The Department of Justice (DOJ), which has remained dogged in its investigation of alleged antitrust behavior in the real estate industry, just gave the clearest indication yet that it will not be satisfied with the kinds of tweaks or changes to rules that have been enacted so far.
In a letter filed yesterday as part of its intervention in one of the lower-profile commission cases, DOJ antitrust lawyer Jessica Neal wrote that even after an MLS made significant changes to policies and disclosures, the DOJ has “concerns” and seeks to delay the approval of a settlement agreement.
“Should the Court wish to hear the views of the United States before determining whether to grant preliminary approval, the Department of Justice respectfully asks that the Court allow the United States until February 15, 2024 to file a statement of interest,” Neal wrote.
While dozens of class action lawsuits filed by recent homesellers (and buyers) have pushed forward with a relatively narrow focus on rules governing commissions, the DOJ has pursued what may or may not be a broader investigation into organized real estate—and the National Association of REALTORS® (NAR) in particular.
This letter, filed in the MLS PIN v. Nosalek case, would seem to indicate that the DOJ will pursue broader changes to rules governing buyer-broker commission or MLS participation.
The case in question had already been settled by the MLS, with Massachusetts-based MLS PIN agreeing to make offers of buyer commission optional and proactively inform consumers about negotiable commissions, when the DOJ first intervened back in October, asking the court to hold off on final approval.
According to Neal’s letter, the DOJ subsequently spoke with lawyers for both MLS PIN and the plaintiffs “to discuss the terms of the proposed settlement and whether changes could alleviate the (DOJ’s) concerns.”
A new settlement agreement was drafted, she wrote, but that “proposed changes” made were not enough for the DOJ to withdraw its request for a delay in the process.
It was not immediately clear what further changes were made in this second settlement agreement, or what changes the DOJ had sought. Lawyers for the plaintiffs and MLS PIN could not immediately be reached for comment.
The DOJ’s current investigation extends back at least six years, and has taken a convoluted path. This intervention in MLS PIN’s settlement appears to be only a small part of a broader pushback against the structure of organized real estate.
After initially agreeing to end its inquiry back in 2020 in exchange for changes to some NAR policies, the DOJ attempted to restart that same investigation under the Biden administration. Those efforts were blocked by a federal judge—though an appeals court appears to be leaning toward allowing it to reopen.
While that process played out, the DOJ filed numerous “statements of interest” in the class action commission lawsuits targeting NAR, clarifying that it had not approved of or found pro-competitive aspects to NAR rules, and that NAR had in fact had to modify other policies that were alleged to be anti-competitive.
Though the full scope and thrust of the current, dormant investigation is not fully clear, court filings by the DOJ have largely focused on the same mandatory offer of buyer compensation that sparked the class action lawsuits, as well as the “clear cooperation” rule, requiring listings to be marketed on NAR-affiliated MLSs.
The 2020 settlement required NAR to cease allowing buyer agents to advertise their services as “free,” end policies that limited access to lockboxes and ensure that MLSs could not hide commission offers from consumers or allow agents to sort listings by the commission amount.
