The Justice Department and the National Association of Realtors—the largest realty trade group in the country—have reached a settlement on the government’s antitrust lawsuit, the Wall Street Journal reports. The expressed purpose of the suit was to increase transparency among real estate brokers for the benefit of consumers.
In a case filed in a Washington D. C. federal court, the Justice Department has alleged that current NAR practice hurts competition by concealing from prospective homebuyers the exact earnings that their brokers will make. This results in less informed consumer decisions, the government alleges, and stifles competition by making it very difficult for homebuyers to compare the commissions of different brokers.
More specifically, the Justice Department claimed that the National Association of Realtors’ rules forbid multiple-listing services from sharing information about brokers’ commissions. Multiple-listing services (MLS) are databases of home information that are widely used throughout the real estate industry.
While they did settle with the Justice Department, the NAR, which represents 1.4 million real estate agents across the country, have maintained that their practice has been entirely ethical heretofore. Accordingly, a spokesman for the group has stated that the suit will only formalize what was already their consumer and competition friendly policy.
Upstart firms, independent of the NAR, are looking at this settlement as a good step in the right direction, expressing hope that it will increase awareness among homebuyers of the frequently high commissions earned by brokers.