Real Estate News

Justice Department to reopen inquiry into realtor trade group

The government now has another chance to peel back the curtain on those fees and other National Association of Realtors rules that have long confused and frustrated consumers.

By Debra Kamin, New York Times Service

April 9, 2024

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The Justice Department will reopen an antitrust investigation into the National Association of Realtors, an influential trade group that has held sway over the residential real estate industry for decades. The investigation will focus on whether the group’s rules inflate the cost of selling a home.

The renewed federal inquiry comes after the US Court of Appeals for the District of Columbia on Friday overturned a lower-court ruling from 2023 that had quashed the Justice Department’s request for information from NAR about broker commissions and how real estate listings are marketed.

Friday’s ruling was another setback for NAR, still reeling 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, NAR will pay $418 million in damages and will significantly change its rules on agent commissions and the databases, overseen by NAR subsidiaries, where homes are listed for sale.

Home sellers in Missouri, whose lawsuit against NAR and several brokerages was followed by multiple copycat claims, 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 them to pay inflated fees.

The Justice Department now has another chance to peel back the curtain on those fees and other NAR rules that have long confused and 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 NAR 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.

Americans pay roughly $100 billion in real estate commissions annually. In many other countries, commission rates hover between 1% and 3%; in the United States, most agents specify a commission of 5% or 6%, paid by the seller.

In an emailed statement on Friday, representatives for NAR said the organization was “reviewing today’s decision and evaluating next steps.”

Should NAR wish to appeal the ruling, it will have to now take it to the Supreme Court.