In November 2021, the United States Justice Department announced that it was pursuing legal action against the National Association of Realtors (NAR) for violating consumer protection laws and the Taft-Hartley Act. The NAR is the largest trade association for real estate agents in the United States, with over 1.4 million members.
The Justice Department’s complaint alleges that the NAR has engaged in a series of anticompetitive practices that have harmed consumers and prevented competition in the real estate market. Specifically, the complaint alleges that the NAR has:
- Imposed rules that limit competition among real estate brokers: The NAR has rules that require brokers to offer a minimum level of service, such as providing lockboxes, arranging showings, and negotiating offers. The complaint alleges that these rules prevent brokers from offering a more limited set of services to consumers, which could lower costs for both buyers and sellers.
- Restricted access to multiple listing services (MLS): The NAR operates the largest MLS in the country, which contains information about properties for sale. The complaint alleges that the NAR has restricted access to this database, which makes it harder for new brokers to compete with established brokers.
- Limited the ability of brokers to offer rebates to buyers: The NAR has rules that limit the ability of brokers to offer rebates to buyers, which could help lower the overall cost of buying a home.
In addition to these consumer protection violations, the Justice Department’s complaint also alleges that the NAR has violated the Taft-Hartley Act. This law prohibits unions and other organizations from engaging in certain types of anticompetitive behavior. The complaint alleges that the NAR has used its power as a trade association to limit competition among real estate brokers and prevent new entrants into the market.
The Justice Department’s legal action against the NAR is significant because it could have far-reaching implications for the real estate industry. If the allegations in the complaint are proven to be true, it could lead to changes in the way that real estate brokers operate and offer their services to consumers. It could also lead to increased competition in the real estate market, which could ultimately benefit consumers.
In response to the complaint, the NAR has defended its practices, arguing that they are necessary to maintain the integrity of the real estate market and protect consumers. The NAR has also emphasized that it is committed to working with the Justice Department to address any concerns that have been raised.
The legal action against the NAR is still ongoing, and it remains to be seen how the case will ultimately be resolved. However, the fact that the Justice Department has taken such a significant step in pursuing legal action against the NAR underscores the importance of ensuring that trade associations and other organizations do not engage in anticompetitive behavior that harms consumers.
In addition to the legal action being taken against the National Association of Realtors (NAR) by the United States Justice Department, there have also been several class action lawsuits filed against real estate brokerages in recent years.
And, the class action suitsOne such lawsuit was filed against the real estate brokerage company Realogy Holdings Corp. in 2019. The lawsuit alleged that Realogy had engaged in anticompetitive practices, such as requiring brokers to only use Realogy-affiliated service providers, which limited competition and raised costs for consumers. Realogy denied the allegations, but ultimately agreed to settle the case for $400,000.
Another class action lawsuit was filed in 2020 against several major real estate brokerages, including Keller Williams, RE/MAX, and Coldwell Banker. The lawsuit alleged that these brokerages had engaged in antitrust violations by conspiring to require home sellers to pay a 6% commission to real estate agents, which the plaintiffs argued was an artificially inflated rate. The case is still ongoing.
These class action lawsuits, along with the legal action being taken against the NAR by the Justice Department, highlight the importance of ensuring that real estate brokers operate in a fair and competitive manner. By limiting competition and artificially inflating prices, real estate brokers can harm consumers and make it harder for new entrants to enter the market. As such, it is crucial for regulators and consumers to remain vigilant and hold real estate brokerages accountable when they engage in anticompetitive behavior.