DOJ v. NAR: How Will This Affect Real Estate Agents?

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The following questions and answers are from HW + exclusive Slack Channel, where HousingWire’s Senior Real Estate Reporter Matthew Blake answered questions about his latest lighting the impact of the decision of the Ministry of Justice and how the industry prepares to respond. During a Q&A session, Blake discussed the implications of previous US Department of Justice investigations into the NAR and the conversations he had with senior agents about their thoughts on the news.

The following questions and answers have been slightly edited for clarity.

Housing wire: To start Department of Justice allowing itself to conduct a broader investigation of the NAR, a high-level conflict is brewing. How, if at all, does this practically affect the agents?

Matthew Blake: This is not some vague legal issue. The Justice Department has repeatedly stated, in overturning its agreement with the realtor’s trading group, that it is considering commissions. Many academics and antitrust lawyers, but not many agents, say that US real estate commissions are being artificially inflated by illegal horizontal collusion between NAR and brokerage firms. So, if the Justice Department believes this, they will look for ways to lower consumer fees.

In other words, it could affect the very economic model we know for agents, namely that they are independent contractors who make a living in commissions that can be 3% each of the total purchase price of a home.

Housing wire: Interesting guess. Based on this, do you consider NAR a monopoly?

Matthew Blake: I am not a lawyer, so I don’t know, but the usual understanding of monopoly is dominance in one area, and NAR is by far the dominant trade group for agents. But they represent not only the labor force, but also the management (brokerage companies). and claim to be working in the best interest of consumers. As such, they play a huge role in the American real estate market and, I would say, unique among trading groups. For antitrust purposes, however, the question is whether they are a monopoly that harms consumers, and this is where you get into full of controversy.

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