The landmark decision in the Sitzer/Burnett commissions case could have catastrophic consequences for the National Association of Realtors. The arrival of the Justice Department could be even worse, according to the trade group’s president.
Kevin Sears, who was elevated to the top job in January after Tracy Kasper’s abrupt exit, warned of the potential threat from the Department of Justice to Realtors at large, Inman reported. The comments made at a real estate conference last week were later posted to YouTube.
Sears addressed the verdict in the Sitzer/Burnett decision, which centered on some of the group’s rules over commissions as violations of the Sherman Antitrust Act. The case, which included the trade group and two brokerages as defendants, ended with a jury saying the firms were liable in conspiring to inflate broker commissions and ordering $1.8 billion in damages.
“At the end of the day, even though our policy and what we do is right, being a sports guy, all you have to do is look at the scoreboard: We lost,” Sears said.
The group is appealing the decision, but has a “bigger problem” in the form of the DOJ, Sears said.
“They’re pissed off at us,” Sears said, pointing to NAR’s previous victory in court that came as part of a long-running dispute over a probe by the DOJ.
The Justice Department is looking to reopen an investigation into the group’s commission rules. The trade group came to a settlement to block further probes of the policies under President Donald Trump’s administration, only for President Joe Biden’s administration to try reopening the investigation. The matter is in front of an appellate court in Washington, D.C.
The DOJ could shatter Realtors’ way of doing business, Sears, said, especially as the agency eyes intervening in another case.
“The reason I’ve spoken so much about this is because the way that we operate our business is going to change,” Sears said. “It is going to change whether we embrace it and adapt, or it’s going to be forced down our throats.”
Redfin CEO Glenn Kelman is among residential players who pointed to the Justice Department as a bigger threat than the antitrust cases. Redfin, which Kelman announced last year was withdrawing from NAR and called for MLS access to be decoupled from membership, is a defendant in a similar lawsuit filed by an attorney for the Sitzer/Burnett plaintiffs.
“The [U.S. Department of Justice] is fired up on this subject,” Kelman said in a reaction to the bombshell ruling in Sitzer/Burnett. “I think they will look at the outcome of the lawsuits and then decide whether they want to get more aggressive. And every indication is that they will.”
— Holden Walter-Warner