The legendary billionaire CEO of Berkshire Hathaway, Warren Buffett, has found himself at the center of one of the nation’s largest real estate commission lawsuits.
In an amended complaint filed on Monday, the plaintiffs in the Gibson commission lawsuit, which was filed in early November in Missouri by Michael Ketchmark, the attorney for the plaintiffs in the Sitzer/Burnett suit, added Berkshire Hathaway Energy Company to the list of defendants. Buffett’s firm Berkshire Hathaway owns 92% of Berkshire Hathaway Energy Company and real estate firm HomeServices of America is a subsidiary of the company. HomeServices of America is not a defendant in the Gibson suit, however it is a defendant in the Sitzer/Burnett suit and was found liable for colluding with the National Association of Realtors and other real estate industry players to artificially inflate agent commissions.
In an interview with the Wall Street Journal, which first reported the addition of Berkshire Hathaway Energy Company to the Gibson suit, Ketchmark said that the plaintiffs decided to name Buffett’s firm because the issue of collusion goes “all the way to the top of Berkshire Hathaway.”
In the amended complaint, Ketchmark notes that Berkshire Hathaway Energy Company considers HomeServices’ employees as its own, and that the firm could not have expanded or acquired as many real estate firms as it did without the financial backing of Berkshire Hathaway Energy Company.
The complaint also alleges that the firm has used Buffet’s profile and image as a “Halo Effect” to create consumer trust in the firm, saying that it has used this “Halo Effect” to further the alleged conspiracy.
Due to this the plaintiffs allege that “Berkshire Hathaway Energy has engaged in price fixing by using our nation’s MLS system as a vehicle to fix, increase, raise, and stabilize the number of commissions that a homeowner has to pay to sell their home.”
Like the other commission lawsuits, the Gibson suit takes aim at NAR’s Participation Rule, which requires listing brokers make a blanket offer of compensation to buyer’s brokers in order to list a property on the MLS. The plaintiffs allege that the rule in the cornerstone of a conspiracy to artificially inflate agent commissions. Other defendants in the suit include Compass, eXp World Holdings, Redfin, Weichert Realtors, United Real Estate, Howard Hanna and Douglas Elliman.
Berkshire Hathaway did not immediately respond to a request for comment.
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