NAR Sued by the DOJ: What You Need to Know

 

The recent lawsuit involving the National Association of Realtors (NAR) and the Department of Justice (DOJ) has sparked numerous headlines and debates. However, it's essential to understand the outcome and implications of this case. The DOJ's lawsuit aimed at NAR's rules and practices ended without requiring substantial changes, indicating that NAR's actions were not fundamentally wrong.

Understanding the Lawsuit

The DOJ filed a lawsuit against NAR, alleging that several of NAR's policies lessened competition among real estate brokers. The DOJ claimed these rules led to higher costs and reduced options for American home buyers. Specifically, the lawsuit targeted:

• Commission Concealment Rules: Preventing MLSs from showing prospective buyers the commission earned by buyer brokers.
• Free-Service Rule: Allowing buyer brokers to mislead buyers into thinking their services are free.
• Commission-Filter Rules: Enabling brokers to exclude homes with lower commissions from buyer consideration.
• Lockbox Policy: Restricting lockbox access to only NAR-affiliated brokers.

NAR's Role and Response

NAR, a leading national trade association of real estate brokers, has over 1.4 million members. It establishes and enforces policies through its local associations and MLSs, aiming to maintain high ethical standards and provide comprehensive listings of homes for sale.

In response to the lawsuit, NAR worked cooperatively with the DOJ to address concerns. The proposed settlement required NAR to:

• Repeal or modify certain rules to increase transparency and competition.
• Ensure that MLS databases display commission information.
• Prohibit brokers from claiming their services are free when they are not.
• Allow broader access to lockboxes for all licensed real estate brokers.

The DOJ's Decision

Despite the allegations, the settlement did not require NAR to make drastic changes to its core practices. This outcome suggests that while there were areas for improvement, NAR's overall system was not fundamentally flawed. The DOJ's involvement led to refinements rather than an overhaul, which speaks volumes about the validity of NAR's existing practices.

What This Means for Home Buyers and Sellers

For consumers, the resolution ensures greater transparency in the real estate process. Buyers will have better access to information about broker commissions, and all licensed brokers will have equal access to lockboxes, promoting fair competition.

Conclusion

The DOJ's lawsuit against NAR brought attention to some practices that needed adjustment. However, the lack of sweeping changes required by the settlement indicates that NAR was not engaging in fundamentally wrong practices. Instead, NAR's commitment to transparency and fair competition is now even more robust, benefiting home buyers and sellers across the country.