The National Association of Realtor’s notorious buyer-broker rule is anticompetitive and stifles competition and it extract unreasonable fees from American homebuyers and sellers.
Dear Assistant Attorney General Kantor:
We write to urge you to use your good offices to assist federal courts around the country understand that several National Association of Realtor (NAR) rules, including the notorious buyer-broker rule, are anticompetitive and extract unreasonable fees from American homebuyers and sellers. You have stated that “Antitrust enforcement is about economic liberty.” There is no doubt that economic liberty is fundamental to a thriving democracy, and we agree with you that “[a] vibrant, open and competitive market economy sustains a thriving democracy premised on individual liberty. Absent competition, real people suffer real harms.” 1 President Biden observed, in his executive order addressing competition, that the “American promise of a broad and sustained prosperity depends on an open and competitive economy.” 2
We agree with both you and President Biden, and it is for this reason we are perplexed that the Department of Justice has thus far been on the sidelines on what is one of the most consequential competition issues of our day that directly impacts consumers’ pocketbooks. You are no doubt aware that a federal jury in the Western District of Missouri took less than three hours to decide that NAR conspired to restrain trade resulting in illegally inflated realtor commissions resulting in higher costs to consumers. The jury awarded plaintiff’s 1.78 billion in damages which could ultimately reach in excess of $5 billion. The Wall Street Journal Editorial Board, not known as antitrust enforcement hawks, called the decision “a victory for consumers” and highlighted that commissions in the U.S. are “about two to three times as high as in other wealthy countries where such self-serving industry arrangements don’t exist. The inflated commissions are baked into home prices.” 3 We believe the Justice Department should not stay silent as this and other similar cases are considered throughout the U.S. We would hope you can explain why these “self-serving industry arrangements” promulgated and enforced by NAR are anticompetitive and illegal.
A home is one of the largest purchases and investments any American will ever make in their entire lives. As such, this market should be hyper-competitive. It is, therefore, unconscionable, that a small group of individuals can conspire to extract commissions that far exceed that which would be borne by a competitive market. U.S. homebuyers should not be compelled to pay commissions that are two or three times more than what is standard in other countries. We are not advocates of heavy handed government regulations and believe realtors provide a valuable service. However, like you, we are proponents of a transparent and competitive free market that provides excellent goods and services at competitive market prices. The real estate commission fee rules are anything but competitive and should be eliminated.
As a result of the Missouri jury’s findings, at least a dozen more cases were filed around the country. We appreciate that on occasion the Department has intervened to rebut NAR’s claims that a previous settlement with the Government blessed the buyer-broker commission rule. Given the number of cases in different circuits around the country, we believe weighing in on the merits is timely and warranted, whether in these pending civil matters or independent enforcement action. The civil cases could benefit from input from the Government regarding the anti-competitive nature of NAR’s buyer-broker commission rule and other NAR rules that artificially inflate real estate prices. Furthermore, it is no time for half measures. NAR will likely continue to lose cases around the country and their fall back will likely be to keep their rules on the books but make them voluntary. With respect, voluntary cartel rules are never voluntary. They must be removed, root and branch.
Finally, we will observe that President Biden has made the elimination of “junk fees” a priority for his administration. We do not address those proposals here; however, we are skeptical that big government regulation of certain fees are necessary. What is necessary is strong, transparent, competitive markets. Anything you can do to educate courts about why NAR’s rules do not foster free competitive markets is time well spent. Homebuyers and sellers throughout the nation will thank you.
Sincerely,
1 Assistant Attorney General Jonathan Kanter, Statement Before the Subcommittee on the Administrative State, Regulatory Reform, and Antitrust of the House Committee on the Judiciary (Nov. 14, 2023)
2 Executive Order on Promoting Competition in the American Economy (July 9, 2021).
3 Editorial, A Big Legal Defeat for the Realtors, THE WALL STREET JOURNAL, (Oct. 31, 2023).