In Case You Were Unclear What the US Government Thinks of NAR…

It’s Friday afternoon, and posting has been very light as I’ve been non-stop traveling. But I wanted to get this out because it came up in conversation earlier today with an MLS executive, and thought that many of you probably were wondering the same thing.

In light of yet another intervention in a private lawsuit by the Department of Justice, this time in the REX v. Zillow case, a few things should be clearer.

One, the Department of Justice really doesn’t like it when NAR uses the 2008 Consent Decree as any kind of a shield for any kind of a rule. NAR has done this in Moehrl, in Sitzer, and now in REX and in all three instances, the DOJ went out of its way to file a Statement of Interest telling the judge that the DOJ in no way shape or form approved any NAR rule or policy.

Note further that the DOJ did this in both the supposedly free-market Trump Administration and its supposed antithesis the Biden Administration. Political winds do not change the DOJ’s institutional dislike of having the Consent Decree used to justify anything that NAR does.

Two, the continued insistence in these filings that the DOJ never analyzed NAR’s rules or policies for antitrust compliance is… meaningful.

Contrary to NAR’s argument, therefore, those other policies, including the supposedly similar search policy that appears in an attachment to the 2008 consent decree as part of NAR’s IDX Policy, were in no sense analyzed and found consistent with antitrust laws. (Statement of Interest, p. 4)

It’s meaningful because it signals that the FTC intends to engage in some kind of a full-court press investigation against NAR and its rules… especially as the FTC was ordered by the President to do exactly that in a recent Executive Order.

Expect the investigation to commence soon. Expect it to be invasive and intrusive. And expect hearings not just on the rules being questioned by the likes of Moehrl, Sitzer, Leeder and REX but on all NAR rules. I don’t think anything is safe now, including things like MLS of Choice, REALTOR-only MLS, Principal REALTOR rule, etc. etc. No rule is safe.

That’s my take on what’s headed our way, which I wrote about in DOJ Ends the Armistice, Part 2: The Big Guns – Regulation.

And three, in case you were unclear about how the United States of America felt about the National Association of REALTORS, it has now made those feelings clear through the Department of Justice. That feeling can be summarized by this epic speech from Pulp Fiction:

“You will know my name is The Lord when I lay my vengeance upon thee.”

This laying down of vengeance is inevitable because the Government, like Yahweh of the Old Testament, is a jealous god. It will not tolerate a separate power that claims to govern and rule over an industry as important as housing and real estate. And it will especially not tolerate a separate power that resists the Will of the Almighty Government, as NAR has done recently. I have no proof or evidence, but my feeling is that some of the career lawyers and regulators at the DOJ and the FTC are kinda like, “Just who the hell do these REALTORS think they are?” and will seek to make an example out of upstarts like NAR pour encourager les autres.

There is a part of me — the lawyer part that enjoys the competitive aspects of lawfare — that finds the spectacle fascinating. The second most powerful lobby on Capitol Hill going up against the DOJ and the FTC over the question of Who Shall Rule the real estate industry is a battle for the ages. Now we get to see if the REALTOR Party really has some muscle or if it was all an emperor’s new clothes situation.

-rsh

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Rob Hahn

Rob Hahn

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

3 thoughts on “In Case You Were Unclear What the US Government Thinks of NAR…”

  1. You have not responded to past comments which I understand but you can be fairly certain the case information in DOJ hands goes well beyond mere price fixing of commissions . so hang in there and if you truly do not all ready know the answers maybe someday you will.

  2. My money is on AAG Richard Powers and his antitrust division….and not just because we share the same last name. FTC Chair Khan is smart & a bad a$s too.

    NAR deserves everything coming to them. I hope they all get deposed and discovery docs become available to the public. Pass the popcorn. *Before* the 1st antitrust lawsuit I wrote an email to Katie Johnson, Bob Goldberg, and Katie Lawton in Nov. of 2018:

    “….NAR should start to notice before the government does. I watched the FTC competition hearings last month.”

    In same email:
    “ When a town like mine has 89% of it’s listings at the same commission rate over a 2 year period, is this good for the consumer? Are agents *really* competing then? This is where non-competes really come into play— controlling the agent/employee=controlling the price ”

    And I wrote more…
    “Is this considered price fixing via the control of the agent by the brokerage via employment contract”

    I now know antitrust is complicated (and I don’t claim to be an expert). I also know that agents and or RE employees shouldn’t have to move, retire, or change industries due to an over reaching controlling broker because the RE industry is so competitive. In some cases, it’s easier to leave a bad relationship than a bad brokerage. The number of tortious interference suits in the RE industry is distrusting, disturbing, and leaders should be embarrassed and ashamed for trying to lock down independent contractors. It’s one big pissing match of sour losers who are also likely poaching unethically. Same bad players crying foul but also recruiting unethically. More people need to talk about these issues. Competitors lose when the real estate market is not a free and open market. Antitrust issues can impact both consumers and the competition. I also know these antitrust suits are consumer driven because the buyer commissions are coupled with the sellers’ commissions in the listing contract. Since I wrote the 2018 email many more states have also passed non-compete laws and the FTC is considering a federal non-compete ban.

    Here’s my take: Instead of innovating, NAR became greedy, controlling, and excluded vendors who were not willing to play by their rules. Newsflash to NAR: they are not a regulatory agency. They are not FINRA. But they certainly behave like a cartel…..

    I really hope Katie Johnson has to work nights and weekends with all of these antitrust suits:). If she and Bob Goldberg had maybe just listened to a third of what I was wrote to them. Instead I got arbitration paperwork from Katie; but she got MOEHRL vs NAR and more suits 4 months after my email.

    NAR doesn’t care about agents. Otherwise they would have never let the reputation of the industry go to shit. They only care about collecting *more* dues. How many ads are there on LinkedIn, Indeed, etc for recruiting more RE agents and dangling the potential for six figure commissions? There are over 20k ads on just LinkedIn. The industry doesn’t need more untrained new agents to make the reputation worse. Top agents should refuse to pay dues. NAR’s greed has ruined the reputation for every hard-working agent out there doing 80% of the business. Brokerages would never let go/fire their top 20% producing agents for refusing to pay dues. The agents keep the lights on…it’s a cost for services industry. After all, NAR dues should be optional not mandatory. Who does NAR think they are demanding 1099s to pay dues to get on MLSs owned by Realtor boards? Sure sounds like a cartel to me. Slay Richard Powers and DOJ, NAR is their own worst enemy.

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