The National Association of Realtors (NAR) is a trade group for real estate agents and brokers in the United States. It was founded in 1908 and has over 1.5 million members. The NAR is responsible for setting many of the standards and practices in the real estate industry, including the Multiple Listing Service (MLS).
The MLS is a database of homes for sale that is shared by real estate agents and brokers. It allows agents to list homes for their clients and to see listings from other agents. The MLS is an essential tool for the real estate industry, and it is estimated that over 90% of homes sold in the United States are listed on the MLS.
In 2019, a group of home sellers filed a class-action lawsuit against the NAR and several real estate firms, alleging that they conspired to keep commissions artificially high. The plaintiffs argued that the NAR’s rule requiring sellers to make a nonnegotiable commission offer before listing homes on the MLS was anticompetitive. Yesterday, a jury in Kansas City, Missouri, found the NAR and the other defendants liable for damages and awarded $1.8 billion to the plaintiffs. The damages award could be tripled under U.S. antitrust law, bringing the total to over $5 billion.
In the wake of the lawsuit, the NAR has faced a number of other challenges. In March 2023, the NAR’s board of directors dismissed its president, Charlie Oppler, after he was accused of sexual harassment. In addition, some real estate agents and brokers have left the MLS and are no longer syndicating their listings. These agents argue that the MLS is too expensive and that they can get more exposure for their listings by listing them on their own websites and other real estate websites. Adding fuel to the fire, Redfin, a real estate brokerage firm, announced in June 2023 that it was leaving the NAR. Redfin said that the NAR is too focused on protecting the interests of real estate agents and not enough on the interests of home buyers and sellers.
Long overdue, the NAR lawsuit and other recent developments have the potential to significantly change the real estate industry in the United States. If the damages award is upheld, it could force the NAR to change its rules and practices. The departure of Redfin from the NAR could also lead to other brokerage firms leaving the trade group.
More on point, though, this has not happened in a vacuum. The NAR has recently been involved in a number of settlements and investigations, including:
DoJ settlement: In November 2020, the NAR reached a settlement with the Department of Justice (DoJ) over allegations that it had violated antitrust laws by restraining competition in the real estate industry. The settlement required the NAR to change its rules and practices in a number of ways, including by prohibiting it from requiring real estate agents to participate in the MLS and by making it easier for agents to offer discounts on commissions.
DoJ investigation: In September 2021, the DoJ launched an investigation into the NAR’s Virtual Office Website (VOW) policy, which requires real estate agents to display their listings on their own websites in order to be included in the MLS. The DoJ is investigating whether the VOW policy violates antitrust laws by stifling competition in the real estate industry.
End of consent decree: In January 2023, a federal judge ended a consent decree that had been in place between the NAR and the DoJ since 2004. The consent decree had been put in place to ensure that the NAR complied with antitrust laws.
The sooner that the NAR and the MLS are busted apart the better for consumers. The reality is that with technology today, including Artificial Intelligence, Realtors have little to no add on value other than continuing a multi-decades long shakedown of the consumer.
