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Real Estate Commissions Face Added Scrutiny in Justice Probe

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Bloomberg Law, April 2024

An appeals court decision allowing the US Justice Department to investigate the National Association of Realtors is likely to embolden the agency’s push for even more separation between buyers’ and sellers’ agents. The scrutiny tracks with the Biden administration’s attempts to address record-high housing costs, industry observers say.

“What they want is a more free-form—more dynamic, more negotiable—market,” said Max Besbris, a sociology professor at the University of Wisconsin-Madison who studies housing. The US Court of Appeals for the DC Circuit ruled last week that the DOJ can investigate NAR, rejecting a bid by the real estate trade group to enforce a 2020 settlement with the Trump administration to close the case.

The DOJ can now probe how potentially unlawful conduct by NAR might be contributing to high real estate commissions in the US, DOJ antitrust chief Jonathan Kanter said in a press release applauding the appeals court ruling. NAR said in a statement it believes the government should be “held to the terms of its contracts” and is considering next steps in light of the appeals court decision. That 2-1 ruling followed a settlement of private litigation last month over NAR’s commission fee structure that still left room for sellers’ agents to dictate commissions for buyers’ agents.

The question now is whether the Justice Department will be able to succeed where private litigation has faltered in changing the close relationships between sellers’ and buyers’ agents. Looming intervention from the federal government to alter the commission system marks “another chink in the armor of the NAR,” Besbris said.

Read more at Bloomberg Law.

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