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Real EstatePolitics & Money

DOJ withdraws from settlement with NAR

Federal agency said withdrawal allows it to continue investigating trade group's rules

The U.S. Department of Justice (DOJ) has fully walked back a settlement agreement it reached with the National Association of Realtors (NAR) in the waning months of the Trump administration regarding anti-trust claims, the agency announced Thursday.

In a statement, the DOJ said it was withdrawing from the settlement so it could undertake a broader investigation into the NAR’s rules.

“The proposed settlement will not sufficiently protect the Antitrust Division’s ability to pursue future claims against NAR,” said Acting Assistant Attorney General Richard Powers of the DOJ’s Antitrust Division. “Real estate is central to the American economy and consumers pay billions of dollars in real estate commissions every year. We cannot be bound by a settlement that prevents our ability to protect competition in a market that profoundly affects Americans’ financial well-being.”

The agency initially sued the 1.4 million-member strong trade group in November, alleging a series of violations of antitrust law, including commission arrangements and consumer disclosure requirements.

The federal government alleged that the Chicago-based trade organization violated the Sherman Act and “restrained” free trade by:

  • prohibiting NAR-affiliated multiple-listing services (“MLSs”) from disclosing to prospective buyers the amount of commission that the buyer broker will earn if the buyer purchases a home listed on the MLS;
  • 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 home buyers;
  • and limiting access to the lockboxes that provide licensed brokers with physical access to a home that is for sale to only brokers who are members of a NAR-affiliated MLS.

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Because the practices have been widely adopted by NAR-affiliated MLS networks, they 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 alleged.

The DOJ on Thursday said the proposed settlement sought to “remedy those illegal practices and encourage greater competition among realtors, but it also prevented the department from pursuing other antitrust claims relating to NAR’s rules.”

A spokesperson for the trade group called the withdrawal a “complete, unprecedented breach of an agreement” that was approved by the head of the agency’s antitrust division.

“Grounded in our commitment to act in the best interests of buyers and sellers, we regularly update our rules and policies to protect consumers and provide transparency,” the spokesperson said. “NAR has fulfilled all of our obligations under the settlement agreement and now DOJ is inexplicably backing out. If the Department does not live up to its commitments under the terms of the agreement, we are confident in our pro-consumer and pro-competition policies.”

Editor’s note: This story was updated on July 1, 2021 at 7:50 p.m. to include a statement from the NAR.

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