Washington, D.C. – A recent decision by a District of Columbia Circuit Court of Appeals panel has granted the Department of Justice the authority to reopen an antitrust probe into the National Association of Realtors (NAR). The ruling overturned a lower court decision that initially set aside a 2021 investigative subpoena from the DOJ related to NAR policies on commissions and home seller choices.
The case, previously settled during the Trump administration and subsequently reinvigorated by the Biden administration, had faced a judicial roadblock in 2023. However, the recent court decision emphasized that the prior closure of the case did not preclude its reopening, thereby allowing the DOJ to continue its investigation into potential anti-trust activities within the real estate sector.
The issue at the heart of the legal battle revolves around the high commission rates charged on home sales by realtors, which ultimately contribute to escalating home prices, making homeownership increasingly unaffordable for many. The NAR, in a separate settlement with home sellers, recently agreed to pay $418 million over commission rate disputes.
In response to the court’s decision, the DOJ’s Assistant Attorney General for the Antitrust Division, Jonathan Kanter, highlighted the disproportionate real-estate commissions in the U.S. compared to other developed economies. Kanter reaffirmed the Antitrust Division’s commitment to investigating potentially unlawful conduct by the NAR that may be exacerbating the affordability issue in the housing market.
Despite the court’s ruling, dissenting Judge Justin Walker pointed to the previous agreement between the NAR and DOJ as grounds for his opposition, arguing that the NAR had fulfilled its obligations under the contract by eliminating certain policies deemed anticompetitive. The NAR, in a statement following the decision, criticized the ruling and expressed deliberation on their next steps moving forward.
As the NAR evaluates its response to the court’s decision, the implications of this legal battle on the real estate industry and potential reforms in commission structures remain significant. The ongoing scrutiny from the DOJ underscores the broader effort to promote competition and affordability in the housing market, with potential implications for both real estate professionals and prospective homebuyers alike.