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 U.S. 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 N.A.R. about broker commissions and how real estate listings are marketed.
Friday’s ruling was another setback for N.A.R., 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, N.A.R. will pay $418 million in damages and will significantly change its rules on agent commissions and the databases, overseen by N.A.R. subsidiaries, where homes are listed for sale.
Home sellers in Missouri, whose lawsuit against N.A.R. 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 N.A.R. 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 N.A.R. 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. “The Antitrust Division is committed to fighting to lower the cost of buying and selling a home.”
Americans pay roughly $100 billion in real estate commissions annually. In many other countries, commission rates hover between 1 and 3 percent; in the United States, most agents specify a commission of 5 or 6 percent, paid by the seller. Those high commission rates have been at the heart of N.A.R.’s mounting legal challenges.
In an emailed statement on Friday, representatives for N.A.R. said the organization was “reviewing today’s decision and evaluating next steps,” adding that they remained “steadfast in our commitment to promoting consumer transparency and to supporting our members in protecting their clients’ interests in the home buying and selling process.”
Should N.A.R. wish to appeal the ruling, they’ll have to now take it to the Supreme Court.
With 1.5 million members, a powerful lobbying arm in Washington and $1 billion in assets, N.A.R. has an outsize influence on the real estate industry. It even owns the trademark for the word “Realtor,” and an agent must be a member to call themselves one.
The Justice Department sued the trade group in 2005, claiming that N.A.R. promoted anticompetitive practices and inflated commissions, and the two sides agreed to a 10-year settlement in 2008, during which time N.A.R. was required to change many of its policies regarding home listing sites.
After that settlement expired, the Justice Department reopened its investigation, issuing demands for documentation on how Realtors in the United States use N.A.R.-operated databases to list homes and discuss commission rates, as well as the rules on agent compensation that the organization enforces among its membership.
The department even issued statements of interest in two lawsuits against N.A.R., regarding anticompetitive practices, including the Missouri case, which N.A.R. settled in March.
In 2020, it looked like the case had ended — the Justice Department offered another settlement to N.A.R., this one requiring rule changes like more disclosure around broker fees. N.A.R. agreed, and the investigation was closed.
But in 2021, under the new Biden administration, the Justice Department backed out of its settlement and announced it was reopening its inquiry. N.A.R. took them to federal court in a bid to stop them, and initially was successful in January 2023. But the Justice Department appealed, and a three-judge panel of the appeals court sided with the department in a split ruling — with two judges in favor and one against.
In an interview with The New York Times, Michael Ketchmark, who was the lead lawyer in the Missouri home sellers’ lawsuit against N.A.R., called the renewed investigation “great news for homeowners and home buyers across the country,” which would expand upon the impact of the civil cases against the group.
N.A.R.’s agreement to settle came months after a jury verdict in October 2023 in favor of the home sellers that would have required the trade group to pay at least $1.8 billion in damages.
“Through our trial and our settlement with N.A.R., we advanced the ball as far as we could down the field,” he said. “This is an opportunity for the DOJ to continue to hold them accountable, and if they feel additional steps need to be taken through criminal prosecution or regulation, now they have the green light to do it.”
