Despite offering a cautiously positive assessment of the settlement struck by the National Association of REALTORS® (NAR) late last month, Department of Justice (DOJ) antitrust regulators are signaling they will push for more changes to real estate rules outside the significant shifts already looming for the industry.
In three separate moves, lawyers for the DOJ targeted the so-called “commingling” MLS rule, which bans real estate platforms that use MLS data from presenting those listings alongside listings from other sources, and also directly intervened in a major real estate association’s plans to prepare for NAR’s settlement.
And in a status update in the Massachusetts-based commission case known as MLS PIN, last week, plaintiffs and defendants said they specifically asked DOJ lawyers to commit to taking a position on the NAR settlement before November 26, when a hearing is scheduled to potentially grant final approval to that agreement.
“(C)ounsel for the Department declined to make that commitment,” the lawyers wrote.
Taken together, it appears more likely that the DOJ will either directly intervene in the NAR settlement—as it has in the aforementioned case—or potentially push for broader changes as part of a long-running investigation into NAR.
“As we have long said, local MLSs benefit competition and fair housing, and provide consumers with the most accurate, transparent and up-to-date information on home listings,” NAR said in a statement shared with RISMedia.
NAR was responding to an amicus letter filed by the DOJ in the “commingling” antitrust lawsuit targeting both the association and Zillow, in which both companies appeared to earn a rare win as a judge dismissed the case—first in regard to claims made against NAR almost a year ago, and more recently allegations leveled against Zillow.
Separately, but almost simultaneously, the California Association of REALTORS® (CAR) revealed that it was delaying the releases of updated forms in response to a “formal inquiry” by the DOJ, which expressed unspecified “concerns” regarding changes made specifically to adhere to the NAR settlement.
“(T)his decision is being made from an abundance of caution,” wrote CAR President Melanie Baker in a letter shared with member’s and posted on CAR’s website. “We are working diligently to create the next set of forms that will continue to protect our members and serve consumers.”
In a statement, CAR General Counsel Brian Manson told RISMedia that the forms currently being delayed will be available, along with “relevant education,” prior to the August 17 deadline for the NAR settlement changes.
“(CAR) has received an inquiry from the Dept. of Justice regarding these forms as well as extensive feedback from our members. We believe it is prudent to take additional time to consider the concerns comprehensively,” Manson said.
Reading tea leaves
So far, DOJ regulators have chosen to keep most of the specific goals and targets entirely under wraps, declining even to share with lawyers involved in the commission cases they have intervened in.
In the MLS PIN case, the issue appears to be the same commission offer rules that have been at the center of both the DOJ investigation and most of the commission class-actions. According to a July 7 email sent from Seth Klein, one of the plaintiffs’ lawyer, to DOJ Antitrust Attorney Jessica Leal, government regulators are asking for MLS PIN to adopt a “general prohibition” that bans it from “directly or indirectly” requiring sellers to make offers of compensation, or prohibiting buyers and sellers from negotiating commissions.
Klein objected specifically to the word “indirectly,” requesting that a more specific policy is included in the settlement.
“To be clear, we agree with the general policy embodied by the Department’s language. But in our view, the phrase ‘or indirectly’ causes the Department’s version…to be unreasonably vague,” he said. “Accordingly, in order to avoid future disputes over whether conduct does or does not violate (the new policy), we believe that the settlement should include specific and express language changes in the Rule.”
The language proposed by the DOJ—specifically the “indirectly” stipulation—is clearly pushing further than the NAR settlement has, and includes comprehensive bans on MLS PIN “adpt(ing) any language, or otherwise promulgate any policy, that materially (re)instates the Buyer-Broker Commission Rule.”
Klein argued that proposed changes to MLS PIN’s rules already meet what the DOJ is seeking, and asked the DOJ to explain why it believes they don’t.
Seeking to ban rules or policies that indirectly make compensation offers mandatory on the MLS or prevent negotiating commissions would appear to be much further reaching than agreements reached so far, and it is unclear what kinds of rules might violate this kind of broad language.
Separately, DOJ regulators sought to intervene in a long-running case involving REX, a listing service startup that sued both NAR and Zillow back in 2021. REX accused the portal of conspiring with NAR to suppress competition by separating MLS listings from those provided by other services or sources.
Those claims were repeatedly dismissed, but REX recently appealed the ruling to the Ninth Circuit, where the DOJ chose to intervene, penning a 35-page letter urging the appeals court to reverse the earlier dismissals.
“NAR is a collection of competitors in the same industry, and the adoption of the no-commingling rule by NAR’s Board of Directors concerning that industry (through authority delegated to them) joined together separate centers of economic decisionmaking,” the DOJ wrote. “Although the district court appeared to suggest that NAR could not be a part of the alleged conspiracy because the rule it promulgated was optional, courts have recognized that a ringleader proposing a common scheme can be a part of a broader, single conspiracy with the other participants.”
While the DOJ seems sympathetic to REX’s argument that the “no-commingling” rule was anticompetitive in its right, the letter is mostly focused on the alleged “concerted action” that real estate entities—including NAR and local associations—took to promulgate and enforce rules.
NAR essentially delegates authority to enforce these rules to local MLSs and associations, the DOJ claims, and even occasionally on entities like Zillow.
“(C)oncerted action is not limited to an association’s binding rules. Optional association rules affecting members’ separate businesses can also constitute concerted action,” the DOJ wrote. “If uncorrected, the district court’s incomplete approach creates a risk that associations like NAR could evade antitrust scrutiny for many anticompetitive schemes by using optional rules.”
Being able to target optional rules as evidence of antitrust conspiracy as part of its investigation would also appear to be a significant escalation. For the most part, the DOJ (and class-action plaintiffs) have focused on mandatory rules like Clear Cooperation and the Participation Rule.
Using the REX case as an example, the DOJ claims that NAR effectively created the foundation for a conspiracy—which it could then be held responsible for.
“Although Zillow disliked the rule, Zillow felt compelled to follow it to obtain the benefits of MLS membership,” the DOJ wrote. “Zillow thus allegedly acquiesced in the alleged common scheme.”
In the MLS PIN case, the DOJ proposed that it would file another “statement of interest” in the case by August 24, though a judge had yet to rule on that proposal at press time. REX is expected to file its brief in the appeal at roughly the same time, on August 31.
