, though the company added that it would continue to “see the economic benefits” of sellers offering compensation to buyer agents.
“It is in the economic best interests of both buyers and sellers to work with experienced trusted advisors,” said Yannaccone. “We strongly believe in sellers making offers of compensation to buyers’ agents to bring more eligible buyers to a listing, which increases the likelihood of a successful transaction. Certain MLSs that have already removed the mandatory requirement or eliminated a minimum amount have helped facilitate seller choice in those markets as well as provide for continued access to both buyer and seller agent services.”
Anywhere has agreed to several other practice changes, including the aforementioned cessation of any requirement that company owned brokerages join NAR or follow NAR or MLS policies:
-Anywhere will require company owned brokerages and their agents “clearly disclose” to clients that commissions are negotiable and not set by law, along with eliminating any minimum client commission requirements.
-Anywhere will also develop training materials for company owned brokerages, franchisees and affiliated agents that support all the practice changes outlined in the injunctive relief.
All of this comes as other brokerages—and NAR—prepare for the Burnett/Sitzer trial set to begin October 16, just 10 days from now.
“We believe this (settlement) is the right course of action to remove future uncertainty and ongoing legal expense, serving the best interests of the company, our affiliated agents and franchisees, and shareholders, and enabling Anywhere to focus on moving real estate to what’s next,” Schneider added.
Williams reiterated that NAR will stand behind its guidance for MLSs, saying that those rules “(ensure) consumers get comprehensive, equitable and reliable home information and that brokerages of any size, service or pricing model get a fair shot at competing.”
