BAM Key Details:

  • Gary Keller, co-founder of Keller Williams, took the stand in person Friday, October 27th, and remained there for much of the day’s proceedings. 
  • Plaintiff’s lead counsel, Michael Ketchmark, began his cross by criticizing Keller for talking about his group’s charitable work. 
  • Defense had planned on wrapping up by end of day, but questioning took longer than expected and pushed closing arguments by at least a day. 

Keller Williams co-founder Gary Keller took the stand on Friday, October 27 to drive home the defense’s argument that real estate agent commissions are variable. He also argued that the defendants, which include some of the largest real estate companies in the U.S., are not involved in a conspiracy to impose a standard commission rate in violation of federal antitrust law. 

On the stand, Keller denied the existence of a “standard commission,” saying agents are responsible for setting or negotiating their own compensation, and they receive what their clients are willing to pay. 

Multiple times under questioning from Keller Williams attorney Timothy Ray, Keller affirmed that agents are “independent contractors.” 

The plaintiffs have claimed Keller is the head of an alleged conspiracy involving Keller Williams and the other defendants listed in the Sitzer/Burnett lawsuit. The plaintiff class represents roughly 500,000 Missouri home sellers and asks nearly $1.8 billion in reimbursed commissions paid to buyer brokers between 2015 and 2022. 

Read on for the highlights of Keller’s testimony. 

Keller’s testimony

According to Inman reports, Ray questioned Keller on the following: 

  • KW culture and charitable work—Keller testified on the KW culture, including the company’s philanthropic arm, KW Cares, which has stepped up and helped victims of Hurricane Katrina and Hurricane Harvey in Houston. 
  • Keller’s personal and professional background—Ray also questioned Keller about his family and his professional background, from his teenage rockstar aspirations to his founding of Keller Williams in 1983. 
  • Keller’s books—Ray asked Keller about two of his books: The Millionaire Real Estate Agent and Shift. Keller defended his use of a 3% commission rate in the first book’s income calculators; the purpose was to show agents how many client/listing appointments they need to reach a million in annual income. At the time, per Keller’s testimony, KW didn’t have data on commissions, so he based his total rate on an estimate of 5.6 or 5.7 that he rounded up. 
  • As Keller said, “It was pretty innocent,” adding that his use of 3% was not intended to suggest to agents what rate they should expect as the bare minimum for themselves or as a standard offer to a buyer agent. He also said commissions vary by city. 
  • KW Family Reunion events—Asked about the annual KW Family Reunion events, Keller said they generally attract between 12,000 and 15,000 attendees, including agents KW brokers are trying to recruit. 
  • Keller’s “Vision Speech” — Keller gives a “Vision Speech” at these events where he shows slides of economic indicators over time—including GDP, first-time homebuyers, mortgage rates, days on market, and sides per agent. 
  • In a video shown by Ray, Keller is seen showing slides on agent compensation, including commission negotiations—which Keller said (in the video) KW “like(d)” and was “okay with”—and  KW agents’ average commissions: 2.6% on the seller side and 2.7% on the buyer side between 2002 and 2019. In the video, Keller clarifies by saying, “We’re not talking commissions here, we’re just showing averages.” 
  • Keller also said the only time the buyer agent commission rate averaged 3% was during the Great Recession, when sellers were extra-motivated to incentivize buyer agents to sell their clients’ homes. Afterward, the rate stayed around 2.8% or 2.9%. 
  • That said, data show agent commissions tend to vary “literally every year” with market conditions. 
  • He added that the slides he shows at KW events are for “perspective” and to highlight specific issues in the broader economic landscape so his agents are better informed. 
  • The 6% “standard” commission—Keller testified that the 6% commission is a “myth” and dismissed as “ludicrous” the idea that he was trying to tell agents what to charge by showing them historical data. 
  • Keller further added there was nothing about showing commission data that violated KW’s antitrust policy because those slides didn’t show local rates. 
  • Realtor associations—KW does require its agents to join Realtor associations and multiple listing services (MLS), as Keller readily admitted, but he does allow agents to obtain an exemption from their team leader. KW does not track those exemptions. 

They don’t need our permission to do it. So we don’t track whether they do it or not.

Gary Keller

Co-founder of Keller Williams

Per Keller’s testimony, Keller Willaims enacted that policy in 1989—before the current version of the NAR cooperative compensation policy—because KW wanted its agents to have access to the MLS. For his part, Keller is not involved with any Realtor associations. 

I’m either all work or all play. It’s nothing against NAR or the local boards. They do what they do and we run our business.

Gary Keller

Co-founder of Keller Williams

  • Cooperative compensation—Asked by his attorney how often he’d discussed the cooperative compensation rule at KW before the Sitzer/Burnett lawsuit was filed, Keller answered, “Never. Never came up. Never discussed.” He added that he’d never talked about the rule with anyone at NAR and had never had anything to do with it. 
  • Collusion theory—Ray asked Keller whether he believed in “collusion theory” (a term used by former KW industry analyst Michelle Figgs in her testimony for the plaintiffs—specifically her statement that “Gary [Keller] believes strongly in collusion theory for why commissions are stable…”). Keller answered, “I don’t even know what that means.” 

Cross-examination

Lead counsel for the plaintiffs, Michael Ketchmark, began his cross-examination by criticizing Keller for “trumpeting” his company’s charitable works (a Biblical reference: Matthew 6:1-2) and saying, for his part, that he’d been taught from a young age to avoid doing so. 

When Ketchmark asked if he’d bragged about KW’s philanthropic efforts to impress the jury, Keller said he would never help anyone with the purpose of impressing the public or taking personal credit for it. 

To my knowledge, I’ve never gone outside of this room and trumpeted that to anybody, sir.

Gary Keller

Co-founder of Keller Williams

Inman’s article added a reference to at least 15 press releases published by KW on its philanthropic work since 2005, according to KW’s own archive. Inman has also published several articles on charitable works by KW Cares. 

Ketchmark then asked if Keller was ready to focus on the facts of the case—a question Keller (or the judge) could easily have asked Ketchmark first.  

Here’s how the cross-examination went down:

  • Ketchmark contested Keller’s claim that you can’t predict what commission rates will be next year. As evidence, he showed bar graphs of commission clustering in the lawsuit’s four Missouri MLSs, including Kansas City, in which 94% of listings offered a 3% buyer agent commission. Barring any changes that could come of the trial, Ketchmark said he was 100% certain the commission rate in that market would be 3% in the coming year. 
  • Ketchmark added that, while Keller had said he’d engaged in cooperative compensation since joining the real estate industry in 1979, the market had changed since then. 
  • In a bizarre twist, Ketchmark alleged that, when the internet came along, Keller was “terrified” it was going to affect his “precious commissions.” Keller replied, “I wasn’t terrified, and I wouldn’t characterize commissions as ‘precious.’” 

Ketchmark then showed the jury an email Keller wrote to KW executives in November 2017 saying, “Our agents’ commissions are under siege.” Keller admitted to writing the email, but he clarified his statement for the jury: 

Commission rates are not under siege. The amount of money agents take home is under siege.

Gary Keller

Co-founder of Keller Williams

Keller further explained he was referring (in the email) to companies like Zillow taking about 40% of agents’ commission as payment for leads. 

Ketchmark continued to read from Keller’s email: 

Today our goal is to do everything in our power to protect our real estate agents’ commissions… Keller Williams knows there’s a war being waged to control the data of our industry and provide real estate services at the lowest cost possible.

Keller admitted he had written those statements. Ketchmark continued to read: “Agents won’t be able to make as much money,” alluding to the danger of Zillow having all the listings and the ability to accurately value a home—something Keller said (on the stand) that Zillow still can’t do. 

Ketchmark read more from Keller’s email,

We fight back. We get into every business that touches real estate and we take the money and the data… That’s the playbook we are following to win the data back.

Keller added (in the email) that KW had won the “agent-centric” battle and would now win the data battle. Ketchmark asked him what he meant by that. 

This email has nothing to do with what real estate agents charge. I was talking about what they net.

Gary Keller

Co-founder of Keller Williams

Keller added that the purpose of his email was to explain to executives why KW was expanding into the mortgage business. 

I wasn’t suggesting that we’re trying to fight over commission rates. I was talking about protecting what [agents] net.

Gary Keller

Co-founder of Keller Williams

Closing arguments are expected to begin today (Monday, October 30), followed by jury deliberations. 

Stay tuned as we get closer to a verdict.