BREAKING NEWS — DOJ files Statement of Interest in NAR Settlement lawsuit
At the last minute before the November 26 final hearing for Judge Bough’s Final Approval of the proposed NAR Settlement in the Sitzer-Burnett civil class action case, the Department of Justice (DOJ) filed a Statement of Interest (SOI). Here on The Data Advocate we had predicted that the DOJ would file a SOI by the end of October – we were off a month.
We first heard the DOJ news from Tristan Ahumada this November 24 evening on his Brilliant Tribe website
Although the DOJ filing is short, it nevertheless offers us a much clearer insight into the DOJ concerns regarding antitrust behavior in the real estate industry. You will find the complete 7-page filing here DOJ Statement of Interest
Key Points in DOJ SOI in NAR Settlement with citations included:
- The United States continues to scrutinize policies and practices in the residential real-estate industry that may stifle competition. It is a matter of public record that the United States has an open investigation into these practices. See NAR v. United States, 97 F.4th 951 (D.C. Cir. 2024) (discussing United States’ investigation into NAR’s rules and practices), petition for cert. filed (Oct. 15, 2024) (No. 24-417). Competition in real estate is critical, and home ownership is a key component of the wealth of American households.
- The proposed settlement includes a provision requiring buyers and their brokers enter “written agreement before the buyer tours any home.” Dkt. 1458-1 ¶ 58(vi). This provision itself raises independent concerns under the antitrust laws, which could be addressed in multiple ways. The parties could (i) eliminate the provision or (ii) disclaim that the settlement creates any immunity or defense under the antitrust laws. Alternatively, the Court could clarify that approval of the settlement affords no immunity or defense for the buyer-agreement provision.
- The class actions before the Court challenge blanket unilateral offers of compensation to buyer brokers. This pervasive industry practice harms both sellers and buyers. Sellers feel tremendous pressure to offer the “customary” rate of 2.5-3% to buyer brokers, lest those buyer brokers “steer” their clients to higher-commission properties. See United States’ Statement of Interest, Nosalek v. MLS Prop. Info. Network, Inc., Dkt. 290 at 13, 1:20-cv-12244 (D. Mass. Feb. 14, 2024). This practice does not benefit buyers, who must foot the bill through higher home purchase prices, regardless of the extent or quality of their brokers’ services or whether they would have otherwise been willing to pay for those services at all.
- Listing brokers, who represent sellers, effectively decide the total commission and, as a general matter, split it with buyer brokers, insulating buyer brokers from meaningful competition, foreclosing meaningful negotiations between buyer brokers and their clients, and decreasing the incentive for brokers to offer improved or lower-cost services. See Burnett v. NAR, No. 4:19-CV-00332-SRB, 2022 WL 17741708, at *8 (W.D. Mo. Dec. 16, 2022).
- Under the proposed settlement, NAR would prohibit brokers from making these offers on the MLS itself. The proposed settlement, however, expressly allows offers of compensation to continue and for them to be posted publicly; it simply prohibits making these offers on an MLS. See No. 1458-1 ¶ 58(ii), (iii). The proposed settlement also introduces a new NAR rule that requires buyers and brokers to enter a “written agreement before the buyer tours any home.” Dkt. 1458-1 ¶ 58(vi).
- Thus, while the Court may ultimately find that the proposed settlement achieves important concessions in the interests of the private actors in this litigation and satisfies Rule 23(e), such determination does not mean that the proposed settlement effectively prevents or restrains ongoing antitrust violations or remedies past violations, or itself contemplates practices that fully comply with the antitrust laws. Because the United States did not participate in either the underlying litigation or the proposed settlement, that settlement does not preclude any future enforcement actions by the United States, and compliance with the proposed settlement or new NAR rules implementing that settlement affords no defense to any such enforcement actions.
- In addition, the new provision that requires buyers and brokers to make written agreements before home tours may harm buyers and limit how brokers compete for clients. It bears a close resemblance to prior restrictions among competitors that courts have found to violate the antitrust laws in other proceedings and could limit — rather than enhance — competition for buyers among buyer brokers. See, e.g., FTC v. Ind. Fed. of Dentists, 476 U.S. 447, 459 (1986) (condemning an agreement among competitors “to withhold from their customers a particular service that they desire”); RealComp II, Ltd. v. FTC, 635 F.3d 815 (6th Cir. 2011) (condemning an agreement that prohibited information useful to consumers from being distributed through MLS feeds to public websites).
- In its recent filing, Plaintiffs argued that the settlement does not require a representation agreement for a specific time period. See Plaintiffs’ Motion and Suggestions in Support of Final Approval, Dkt. No. 1595 (Nov. 20, 2024) at 42. Regardless, buyer brokers under the proposed rule may not show a house, even a no-obligation showing, without first obtaining a written agreement. Thus, the concerns remain that the broker agreement rule may limit how brokers compete, and there is no record available in the current posture addressing this concern. It is therefore important that any settlement not purport to preclude future antitrust scrutiny.
GAME ON — Here’s the NAR Response to the DOJ Filing 
NAR Response to DOJ Statement Sitzer Nov 2024
Where can I buy tickets for this great show to hear the DOJ attorneys appear in person to make their case to Judge Bough, who had previously denied a request by a Buffalo contract law professor to appear digitally. The Plaintiffs attorneys are expecting a payday of over $300 Million.
RELATED READING:
6 Responses
I think the Statement says a lot in its brevity.
1. The DOJ is not done investigating not only the provisions of the Proposed Settlement, but other alleged antitrust behavior in the residential real estate space as well.
2. The DOJ does not care for the buyer broker requirement the way it is described in the proposed settlement and as currently constructed in the proposed settlement, could bring other antitrust concerns.
3. The DOJ was not a party to the litigation or the settlement and compliance with the settlement does not eliminate potential antitrust liability.
4. Removing Offers of compensation is a good start, but the proposed settlement does nothing about offers of compensation off the MLS, and, the DOJ stated in its Nosalek Statement of Interest, it does not want offers of compensation anywhere, on or off the MLS.
5. The court, if it does finalize the Settlement, should be clear that compliance affords no immunity or defense for the buyer broker provision.
6. The responsibilities of the parties in the Civil Class Action litigation are not the same as the DOJ’s antitrust responsibilities.
7. The DOJ will have a lot to say at the Settlement hearing, would be my final takeaway.
our agents are not really surprised with the DOJ intervening as prices are still on the rise, in fact higher in certain neighborhhoods.
What has changed is higher stress levels and agents spending less time with their families.
thx for this late breaking news update
I hear you, Douglas. Stress levels are on the rise, especially with some agents ignoring the issues.
Flashing News today! Updated April 8, 2025
Roger P.Alford now working for the DOJ! — Certainly no fan of NAR and its policies.
https://www.justice.gov/atr/staff-profile/roger-alford-principal-deputy-assistant-attorney-general
Roger Alford will serve as Principal Deputy Assistant Attorney General. Mr. Alford previously served in the first Trump Administration as Deputy Assistant Attorney General in the Antitrust Division. Prior to returning to the division, he was a tenured Professor of Law at the University of Notre Dame Law School for nearly thirteen years. During that time, he also consulted on antitrust matters, including as an expert witness in the landmark 2023 real estate $1.8 billion litigation against the National Association of Realtors, and since 2019 consulting for Texas Attorney General Ken Paxton in Texas v. Google. He served as a law clerk to Judge James Buckley of the United States Court of Appeals for the D.C. Circuit, and Judge Richard Allison of the Iran- United States Claims Tribunal in The Hague, Netherlands. He also practiced law with Hogan Lovells in Washington, D.C. and was a Senior Legal Advisor to the Claims Resolution Tribunal for Dormant Activities in Zurich, Switzerland.
He earned his B.A. with Honors from Baylor University in 1985, his M.Div. from Southern Baptist Theological Seminary, his J.D. with Honors from New York University, and his LL.M., first in class, from Edinburgh University.
I don’t see how any of this is helping the BUYERS! We all know, that most of the buyers don’t have the money or much desire to pay the buyer brokers, they have been programmed for DECADES that their broker commission is part of the house price, and with that understanding, the broker was free to low-ball the seller, offer whatever price the broker and the buyer felt was fair and reasonable, because regardless of the price, the buyer’s broker was guaranteed the commission! Now, if the buyer and his broker want to low-ball the seller, the buyer MUST pay the commission, because the seller will only pay it at the highest possible price. As a result, THE ONLY WAY THE BUYER CAN GET FAIR AND/OR AGRESSIVE REPRESENTATION IS IF THE BUYER IS WILLING TO PAY ALL OF THE COMMISSION TO HIS BROKER, and if the buyer can’t pay it, or can’t afford to pay it (think first-time home buyers in starter segment), they are F&$ed, they will have to offer full price to the seller in order to avoid paying broker commission out of their pockets! Or they will have to go to the seller’s broker directly and, again, pray that the seller and his broker will not take advantage of them. So, if and when we get back into the seller’s market, goodbuy buyer brokers, welcome to the world of dual agency (and very screwed buyers!)
So, how exactly did it all help the buyers? It didn’t, not a bit! THE MARKET has been naturally taking care of the competition all these decades, but as soon as the lawyers got involved, things got only worse, not better (except for those lawyers)
With the recent elimination of the MLS offer of compensation — the MLS guaranteed commission also known as the “MLS Crutch” — a professional buyer broker now has to prove his or her value. There will be intense competition to secure the buyer’s written agreement to engage the buyer broker choosing from a variety of compensation alternatives, such as flat fee, hourly, percentage of sale price, or a new model of Performance-based compensation focused on buyer savings. Look for more models where the buyer makes an offer that includes payment of all or a portion of the buyer agent fee and the seller focuses on the NET PROCEEDS they receive upon successful closing of the negotiated purchase price.