Antitrust Lawyer Blog Commentary on Current Developments

DOJ SETTLES WITH NATIONAL REALTORS ASSOCIATION

On May 27, 2008, the Department of Justice (“DOJ”) reached a settlement with the National Realtors Association (“NAR”) that requires NAR to allow internet-based real estate brokers to compete with traditional real estate brokers. NAR is a trade association of 1.2 million real estate members.
According to the DOJ, NAR’s policies stifled competition by restricting the access of internet-based real estate brokers from affiliated multiple listing services (“MLSs”) and obstructing real estate brokers from using innovative Internet-based tools to offer better services at lower costs to their clients. An MLS is a database that includes members’ home listings information. Members are allowed to communicate amongst themselves as well as search through all of the home listings available in the area through the database. As such, access to a multiple listing service database is critical for any broker to service clients efficiently. More than 80 percent of the MLSs in the United States are affiliated with the NAR.

According to the settlement, NAR will require all of its affiliated MLSs to permit their listings to brokers who serve their clients through virtual office websites (“VOWs”). VOWs allow brokers’ clients to search listings on their own in order to avoid broker fees. As such, VOWs allow brokers to be more efficient. This efficiency translates into lower commission rates to home sellers and rebates to home buyers. This settlement binds NAR for 10 years.

However, Albert Foer, president of the American Antitrust Institute, believes that the settlement leaves room for states to pass legislation that could nullify any of the benefits consumers may receive from the settlement. Mr. Foer stated, “The settlement allows state law to impose minimum ‘levels of service’ on brokers who seek to place MLS data on the internet. So we could see an effort by the real estate industry establishment to lobby state legislatures for laws that force participants to bundle services, maintain physical as well as virtual offices, etc., which could result in depriving consumers of money-saving options to purchase ala carte services.”


Andre Barlow

(202) 589-1834
abarlow@dbmlawgroup.com