The National Association of Realtors (NAR) is once again butting heads with the U.S. Department of Justice (DOJ).

In a November 2020 lawsuit, the DOJ’s antitrust division claims NAR:

  • prevents multiple listing services (MLS’s) from disclosing a buyer’s agent’s fee is paid for by the seller, masking the fact that the fee is effectively included in the purchase price;
  • allows buyer’s agents to filter MLS listings by the amount of fees offered, allowing brokers to steer homebuyers away from low-fee listings; and
  • requires brokers to be members of their local NAR-affiliated MLS in order to access lockboxes and show properties to clients.

This antitrust behavior places real estate brokers not affiliated with NAR at a serious disadvantage. This lack of competition is ultimately bad for real estate clients, who are essentially convinced that NAR brokers are their only choice. Likewise, brokers feel forced into a “join or die” situation with their local association of realtors (AOR), as the trade union makes it difficult to impossible to make a living without paying AOR membership fees.

Under the DOJ’s settlement, NAR agrees to modify its multiple rules related to the antitrust behavior named above and provide more transparency to buyers about how their fee is paid.

NAR’s checkered antitrust past

This is far from the first time NAR has dealt with antitrust lawsuits or allegations.

Closer to home, the California Association of Realtors (CAR) recently settled an antitrust lawsuit in which PDFfiller claimed CAR unlawfully tied CAR real estate forms to its proprietary zipForm® software. It also accused CAR of attempted and actual monopolization of real estate forms in California.

Editor’s note — Contrary to popular belief, real estate forms do not need to be purchased through the trade union to be legal. This misconception sometimes leads to the unlawful practice of offers being rejected simply because they are presented on non-CAR forms. All offers need to be presented promptly to the seller for acceptance, rejection or counter.

Related article:

Failure to submit all offers: a reportable offense

Further, in 2008, NAR and the DOJ came to an agreement following a 2005 investigation and lawsuit alleging that NAR unfairly restricted access to MLS data for brokers who elected to use virtual office websites (VOWs) in lieu of running more traditional brokerages. These VOWs often provided public access to the MLS, information around which NAR has a tight fist. To limit their use, NAR created rules that allowed brokers to withhold listings from VOWs, making them less competitive.

The resulting agreement ended NAR’s practice of cutting off VOWs, providing them with full access to the MLS as regular brokerages.

Yet another antitrust violation occurred for decades here in California, under the unlawful price fixing scheme that was accepted practice until 2003. Under the price fixing scheme, brokerages colluded to set the 3% / 3% fee split, banning brokerages offering any discounts or rebates from participating in the MLS. [Freeman v. San Diego Association of Realtors (9th Cir. 2003) 322 F3d 1133]

Here we are in 2020, and the DOJ is still attempting to pry the trade association’s fingers from their stranglehold on brokers — and their clients. The changes are scheduled to begin 60 days after publication in the Federal Register. However, given the association’s tendency to find ways around antitrust law in the past, we’re not holding our breath for any concrete change in how NAR does business.