A United States jury in Boise, Idaho has found two real-estate firms and their agents liable for engaging in a pattern of deceptive tactics and inflating commissions. The jury awarded the home buyers $1.78 billion dollars in damages.
The defendants, Sotheby’s International Realty and Century 21, were accused of manipulating commission agreements with homebuyers to increase their own profits. The lawsuit was filed by the Justice Department on behalf of six Idaho residents who had bought or sold a home in the state between 2016 and 2020.
In the lawsuit, the Justice Department alleged that the two companies and their agents misled home buyers into believing that commissions were fixed at the 3% common industry rate, when in fact they were negotiated to higher rates up to 5%. The defendants also allegedly failed to inform buyers of any other real estate services that may have reduced the commission amount.
The lawsuit argued that the deceptive practices of the real estate agents violated the Real Estate Settlement Procedures Act, which is designed to protect consumers from unfair business practices.
The jury agreed with the Justice Department that the firms and their agents had knowingly misled customers in order to traditional as much as possible from a sale. They awarded $1, 78 million to the plaintiffs, which is meant to deter the realtors and other real estate agents from engaging in similar behavior in the future.
This historic judgement has important implications for the industry because it will hopefully make it difficult for realtors to pull the same sort of deceptive behavior. Consumer confidence in realtors and real estate agencies will likely increase as a result of the court’s ruling, and hopefully serve as a deterrent to others who might be considering engaging in similar deceptive tactics.