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The real estate firm the City of South Pasadena intends to hire to resell properties it is buying from Caltrans is affiliated with one of three nationwide brokerages ordered this week to pay a total of $1.78 billion in damages after being found guilty by a Missouri jury of conspiring to inflate commissions.
The city council is set tonight to authorize the city manager to sign contracts with Dave Knight of the Dave Knight Real Estate Team to resell over a dozen South Pasadena residential properties in the former SR-710 extension corridor that the city is currently negotiating to buy from Caltrans.
The contract would grant Dave Knight RET a 5% percent commission on the properties, to be split equally between the listing and buyer agents, terms which reflect a well established practice in the industry on single property sales; however for this multi-property contract, some have remarked that this is commission percentage is high. Services under the contract include market analysis, showing properties, coordinating appraisals and others.
Dave Knight RET operates under the name Keller Williams Realty Downtown Los Angeles, which is a trade name for the Keller Williams brokerage. All licensed real estate agents are required to work with a “responsible” broker if they do not have a brokerage license themselves.
But the name of the actual legal entity owned by Knight is the Los Angeles-based Beautiful Pasadena Homes. Inc., according to state records.
Keller Williams, the National Association of Realtors and HomeServices of American were all found guilty Tuesday in a class-action lawsuit brought by a group of Missouri homesellers who alleged the realtors inflated commissions. Appeals of the verdict are expected.
RE/MAX and another firm, Anywhere Real Estate, were also defendants in the case but settled last month for $138.5 million after agreeing to make changes in how commission arrangements for buyers are made.
Austin, TX-based Keller Williams has over 170,000 agents in the US and Canada. According its website, Dave Knight became a Keller Williams agent in 2007 and since then “has consistently ranked in the top 2 percent of producing agents at Keller Williams Realty.”
The South Pasadenan News was unable to reach Knight before deadline.
Meantime the City of Pasadena, which is also looking for brokers to resell SR-170 homes it is purchasing from Caltrans, elected on Monday to postpone a recommendation to award a $462,420 contract to the Dave Knight Real Estate Team to sell five of the homes, and to two other brokers to sell 10 other Caltrans properties. The Council postponed after learning learning bidders raised questions about the city’s process for evaluating the bids, and because the mayor was not present for the vote.
In August, as a result of a competitive bid, Caltrans also awarded 37 El Sereno residential properties in the former SR-710 corridor to the city of Los Angeles.
In all three cities, the sale of the properties come with provisions to reinvest some proceeds to promote affordable housing in their respective jurisdictions.
Apart from any lawsuits, the fact that Dave Knight’s team has received a number of the Pasadena properties as well as all of the South Pas properties is worth considering. There are any number of highly qualified realtors, many of whom are female (no female brokers have been selected to sell any of the CalTrans properties in either South Pas or Pasadena). Variety is the spice of life! Hopefully City Council was aware that the deep bench of the Knight Team is also committing to represent the city of Pasadena in their sales.