The lucrative broker commission system at the center of the US residential housing market is facing unprecedented antitrust scrutiny from the Justice Department and two private class-action lawsuits that threaten to undermine the National Association of Realtors, the industry’s influential lobbying organization.
After years of investigation, federal antitrust enforcers will soon determine whether to pursue their own case, according to a source familiar with the matter. The Justice Department is concentrated on the real estate commission-sharing system that typically requires sellers to pay their agent and the buyer’s agent 5% to 6% of the sale price.
It is a structure primarily unique to the United States, preserved by the association’s control of many of the country’s multiple listing services — an indispensable tool that aggregates properties for sale in a particular region. The NAR mandates sellers to offer compensation to the buyer’s agent in order to use the system, which critics say inflates home prices.
This practice will also be the subject of two class-action antitrust lawsuits, one of which begins on Monday in Missouri. This case could result in damages of up to $4 billion, whereas plaintiffs in an Illinois trial scheduled to begin early next year are seeking damages of up to $40 billion.
Michael Ketchmark, the chief plaintiffs’ attorney in the Missouri case, stated in an interview that the commission-sharing structure constitutes “collusion.” “The day of reckoning is approaching.”
More: DOJ Abandons Realtor Antitrust Pact Citing Need for Investigation
Under the Trump administration, the DOJ began investigating residential real estate, and the NAR agreed to measures, including increased price transparency, to resolve the case. Biden officials withdrew from the agreement in 2021, citing a desire to pursue future antitrust claims against the organization, but a federal judge ruled in January that the DOJ remains bound by the agreement. The department is appealing this decision as the Biden administration expands antitrust scrutiny to non-traditional sectors.
