The U.S. Department of Justice (DOJ) on Sunday published an opinion that may impact this week’s settlement agreement calling for the National Association of Realtors (NAR) and HomeServices of America to pay nearly $700 million to settle a class action lawsuit with a group of home sellers.
The class action suit challenged the longstanding practice of unilateral compensation to buyer brokers of 2.5% to 3% of the cost of a home being purchased. It is a fee that many prospective homebuyers didn’t realize was negotiable. The suit maintained that this practice raised the cost of buying a home and had to be paid, no matter the quality of services or whether the homebuyer was willing to pay for such services at all.
The DOJ did not speak directly to the settlement agreement, but instead spoke to provisions in the agreement, including requiring buyers and their brokers to enter a “written agreement before the buyer tours any home.” DOJ officials say the provision raises independent concerns under the antitrust laws, which could be addressed by the elimination of the provision, or that the settlement does not create any immunity or defense under antitrust laws.
The DOJ says that such agreements closely resemble prior restrictions among competitors that courts have found to violate the antitrust laws in other proceedings. These agreements could limit and not enhance competition for buyers among buyer brokers.