WSJ Editorial Deems NAR Lawsuit Antitrust “Reckoning”

The National Association of Realtors faces its day in court as an antitrust case reaches trial.

NAR is set to go before the courts on Monday in Sitzer/Burnett, the first of two high-profile cases challenging the trade group. At the heart of the landmark case is a complaint from home sellers in Missouri over the group’s rule that requires them to offer brokers for potential buyers a commission to get their property listed on a listing service.

The Wall Street Journal’s editorial board railed against the rule, citing “evidence presented by the plaintiffs that the Realtors’ primary interest is ensuring buyer brokers make a 3 percent commission no matter what.” Agents are trained to set rates at 6 percent for agents on both sides of the deal to split, the newspaper wrote.

Citing a recent study that found Redfin listings with lower commission offers are more rarely sent by brokers to clients and therefore get fewer views, the Journal deemed the requirement “a quintessential trade practice that the Sherman Act prohibits.” Some of NAR’s other rules pertaining to the MLS are “anti-competitive,” the editorial board wrote.

Without the commission rule, the board forecast that “many buyers wouldn’t use brokers or would negotiate lower commissions” and home prices would likely fall.

“We’re no fans of most antitrust suits, but the evidence is strong that Realtors’ practices are classic antitrust violations that harm consumers,” the famously conservative board wrote. “The Realtors may own the U.S. Congress, but perhaps independent courts won’t be so intimidated.”

NAR is already warning that a ruling in favor of the plaintiffs could make buyer’s agents unaffordable, restrict equal access to listings and limit buyer choice.

Sitzer/Burnett is one of two trials challenging NAR’s “participation rule,” which critics say violates antitrust laws by inflating commissions charged to home sellers.

Days before the trial’s start, NAR shifted its interpretation of the policy. It was previously understood as requiring listing brokers to offer compensation to buyer’s agents, but NAR is now saying it only requires the communication of an offer of compensation to other multiple listing service participants, which can be an offer of zero dollars.

Two brokerage defendants in the lawsuit have already settled. Anywhere Real Estate agreed to pay $83.5 million, while RE/MAX settled for $55 million. Both are also amending policies to enhance transparency around commission requirements. They also won’t require agents to belong to NAR, something other brokerages are embracing where they aren’t foiled by NAR’s control of local listings.

Keller Williams and HomeServices of America are still defendants in Sitzer/Burnett alongside NAR. The defendants could be on the hook for up to $4 billion in damages if the jury rules in favor of the plaintiffs.

NAR’s general counsel Lesley Muchow predicted a verdict would be reached by Nov. 10 and any appeals would start next year.

— Holden Walter-Warner