As the National Association of Realtors (NAR) is in the legal spotlight with an ongoing class-action lawsuit in Kansas City, the U.S. Department of Justice (DOJ) is reportedly preparing to pursue a federal antitrust suit despite being under a court order to abide by a settlement with the trade group.
Bloomberg, citing an unnamed “person familiar with the issue,” reported the DOJ is taking aim at NAR’s commission-sharing system that requires home sellers to cover up to 6% of a sale, with the funds split between their agent and the buyer’s agent. The practice is at the center of the current trial and will be raised in a separate class-action lawsuit scheduled for Illinois in early 2024.
The DOJ began investigating NAR’s practices during the Trump administration, but reached an agreement in November 2020 with NAR that resolved the department’s concerns. When the Biden administration came into office in 2021, the DOJ tried to pull out of the settlement agreement.
“The proposed settlement will not sufficiently protect the Antitrust Division’s ability to pursue future claims against NAR,” said then-Acting Assistant Attorney General Richard A. Powers of the DOJ’s Antitrust Division when the department made its plans known in July 2021. “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.”
However, last January, a federal judge ruled the department was still bound by the agreement. NAR General Counsel Katie Johnson acknowledged the court’s ruling “does not preclude the DOJ from investigating NAR in the future, and the DOJ has the option to appeal this decision if desired.”
The DOJ appealed that decision in June with a filing in the U.S. Court of Appeals for the D.C. Circuit that claimed the lower court issued an “extraordinary” decision blocking a subpoena for information from NAR that disrupted a “consequential investigation of conduct that affects over $100 billion in broker fees paid by Americans annually.”
Update: In a statement to WRE News, a NAR spokesperson said: “We reached a settlement agreement with the DOJ nearly two years ago. NAR has upheld our end of the agreement, and we expect the DOJ to do the same as affirmed by a federal court’s careful ruling. This is a completely separate matter from the trial of Burnett v. NAR et al.”