Antitrust regulators at the Department of Justice (DOJ) appear unsatisfied with the agreement struck between the National Association of REALTORS® (NAR) and plaintiffs in commission lawsuit class-actions, with a DOJ lawyer saying explicitly that they do not want any offers of compensation made by seller agents to buyer agents
At a court hearing today in the Massachusetts-based MLS PIN case (the first commission lawsuit to settle, which the DOJ has taken an outsized interest in), Jessica Leal, a lawyer representing the DOJ, called the NAR settlement “an improvement,” but implied it was not enough.
“We believe offers of compensation should not be made anywhere, but certainly not on the MLS,” Leal said.
The DOJ did not immediately respond to RISMedia’s request for clarification of this comment, or further details on its position regarding offers of compensation.
In a statement provided to RISMedia, NAR characterized the DOJ’s position as a negative for buyers and consumers in general.
“Prohibiting all offers of compensation will harm consumers, including by making it more costly for homebuyers to access capable representation and by reducing access to fair housing,” NAR said. “There is a great deal at stake for buyers and sellers all across the country, and NAR will continue to work, in and out of court, toward the best possible outcome for property owners in America and the professionals who represent them.”
In updating Judge Patti Saris, who is overseeing the case, on all the other developments happening around the industry as far as rule changes and other class-action settlement agreements, Leal and other lawyers involved in the case gave a first look at the DOJ’s response to the NAR settlement and changes enacted due to commission lawsuits.
Notably, Leal said the DOJ was not currently supporting or opposing the NAR settlement, even as other lawyers involved in the case said it would be hard for them to make decisions without knowing where the DOJ stood on the issue.
“The current dispute between us and the DOJ is, the DOJ is saying that they don’t want there to be any ability—well ideally in their statement they say they want to prohibit the seller from offering compensation at all,” said Seth Klein, a lawyer representing the plaintiffs in the MLS PIN case. “I think from the statement that (is) their ultimate position on what they think the world should look like, and I don’t necessarily disagree, but that’s an issue for a rule, a legislative change or a regulatory change.”
As the real estate industry has sought to move on from the class-action lawsuits, with settlements from almost a dozen big brokerages along with NAR winning immunity to most claims regarding rules and policies that allegedly inflated commission, the DOJ’s potential interest in these changes has continued to loom large.
Back in 2019, the DOJ launched its own separate investigation into many of the same NAR rules. That inquiry was shuttered for years, but was recently revived by an appeals court (though NAR continues to argue the DOJ legally is not allowed to restart it).
But regulators have also filed multiple “statements of interest” in the lawsuits targeting NAR and big brokerages, letting judges around the country know that the government has its own ideas or arguments about the issues at stake. Back in February, the DOJ filed one of these statements in the MLS PIN case, laying out a scenario where commissions would be “decoupled.”
That was before the NAR settlement, however, and it was unclear if regulators would view the changes made in that agreement—most notably, removing offers of compensation from the MLS—as enough.
Leal did not say explicitly what the DOJ was planning or what specific changes it might pursue beyond the NAR settlement, only that it would make a decision about whether or not to intervene sometime around October.
“The schedule for that is still far out so we’re still analyzing,” Leal said.
The DOJ is also rejecting a settlement proposed in the MLS PIN case, which differs tremendously from what NAR agreed to, in that it allows offers of compensation on the MLS but allows for commission negotiations using the listing service platform as well.
A third amended settlement agreement was recently provided to the DOJ jointly by plaintiffs and MLS PIN in the case, with Leal saying that agreement did not address all of the DOJ’s concerns and specifically noted that the NAR settlement is removing offers of compensation from the MLS.
“We haven’t finished understanding the third settlement,” she said.
At Leal’s request, Saris set the next hearing for the case to be held June 21, a week after the deadline for MLSs to opt-in to the NAR settlement, in order for the DOJ to gather more information—though it was not clear exactly how those opt-ins might affect the DOJ’s decision-making process.
Additionally, MLS PIN and plaintiffs in the case will be filing their official responses to the DOJ this Friday, seeking to address the big-picture concerns regulators have expressed over the MLS PIN settlement.
This is a developing story. Stay turned to RISMedia for updates.
Editor’s note: this story was updated at 2:45 p.m. eastern with a statement from NAR.
It seems like all offers, payments, solicitations, and receipts of compensation between agencies, as well as all forms of dual agency, should be prohibited.
Commissions have always been negotiated; thus, this conversation is an attempt to ruin our industry.
The steering & forced dual agency to follow will be a much more litigious than negotiating the commissions that have always been in the buyer’s price, not the sellers.
You think the sitzer burnett verdict is complete bullshit.
Excellent!
Yes I totally agree!
Because just 2 years ago DOJ decided offers of compensation must be “everywhere”
Great example of…it wasn’t broken….no need to fix it…about to be more broken than ever…sigh.
It is almost [enough] BS to make me a Republican
How can the government prevent a seller from offering compensation if that’s something they want to do, to attract buyers to their house. If I go fishing without bait, I’ll have a hard time catching fish. When I put bait on the hook my odds increase significantly. The same is the case in business.
It seems like offers by the seller are rather quite different than offers by the listing agent. You think offers of compensation to buyers agents are what creates demand for a property as opposed to the actual supply of the property on the open market creating the demand for it.
Don’t know who you are or who you represent, but you have no clue by your comments how the industry works. You have a down payment, in the first time home buyers case, this can come from a grant, then you have the costs of closing which can come through the graciousness of the seller or the buyers pocket. In addition, they will have to come up with some additional money out of their pocket to pay their buyers agent to represent them. Yes, buyers agents are worth something. The seller who just sold his house will then have to pay a buyers agent to help them buy their next home. The loser is the first time homebuyer and the veterans who by law can’t pay a buyers agents fee. If the seller pays the buyers agent on the sale of their home, and get the seller to pay their buyers agent on their purchase, it is an essentially a zero sum for the seller. In your view you’re forgetting the seller when they go to buy.
You simply don’t know how this industry works, but you’re free to continue to believe you do.
Martin!
Really? Have you read the DOJ’s evaluation of the NAR’s rules and how they impact sellers and violate the Sherman Anti-trust laws? From a seller’s perspective, let me share a very recent experience with our attempt to sell our house in New Orleans: My agent requested feedback on ShowingTime. The question was “What was your (agent) opinion of the price.”. A buyer’s agent showed the house to a couple and my neighbor, a developer and mutual friend of ours, and the potential buyers, went through the house. After the showing, the potential buyers and my neighbor thought the price was “great” and a “very fair price”. The buyer’s agent wrote in the feedback that the price was “Too High”. Why would a seller want to pay a commission to someone who is working against you? That the same thing as hiring an attorney and agreeing to pay the opposing counsel, win or lose. Not only that, it’s collusion. In addition, there is no negotiation. It doesn’t matter if the house is $25,000 or 2.5M, the commission is the same percentage in New Orleans. I highly recommend you read the DOJ’s FAQ: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.justice.gov/opa/press-release/file/1338606/dl
Sincerely,
Your former Ann Arbor home owner.
Real Estate commissions have usually been paid from the buyers funds at closing. Either directly by a Buyer Client to a Buyers Agent or from the Buyers funds they bring to the closing. Many times these funds are from a lender to the buyer to the seller to the Brokerages. Appraisals are usually based on the sales price including a commission so arguably a sale without a commission paid to a buyers agent would result in a value a few points lower. Furthermore if a buyer is paying a commission out of pocket they will simply pay a reduced price for the real estate they are purchasing. Sellers are not necessarily going to realize a savings in commission by not paying a buyer agent unless the listing brokerage agrees to lower fees and not offer compensation. I suspect we may see higher fees because of the additional burden this negotiation places on Real Estate Agents.
Who do you think is going to pay agents HIGHER fees? If the DOJ prohibits sellers from paying buyers agents, buyers are not going to fork over more money (most won’t be able to, even if they wanted to), and sellers are certainly not going to pay more to their agent. Sellers all over the country are already trying to get agents to work for reduced commissions after seeing all the media on this settlement. If you ever take the time to read the comments under these articles about the settlement, it appears that many consumers see no value in our services at all and think we’re nothing more than over paid tour guides. Don’t forget, in general, our industry is hated and disrespected as much as lawyers. And many think all they need is a lawyer to write up the contract. I don’t see our fees going anywhere but down.
There is simply not good reason for the DOJ to muddle in a process that has always worked. And telling a seller they can’t offer compensation is ridiculous. In what world would anyone not want to know who and what parties are involved and their compensation in a transaction, that’s called full disclosure…..other than Congressman and woman and their side dealings.
I feel that this is absolutely going to kill the VA buyers ability to get housing using the VA loan program. As well as the entire low end market that feeds the higher end markets. I have been a Realtor for nearly 24 yrs and commissions have always been negotiated. This ruling will force buyers to pay their agents directly or leave them unrepresented. And if buyers have to pay thier agent directly this will take buyers even longer to buy their 1st home.
Another instance where lawyers and govt stick their noses into a situation and all we end up with is confusion and disruption.
I feel bad for the agents that are new to the business.
Very happy to hear you say that!! 35 years and counting. My best to you and yours!
In short, I think this is going to create less transparency; hence, create a larger issue as a result of it.
I do agree with that.
There are repercussions coming from this.
It’s time for local realtors to get their state legislators involved. This is a massive federal overreach into state law across the country, and state attorneys general and governors need to resist the attempt by the DOJ what the states consider legitimate business activities.
Great Advice Matthew Ferrara! The DOJ stance will be forcing Realtors to refuse to work with first time home buyers who cannot afford to pay their Realtor a fee. Since Realtors will not be able to search properties by commission offered and cannot refuse to show a property with no commission offered, does the DOJ think Realtors can afford to spend their time, buy gas and pay all the fees required to be a Realtor, for free???
Why give all the money away to support first time home buyers when the DOJ is making it impossible for them to have representation to assist them in making a wise decision in their most important investment? They are the real losers in this scenario!!
Just when has a real estate agent been helpful to anyone? With Zillow, Realtor.com, Trulia and all of the other real estate marketing tools, who needs a broker or agent? Secondly, banks are already examining increasing the loan to cover the broker’s commission. They already do that and pay the seller’s agent. Example: House listed for 250,000.00 Sales commission of 5%, split. Buyer offers full price and gets a loan for 225,000, paying 25,000 down. Seller pays 12,500 in commission out of the proceeds of the sale. But who really paid the commission? The buyer. If the agents hadn’t been involved, the seller could have obtained the same net amount and the buyer would have only had to pay 237,000,00. The buyer paid 12,500 more than he would have had to if agents weren’t involved. Why? Because every seller bakes in the commission on the sale price.
I hope no one decides you are not needed when you go to your next day of work thanks to the internet and websites. That will be a sad day for you indeed to be replaced by a computer!
No surprise that this is happening! The big picture in all of this is that they intend for Big Companies to take over industry; like Zillow, Amazon, Realtor.com. AI etc and other empires around the country/world. It’s coming. They have been preparing us all along. Get rid of the little guys; they dominate the industry. No more face to face transactions. Everything will be web based and electronic.
yes…I all them “the silicon’s”…some dude in sweats in silicon valley at the computer trying to figure out how to turn a real estate transaction into a credit card swipe swipe.
I thought that we lived in a free country. Our freedoms ate being taken away daily right before our eyes. A homeowner should have the right to pay anyone a fee to sell their property or do anything else for them regarding their property. A buyer should have the same opportunity to pay for a service that they need, just like paying commissions on other types of purchases. When does our Federal government have the power to control what a buyer or seller pays for or not allow them the right to obtain a service for a fee? When does the government have the right to tell ME, a licensed owner of a Real Estate Agency and REALTOR, how much money I can charge for MY SERVICES to an individual AND the procedures I must follow to obtain my compensation? This is mind blowing and I’m wondering what is going to take to get our STATE government to STEP UP and say NO– You are violating Citizens Constitutional Rights?
I should have read your comment before I posted mine.
It sounds like Biden’s DOJ wants to violate the home seller’s Constitutional right to free speech .. ie .. advertise their home the way they want to, not under some Biden GAG order.
I see listing agents all the time advertising listing commissions? Some that say We will list for X% How is that acceptable but not to advertise a buyer representation compensation offer?
Placing commissions in the sale contract via addendum fixes it. Similar practice in commercial RE for a long time. Buyer broker writes offer w price, terms, and their fees. List broker presents to seller and counters w both sets of fees disclosed, and just as available as the sale price for negotiations bw buyer and seller. This is the way.
What right does the gov’t have to tell an individual they can not pay another individual for services rendered? One would think the Seller would be happy that someone actually wants to purchase their home, and give them hundreds of thousands of dollars!! If the Seller wants to give 3%, 4%, 5%, 6% or even 10% to someone then that’s their choice! It’s their money!!! This is just more gov’t control….and it’s not just our industry this effects. Title and loans are feeling it as well!!
On the basis of what authority does the DOJ believe it can prohibit home sellers from offering to pay buyer agent commissions in connection with the sale of their homes? Is the DOJ seriously arguing that a home seller can be ordered to direct his/her agent not to offer a buyer agent commission if the seller in issue believes it is in his/her financial interest to do so? And can an agent, under settled laws of agency, refuse to obey such a legal command of his/her principal? Strip a homeowner of his/her right to deal freely in commerce because the DOJ disagrees? Who does Garland think he is? Lina Khan?
And one last thing: The real estate industry should not even think of entering into a settlement with DOJ after it so blithely welched on a settlement it purported make with the industry very recently.
On the basis of the Sherman Anti-trust Act.
Had the settlement not had every possible loophole in it to nullify the agreement, the DOJ would have consented.
Then maybe Congress should. not be getting paid so much to represent the people of our country, it seems they have a lot to say about how other people live and work to support their families but they do not have anyone looking to make them accountable.
“We believe offers of compensation should not be made anywhere, Ms. Leal said” . Sorry, Sellers Agents can share the information of compensation with other ” Seller Agents” . That cannot be stopped. Broker owner 56 years. Negotiated commissions from the first day I started as an agent.
Buyers can If they wish, hire a ” Buyer’s Agent”, but since most states Attorneys license allows them to transact real estate, the attorneys can then show them houses and prepare the contracts.
I believe the DOJ and the ruling judges of these cases should have to walk a mile in our shoes! They need the true life experience of playing Under Cover Boss! If they were required to shadow our service hours then they could understand our service process to complete just 1 listing or Buyer sale process hours! How about this… take away their salary and instead let them perform the services hours and only get paid when their case closes!
We have a group of people who believe they are above everyone. Their ignorance of the topic is mainly because the association that represents us decided to put money ahead of all else and not defend us. We have been in a seller’s market since Covid. I have been in real estate for 30 years and have been through a few variations of market conditions. And yes, DOJ, Joe Biden, lawyers, even the sellers that filed these suits – there are variations. A buyer’s market is on the horizon, and when it comes, sellers will start throwing bonuses, free home inspections, full home warranties, the car in the garage, etc, to sell their homes. We will all look back at this time and realize both our association and the government overreacted to a made-up crisis. A crisis that mainly benefited the attorneys driving the frenzy. The offering of cooperation between sellers and buyers agents through our MLS systems is not the problem. The barrier to entry into the real estate business is! NAR supports a low entry for the sole purpose of money & power. If I were the DOJ, I would require a new structure of real estate licensing and continuing education throughout the country, placing the industry at a new height of professionalism. That’s how you clean up this problem instead of kicking the can down the road, yet again.