The Real Brokerage settles Umpa commission lawsuit for $9.25M

Fast-growing, publicly traded The Real Brokerage announced Monday that it had reached a settlement agreement with the plaintiffs in the Umpa commission lawsuit.

The Umpa suit is the only commission lawsuit in which Real has been named as a defendant.

The brokerage will pay $9.25 million into a qualified settlement fund, as part of the agreement.

In a press release, the brokerage noted that the settlement “does not constitute an admission of liability by Real, nor does it concede or validate any of the claims asserted in the litigation.”

In addition to the monetary award, Real has also agreed to implement business policy changes as part of the settlement, including “clarifications about the negotiability of commissions, prohibitions on claims that buyer agent services are free, and the inclusion of listing broker compensation offers in communications with clients.” 

The settlement now awaits preliminary court approval, after which Real has 30 days to deposit the settlement amount into a qualified settlement fund. In the release, Real noted that it does not foresee the settlement having a material impact on its future operations. 

Filed in late 2023 in Missouri by Daniel Umpa, a Maryland home seller, the Umpa suit, like the other commission lawsuits, accuses real estate industry players, including Real, of conspiring to artificially inflate real estate agent commissions.

In settling this lawsuit, Real joins Compass, the National Association of Realtors, Anywhere, Keller Williams and RE/MAX in settling the commission lawsuits.

In the NAR’s $418 million settlement in the Sitzer/Burnett commission lawsuit, the trade group agreed to protect all brokerages with sales volume at $2 billion or less in 2022. The Real Brokerage closed $14.4 billion in sales in 2022 and will have to pay the Umpa settlement out of its own coffers. As of the end of 2023, the brokerage had $14 million in cash and another $14 million in investments it could liquidate, according to filings made with the Securities and Exchange Commission.

“We chose to settle this lawsuit to direct our energy to our agent community,” CEO Tamir Poleg said in a statement. “We are committed to continuing to invest in our platform to provide our agents with the tools, training and technology they need to deliver the best possible home buying and selling experience for their clients. At the end of the day, we want to ensure that clients receive the best possible guidance when making one of the biggest financial decisions of their lives.”