By: Ilana Siyance
The United States Justice Department will reopen an antitrust probe into the National Association of Realtors.
As reported by the NY Times, the investigation will look into whether the influential trade group’s rules work to inflate the cost of selling a home.
The probe came back to life after a decision on Friday by the U.S. Court of Appeals for the District of Columbia, which overturned a lower-court ruling from 2023 which had denied the Justice Department’s request for info from N.A.R. regarding broker commissions and how real estate listings get marketed. The National Association of Realtors has been a powerful source for the residential real estate industry for decades, boasting some 1.5 million members, $1 billion in assets and a powerful lobbying arm in Washington. The group actually owns a trademark for the word “Realtor,” and an agent must be a member of the organization to call themselves a realtor.
The N.A.R. also got a heavy blow from a March 15 agreement to settle several lawsuits that alleged the group had violated antitrust laws and had conspired to fix the rates that real estate agents charge their clients. Pending federal court approval, N.A.R. will be on the hook to pay $418 million in damages and will significantly need to change its rules on agent commissions and the databases on which homes are listed for sale, the Times reported. In Missouri, home sellers had filed a lawsuit against N.A.R. which led to multiple copycat claims, in which they successfully argued that the group’s rule that a seller’s agent must make an offer of commission to a buyer’s agent had forced home sellers to pay higher commissions.
Friday’s decision will now give the Justice Department another opportunity to look into the fees and other N.A.R. rules which have long frustrated consumers. “Real-estate commissions in the United States greatly exceed those in any other developed economy, and this decision restores the Antitrust Division’s ability to investigate potentially unlawful conduct by N.A.R. that may be contributing to this problem,” said Assistant Attorney General Jonathan Kanter, the head of the Justice Department’s antitrust division, in an emailed statement. “The Antitrust Division is committed to fighting to lower the cost of buying and selling a home.”
Per the NY Times, Americans pay a total of about $100 billion in real estate commissions each year. Most agencies charge the seller a commission of 5 or 6 percent, whereas in many other countries commission rates are only 1 to 3 percent. The N.A.R. has come under fire for allegedly being the driving force to hike up those commission rates, with the Justice Department first suing the trade group back in 2005.
Should N.A.R. wish to appeal Friday’s ruling, the case would have to move up to the Supreme Court.
On Friday, representatives for N.A.R. issued an emailed statement saying the organization was “reviewing
today’s decision and evaluating next steps,” adding that they remained “steadfast in our commitment to promoting consumer transparency and to supporting our members in protecting their clients’ interests in the home buying and selling process.”
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