This practice, known as market allocation, occurs when brokers agree to specialize in specific geographic areas or types of properties, thereby avoiding direct competition. Multiple Listing Services (MLS) are vital for disseminating property information to real estate professionals. However, the operation of an MLS must adhere to antitrust principles to avoid restricting competition. Examples of per se violations include price fixing, market allocation, and certain types of tying arrangements. According to the FTC, the heart of the issue lies in an agreement made earlier this year.
- NAR has now launched the Pro-Property Platform, a system designed to strengthen federal political advocacy by allowing direct-to-candidate contributions to be tagged as pro-housing and pro-property rights.
- Suppose two large brokerages agree that one will focus solely on the north side of town, and the other on the south side.
- Denying access can limit consumer choice and reinforce market dominance by established players.
- Agreements, explicit or implied, among brokerages to fix commission rates are illegal and carry significant penalties.
- A Missouri jury last week sided with the plaintiffs against the NAR and several residential brokerages, finding them guilty of colluding to inflate brokerage commissions.
NAR has ‘bled Realtors dry,’ new antitrust suit alleges
Individuals found guilty of antitrust offenses may face imprisonment for up to 10 years and fines of up to $1 million. Criminal prosecutions are reserved for clear and intentional violations, such as price-fixing or bid-rigging. Whistleblower protections may apply if you (1) know of an antitrust crime; (2) are not participating in the antitrust crime; and (3) report an antitrust crime or assist a federal government investigation. If you have information about a possible antitrust violation, you may submit your antitrust report to a voice mailbox.
- Compass agents utilize the platform to grow their business, save time, and manage their business more efficiently.
- The consequences can be severe, with penalties including substantial fines and even criminal charges for those involved.
- What’s particularly fascinating is how this case highlights the delicate balance of the online rental ecosystem.
- The settlement will bring the total aggregate settlements reached in the lawsuit to $980.9 million.
- Always consult your attorney and/or financial adviser prior to making any financial or legal decision.
Smart Legal Starts Here
Readers should consult legal counsel before taking action relating to the subject matter of this article. Since its founding in 2014, the Broker Public Portal has worked hand-in-hand with MLSs to aggregate data and streamline access for consumers. Additionally, the ruling notes that the rule does not direct how Zillow or others should separately display listings from MLS and non-MLS sources. A Seattle jury ultimately found that REX did not prove Zillow used false advertising in its decision to put non-MLS listings on a different section of the website. It also found that Zillow proved its defense on REX’s second claim that Zillow acted deceptively and unfairly.
Overview of Antitrust Laws:
By understanding and adhering to antitrust regulations, stakeholders can help foster a thriving real estate sector that benefits both industry participants and consumers alike. Still, although they’ve reached a preliminary agreement to settle, the courts hearing the cases must approve the agreement. Attorneys for the plaintiffs in the Moehrl lawsuit told Inman (a news source for real estate agents, brokers, and executives) and HousingWire that the agreement for both lawsuits was a total of $83.5 million and were negotiated together. That figure does not appear in the notice filed with the court and was not confirmed to Fortune.
Compass Announces Combination with Anywhere Real Estate in All-Stock Transaction
The real estate industry, a cornerstone of economic activity, operates within a complex legal framework designed to ensure fair competition. Antitrust laws, at their core, are the guardians of this competitive landscape. They prevent monopolies, cartels, and other anti-competitive behaviors that can stifle innovation and harm consumers. The recent lawsuit settlement against the National Association of Realtors (NAR), as well as numerous major real estate companies, centers on allegations of antitrust violations related to how commission fees are structured.
Attorneys have reached nearly $1 billion in total aggregate settlements in the lawsuit for consumers. Throughout his career, Glass has been at the forefront of some of the most consequential legal battles involving antitrust and industry policies, MLS governance, listing data access, brokerage competition, and platform accountability. He has a rare insight into how the residential real estate industry is organized, how participants in that industry compete, and how rules and regulations impact that competition. Beyond criminal penalties, civil lawsuits allow victims of antitrust violations to seek damages.
Understanding Antitrust Laws
CoStar has been able to steer clear of the antitrust issues bedeviling the residential side of real estate, which has been hammered with lawsuits claiming MLSs, brokerages and associations are engaging in anticompetitive practices. REX, a now-defunct low-fee brokerage that filed an antitrust lawsuit four years ago against Zillow and NAR over their alleged attempts to conceal non-MLS listings on Zillow’s site, has not given up. The original lawsuit was filed in April 2019 by Joshua Sitzer and Amy Winger after real estate firm Keller Williams charged them a 5.5% commission to list their home—with more than half of that fee going to the buyer’s agent under the NAR’s compensation rule. The Sitzer/Burnett suit alleges that the arrangement violates the federal Sherman Antitrust Act. You could be eligible for the settlement money if you sold a home during the eligible date range, listed a home that was sold on a multiple listing service anywhere in the United States and paid a commission to a real estate brokerage in connection with the sale of the home. Antitrust laws are federal and state statutes designed to promote fair competition.
That is not to say that they are fixed; there are many reasons they could end up at the same level—conscious parallelism (advanced antitrust concept), similar cost structures, etc. But real-estate brokers should understand that any agreement, express or implied, with a competing brokerage to charge a certain commission, or offer the same commission splits, is a per se violation of the antitrust laws, with both criminal and civil consequences. Of course, brokers negotiating a particular transaction must discuss pricing (for that transaction). One of the most blatant violations of antitrust law in real estate involves commission rate fixing. This occurs when brokers collude to set a standard commission rate, effectively eliminating price competition. The Federal Trade Commission (FTC) also plays a significant role in enforcing antitrust laws and promoting competition.
General Business Overview
Features like “auto-accept,” advisor monitoring of compliance, and limits on concessions allegedly pushed participating landlords toward uniform pricing behavior. The DOJ pled both a Section 1 conspiracy (unreasonable restraint of trade) and a Section 2 claim (monopolization of revenue-management software). For example, a large brokerage might drastically reduce its commission rates in a specific geographic area, knowing that smaller, independent brokerages cannot afford to match these rates. Such agreements, whether explicit or implied, harm consumers by denying them the opportunity to negotiate lower rates based on service expectations.
Receive original business news about real estate and the REALTORS® who serve the lower Hudson Valley, delivered straight to your inbox. You can report mergers or other activity that you suspect harms competition through this online reporting portal. Department of Justice is the federal agency tasked with promoting economic competition in the United States.
You can learn more about the federal antitrust laws we enforce by visiting The Antitrust Laws page of this website. Multiple Listing Services (MLS) play a vital role in disseminating property information to real estate antitrust violation real estate professionals and, indirectly, to the public. However, restrictions on who can access and list properties on the MLS can raise antitrust concerns.
For example, if an MLS imposes unduly burdensome requirements that prevent new or smaller brokerages from joining, it could be accused of hindering competition. This section casts a wide net, encompassing both horizontal restraints (agreements between competitors) and vertical restraints (agreements between entities at different levels of the supply chain). Section 1 of the Sherman Act prohibits agreements, conspiracies, or contracts that unreasonably restrain trade. In an emailed statement, a NAR spokesperson wrote that the decision emphasizes NAR’s claim that the no-commingling rule never constituted an antitrust violation. Two months prior to that, Zillow began moving homes not listed on the MLS out of initial user search results and onto a second tab. This adhered to an optional NAR rule, which prevents those who choose to adopt it from commingling MLS listings with non-MLS listings.
.jpeg)