These range from hefty fines and civil lawsuits to criminal charges and damage to professional reputations. Given these potential ramifications, understanding and adhering to antitrust regulations is not just a matter of legal compliance but also a critical aspect of responsible business practice. As used in this policy, “rule” includes all rules, regulations, bylaws, policies, procedures, practices, guidelines, or other governance provisions, whether mandatory or not.
Houston MLS enters data share agreement with DFW counterpart
Vargas did, however, grant Zillow’s request to redact portions of materials filed in the case, which Zillow said could cause the company “competitive harm.” “This metastasized cartel has bled Realtors dry, enriching itself” while brokers like him are “unable to expand, hire, or compete fairly,” Whittman alleges. Supreme Court to review a March 2025 ruling in favor of Zillow and NAR, and in Compass’ lawsuit against Zillow, a judge is allowing Zillow Co-founder Lloyd Frink to be deposed on Sept. 24. One Realtor membership should provide access to MLSs and other tools statewide, broker argues.
The aim is to equip real estate professionals with the knowledge and tools necessary to navigate the complex landscape of antitrust compliance, fostering a fair and competitive marketplace for all. They directly impact the day-to-day operations of real estate agents, brokerages, and other industry participants. The FTC has launched a lawsuit against two leading players in the real estate world, alleging they engaged in practices that reduced competition in the online multifamily rental listing market. The accusations center around a deal where one company paid the other $100 million to essentially take over its rental listings, creating a ripple effect that could limit choices for renters and property managers alike.
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That ruling affirmed a lower court’s finding that Zillow and NAR did not conspire against REX because NAR’s “no-commingling rule,” which the trade group repealed in June, was optional. Keller Williams and HomeServices are still named in the lawsuit, Moehrl v. National antitrust violation real estate Association of Realtors, et al, which has since won class action status. On Sept. 18, 2023, the firm announced a second settlement in the case with defendant RE/MAX of $55 million, on the heels of the case’s icebreaker settlement with Anywhere Real Estate Inc. The firm continues to pursue litigation against remaining defendants and looks forward to recovering damages for those harmed.
- In fact, it is best not to discuss this sensitive information with competitors at all.
- Under federal antitrust law, injured parties can recover “treble damages,” meaning three times the actual damages, plus attorney’s fees and court costs.
- The DOJ has the power to investigate potential antitrust violations, bring civil lawsuits to stop anti-competitive conduct, and bring criminal charges against individuals and companies that violate the antitrust laws.
- The real estate industry, a cornerstone of economic activity, operates within a complex legal framework designed to ensure fair competition.
Nevertheless, the trials will move forward, as Anywhere was just one of several defendants listed in the two lawsuits. In the real estate industry, it is important to note the areas of risk involving antitrust and anti-competitive behavior. A common violation consists of horizontal agreements among competing brokers or MLS participants (e.g., setting minimum commissions, boycotts/steering, or coordinated rules that suppress competition). These can be determined to be per se unlawful (e.g., naked price-fixing), or may be analyzed under the rule-of-reason when the restraint has plausible pro-competitive justifications. A separate but similar lawsuit had been filed in Illinois in 2019 on behalf of sellers whose homes had appeared on one of 20 multiple listing services, or MLSes. That suit claimed the NAR, Anywhere Real Estate, HomeServices of America, RE/MAX Holdings and Keller Williams Realty forced them to overpay commissions to agents representing their homes’ buyers.
Joel Sherman’s 3 Things I Think: The Aarons vs. the Alexes
In the United States, the Sherman Antitrust Act of 1890 and subsequent legislation, such as the Clayton Act and the Federal Trade Commission Act, form the backbone of antitrust regulation. District Court’s summary judgment ruling that the National Association of Realtors (NAR) and Zillow did not commit antitrust violations in the lawsuit filed against them by REX Real Estate. “For now, the initial size of the damages alone will ensure major change,” said Redfin CEO Glenn Kelman in a blog post. “In the weeks leading up to the verdict, the National Association of Realtors already updated its guidelines to let agents list homes for sale that don’t offer a commission to the buyer’s agent.” Redfin is a defendant in the newly filed Gibson case. The verdict, along with a potential Justice Department investigation into real estate commissions, could bring permanent changes to the way buyers’ brokers are compensated—and potential savings for home sellers. The NAR requires that realtors join the association in order for homes they are selling to appear on an MLS.
Real estate associations, such as the National Association of REALTORS® (NAR), exert considerable influence on industry standards and ethical conduct. Under this rule, courts weigh the pro-competitive benefits of a restraint against its anti-competitive harms. The Rule of Reason is a flexible analytical framework used to evaluate the competitive effects of certain agreements. This section requires demonstrating not only that a company possesses monopoly power but also that it has willfully acquired or maintained that power through exclusionary conduct.
Why Competition Matters
Attorneys have reached nearly $1 billion in total aggregate settlements in the lawsuit for consumers. Throughout his career, Glass has been at the forefront of some of the most consequential legal battles involving antitrust and industry policies, MLS governance, listing data access, brokerage competition, and platform accountability. He has a rare insight into how the residential real estate industry is organized, how participants in that industry compete, and how rules and regulations impact that competition. Beyond criminal penalties, civil lawsuits allow victims of antitrust violations to seek damages.
Bid rigging involves competitors colluding to manipulate the bidding process, ensuring that a particular party wins. In real estate, bid rigging might occur during property auctions or development projects. Antitrust authorities closely monitor these activities to maintain a level playing field for all participants.
“Bringing Ethan Glass on board as our Chief Legal Officer reflects our unwavering commitment to seller choice and challenging these restrictive practices that limit when, where, and how homeowners can market their homes.” If their access policies discriminate against certain brokers or individuals, they might invite antitrust scrutiny. The trials and tribulations of MLS policies and challenges are beyond the scope of this post, but anyone involved in running or organizing an MLS should seek antitrust counsel because it is very easy to cross the line into anticompetitive territory. From active real estate and broker associations to collectively-run multiple-listing services, real-estate professionals, despite competing on a daily basis, work together all the time. This is how the Music Teachers National Association (MTNA) found themselves in hot water with the FTC.
Real Estate Commission Structure Found to Violate Antitrust Law
In August 2024, the DOJ and eight states (NC, CA, CO, CT, MN, OR, TN, WA) sued RealPage, a major vendor of revenue-management software used by large apartment owners and managers. If you suspect a sherman act real estate violation, you can report it to the Antitrust Division of the U.S. While MLS organizations are permitted to establish reasonable criteria for membership (such as licensing and adherence to ethical standards), overly restrictive rules can be seen as exclusionary and anti-competitive. “CREXi is attempting to build its own online commercial real estate marketplace and auction platform by free-riding on CoStar’s billions of dollars of investments and the thirty-plus years of hard work by CoStar’s employees,” the original suit alleges. Please note that sending an email to one of our lawyers or to our client services department does not create an attorney-client relationship.
- Real estate agents and brokers are on the front lines of property transactions.
- The tying claim failed under the Rule-of-Reason analysis because no evidence demonstrated that membership fees were exclusionary or that there was unreasonable restraint in trade.
- That ruling affirmed a lower court’s finding that Zillow and NAR did not conspire against REX because NAR’s “no-commingling rule,” which the trade group repealed in June, was optional.
- “At Compass, we firmly believe agents should not be fined by MLSs or banned by Zillow for marketing listings off their platforms and that no agent should be told by an MLS or Zillow how they must work with their clients,” said Compass Founder and CEO Robert Reffkin.
LEGAL CORNER: Antitrust Law, the Real Estate Market, and Recent Antitrust Decisions
The class-action case and its resulting reforms mark a turning point in how real estate commissions are structured. As Bankrate reported, commissions in the United States have traditionally been around 5 percent of a home’s sale price. This sort of entry happens quite often in markets, and it is not uncommon for existing competitors—who are rather happy about the current or traditional state of the market—to react with anticompetitive conduct. Instead of competing better for customers, the initial market players will instead compete against the new entrants. Over the years, lower-cost brokers and unique business models have entered most real-estate brokerage markets to challenge the traditional full-service brokerage model. According to the DOJ’s complaint, RealPage created a hub-and-spoke platform where competitors regularly contributed non-public data and, in return, received coordinated pricing recommendations.
U.S. v. National Association of Realtors
Home sellers had accused the trade group of forcing them make inflated payments to buyers’ brokers. In the meantime, home sellers may wish to use some extra caution when choosing a real estate agent. These lawsuits are a reminder that that the buyer’s agent and the listing agent are meant to be on opposite sides of the transaction. Also, if possible, it’s wise to find out the details of how your agent and the buyer’s agent are getting compensated. On April 9, 2024, plaintiffs in the real estate commission antitrust class action reached a new settlement with another defendant, The Real Brokerage Inc. The judge dismissed the case with prejudice, calling the allegations “bare and conclusory.” There were insufficient factual allegations showing an anticompetitive restraint under Section 1 or proof of monopoly under Section 2.
In this article, we will explore the key aspects of antitrust law as it relates to the real estate industry, shedding light on what professionals and stakeholders need to be aware of. District Judge Stephen R. Bough granted final approval to a $110 million settlement with real estate companies Compass, Real Brokerage, Realty One, @Properties, Douglas Elliman, Redfin, Engel & Völkers, Homesmart and United Real Estate. The ongoing litigation involves 43 defendants facing allegations of a widespread conspiracy to inflate buyer-broker commissions.