Douglas Elliman, Redfin, other realtors fall after $1.78 bln broker commission verdict

Agnt

01/11/2023 19:21

By Chibuike Oguh and Jonathan Stempel
       NEW YORK, Nov 1 (Reuters) - Shares in Douglas Elliman
 DOUG.N , Redfin  RDFN.O , Compass  COMP.N  and eXp World
Holdings  EXPI.O  fell on Wednesday after they were sued for
allegedly conspiring to artificially inflate their commissions
from home sales.
    The proposed class action lawsuit was filed on Tuesday in
Kansas City, Missouri just hours after a jury there found the
National Association of Realtors and other brokerages, including
Berkshire Hathaway's  BRKa.N  HomeServices of America, liable to
pay $1.78 billion in damages for similar commission practices. 
    Damages in that first case could be tripled under federal
antitrust law to more than $5.3 billion.
    The verdict could upend decades-old practices that have
allowed real estate agents to boost commissions by forcing
sellers to pay commissions to buyers' real estate brokers. Home
sellers complained that this model suppressed competition.
    Shares of the new defendants fell between 3% and 7% on
Wednesday. 
    Both suits were filed in the U.S. District Court in Western
Missouri by the same lawyer. The first suit was brought on
behalf of sellers of more than 260,000 homes in Missouri, Kansas
and Illinois between 2015 and 2022. Tuesday's lawsuit is on
behalf of sellers nationwide. 
    A spokesperson for eXP said the company was still studying
the complaint, adding: "We are committed to upholding fair and
transparent practices compliant with law and we already have
mechanisms and a plan in place that enables buyers and sellers
to negotiate commissions." 
    Spokespeople for Compass and Douglas Elliman declined to
comment. A Redfin spokesperson did not immediately respond to a
request for comment.
    BTIG analyst Soham Bhonsle in an investor note said the fact
that Douglas Elliman, Redfin, Compass and eXp were being sued by
the same lawyers was a negative for their stocks. 
    Shares of Re/Max  RMAX.N  and Anywhere Real Estate  HOUS.N ,
two other brokerages that had initially been defendants in the
first suit but settled prior to trial, were up 4% and down 1.6%,
respectively on Wednesday. Both had fallen on Tuesday despite
their earlier settlements.
    Zillow  ZG.O  shares fell 0.33% after brokerage Jefferies
cut its price target, citing the impact of Tuesday's verdict.
While Zillow is not a defendant in either lawsuit, Jefferies
said Tuesday's verdict "increases the chances of a ban on
commission sharing and Zillow having to pivot the business
model."
    On Tuesday, spokespeople for NAR and HomeServices said they
planned to appeal. 

 (Reporting by Chibuike Oguh and Jonathan Stempel in New York;
editing by Michelle Price and Bill Berkrot)
 ((Chibuike.Oguh@thomsonreuters.com; +332-219-1834; Reuters
Messaging: chibuike.oguh.thomsonreuters.com@reuters.net))