Real Estate

DOJ Sues NAR, Alleges Illegal Restraints On Realtor Competition

Proposed settlement would require the trade organization to repeal or change several rules the Department of Justice deems anticompetitive.

The U.S. Department of Justice has filed an antitrust lawsuit against the National Association of Realtors alleging the 1.4 million-member trade group’s rules are illegal restraints on Realtor competition, the DOJ announced Thursday.

The federal agency filed a settlement at the same time as it filed the suit requiring NAR to repeal or change several of its rules, which the DOJ deems anticompetitive. According to the DOJ’s complaint, these include:

  • prohibiting MLSs that are affiliated with NAR from disclosing to prospective buyers the commission that the buyer broker will earn if a buyer purchases a home listed on a multiple listing service;
  • allowing buyer brokers to misrepresent to buyers that a buyer broker’s services are free;
  • enabling buyer brokers to filter MLS listings based on the level of buyer broker commissions offered and to exclude homes with lower commissions from consideration by potential homebuyers; and
  • limiting access to the lockboxes that provide licensed brokers with access to homes for sale to brokers who work for a NAR-affiliated MLS.

“These NAR rules, policies, and practices have been widely adopted and enforced by NAR-affiliated MLSs, and are, therefore, agreements among competing real estate brokers each of which reduce price competition among brokers and lead to lower quality service for American home buyers and sellers,” the complaint says.

The complaint alleges these “agreements” have a cumulative anticompetitive effect and individually and collectively “unreasonably restrain trade” in violation of the Sherman Antitrust Act and should therefore be prohibited by an injunction.

The DOJ said that, if approved by the court, its proposed settlement will improve competition in the real estate market, providing consumers with more choices and better service.

“Buying a home is one of life’s biggest and most important financial decisions,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division, in a statement.

“Home buyers and sellers should be aware of all the broker fees they are paying,” Delrahim added. “Today’s settlement prevents traditional brokers from impeding competition — including by internet-based methods of home buying and selling — by providing greater transparency to consumers about broker fees. This will increase price competition among brokers and lead to better quality of services for American home buyers and sellers.”

The DOJ said it will publish the proposed settlement in the Federal Register as required by the Antitrust Procedures and Penalties Act and anyone may submit written comments regarding the proposed final judgment within 60 days of its publication to Chief, Office of Decree Enforcement and Compliance, Antitrust Division, U.S. Department of Justice, 950 Pennsylvania Ave., N.W., Washington, DC 20530. After the 60 days, the court may approve the proposed judgment if it finds it serves the public interest, the DOJ said.

Inman has reached out to NAR for comment and will update the story when the trade organization responds.

Developing…

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