The real estate trade association is watching its back.

The U.S. Department of Justice (DOJ) recently dropped its settlement with the National Association of Realtors ® (NAR), in order “to permit a broader investigation of NAR’s rules and conduct.”

Some background: in a November 2020 lawsuit, the DOJ’s antitrust division claimed 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.

Editor’s note — Many real estate brokers erroneously believe they need to be a member of the California Association of Realtors® (CAR) or the local AOR in order to access or post listings to the local MLS. However, licensed brokers may simply pay to be an MLS subscriber or participant, skipping the trade association membership fees and bureaucracy of membership. [Marin County Board of Realtors, Inc. v. Palsson (1976) 16 C3d 920]

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

However, the DOJ is now withdrawing its settlement out of fears that agreeing to the settlement would prohibit them from pursuing any further antitrust issues with the trade organization. Instead, the DOJ is choosing to take a magnifying glass to NAR’s anti-competition practices.

NAR’s troubles sound familiar

This is not the first time NAR has been in hot water with the DOJ.

NAR has been accused of antitrust behavior many times throughout its history. Under this particular lawsuit, the DOJ argues that NAR sets and controls the fee amounts at every point in the transaction and makes it extremely difficult for agents to make a living without being a (paying) member of NAR.

This behavior ultimately harms consumers, since the vast majority of home sales are reliant on the MLS. Therefore, these rules make it nigh on impossible for agents seeking to be more competitive by offering lower fees to participate. These antitrust rules violate the Sherman Act, which prohibits monopolies and similar practices that reduce competition.

NAR — and here in California, its state subsidiary, CAR — bill themselves as organizations that protect not only agents and brokers, but the very foundations of homeownership.

In fact, NAR is actually guarding the gates of homeownership, seeking to control all aspects of each home sale transaction. This effort has met more and more obstacles in recent years, as MLS data has moved online and become accessible via listing aggregates like Zillow, and the availability of lower listing fees has been popularized by online brokerages like Redfin.

And yet, as elements of the housing market gradually become more transparent, NAR seeks to tighten its fist on what elements it still controls. The DOJ is taking notice, and so are its paying members.