Legendary investor Warren Buffett and Greg Abel, the CEO of Berkshire Hathaway Energy, addressed the commission lawsuits and HomeServices of America’s recently announced settlement of the suits, during Berkshire Hathaway’s annual shareholder meeting on Saturday.
“There is no question that the industry will go through some transitions because of the settlements — ours and every other major player in the industry settled, the National Association of Realtors settled for more than $400 million,” Abel said. “So, effectively everybody was swept up in the suit and for the industry to move forward there’s a lot of changes that happen or are being proposed associated with the settlement.”
Despite all of the changes Abel anticipates will occur he said he firmly believes that the real estate agent will remain “an important part of these transactions.”
“It is the one time on our lives where we make these massive investments and having that counseling guidance is critical, and that is really what our business and those other businesses rely on,” Abel added. “How the commission structure changes and how it is negotiated will be impacted, but I think the Realtors will continue to be a very important part.”
Abel also noted that HomeServices of America is fully responsible for paying the settlement and that the firm can most definitely meet that obligation.
Buffett said he left the details of the settlement to Abel and was “perfectly happy” with the way it was conducted.
“People do negotiate down commissions to some extent, but I can tell you, I’ve looked at the figures and I think the system has really worked out very well,” he told shareholders. “When I got out of school, they had what they called FSBO – for sale by owner, and so I’ve been involved to some degree in watching the whole system operate, and I know what our average agent makes. I know how long they work on things sometimes that don’t materialize.”
On real estate agent commission structures, Buffett said: “I don’t think we’ll end up with a better system, but it’s up to Greg and the people at HomeServices we work through here.”
He also shared that he has never negotiated down an agent’s commission, despite his last home sale fetching an over $7 million price tag.
