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How Did the NAR Lawsuit Change the Real Estate Industry?

Throughout real estate history, the National Association of Realtors has fought for the rights of homebuyers and realtors to work together. However, a class action lawsuit named NAR as a defendant in the lawsuit. This has led to a change in how the association conducts its business. A new policy and training program has been created that is consumer friendly.

NAR Agrees to Adopt Antitrust Compliance Training Programs

The Department of Justice has challenged several policies and practices implemented by the National Association of Realtors (NAR). According to the Department of Justice, NAR’s challenged rules hindered real estate competition and increased home buyers’ prices.

In 2005, the DOJ filed a NAR Lawsuit to resolve the department’s concerns. The Complaint and the proposed Final Judgment address several issues, including how NAR can ensure that its affiliate MLSs adopt the most effective practices, how to eliminate practices that harm consumers, and how to promote compliance.

To address the alleged anti-competitive effects of the complaint, the proposed Final Judgment requires that NAR adopt an Antitrust Compliance Officer, conduct annual briefings with management on the proposed Final Judgment, adopt antitrust compliance training programs, and notify MLS Participants of their rights and responsibilities.

NAR Policy is Consumer Friendly

The National Association of Realtors (NAR) has announced a new policy. It is a “consumer friendly” measure that aims to make the home buying and selling process more transparent.

NAR’s new rule prevents brokers from helping DIY sellers sell their homes without paying commissions. Brokers can be fined for doing this.

Besides the obvious reason for keeping the consumer safe from a do-it-yourself scam, the policy is intended to keep consumers informed. Previously, consumers could not know if they were paying their broker a commission or paying a “do it yourself” fee.

In the wake of the recent developments in online marketing and the rise of listing searches, the NAR has decided to change its policies. One of the changes will require MLSs to disclose the offering of compensation to buyer agents and is likely the first step toward making real estate more transparent.

Class Action Lawsuits Name NAR as a Defendant

The National Association of Realtors, a trade group of real estate professionals, is the target of a class action lawsuit. It is accused of violating antitrust laws by conspiring with brokerage firms to charge home buyers excessive commissions.

NAR is a trade organization with over 1.4 million members. It regulates multiple listing services, or MLSs, which are the databases that house properties for sale in a specific area.

According to the United States Department of Justice, NAR’s practices violate antitrust laws. It is accused of fixing commissions to increase prices and inflate sellers’ costs.

NAR is one of the targets of a class action lawsuit covering all residential real estate buyers since 1996. The lawsuit is based on a NAR rule that requires the seller to set aside a portion of the purchase price to cover buyer agent commissions. According to the complaint, the NAR rule has inflated the cost of homes while driving discounters out of the market.

NAR’s MLS Rules Prohibit the Sharing of Compensation

So will realtors become extinct? This won’t take place if a professional realtor is able to collaborate with the seller and the buyer to handle any and all concerns, which makes them excellent at what they do, and of course, if they follow government real estate rules. 

The National Association of Realtors (NAR) has a policy on compensation. The Code of Ethics requires that all NAR members adhere to these rules.

The NAR Code of Ethics prohibits real estate brokers from taking any action that would result in a buyer agent being paid less than the full commission rate. This includes negotiating or negotiating on behalf of a buyer agent.

A buyer broker’s fees are ultimately paid out of the home’s purchase price. To avoid receiving the full commission, a buyer broker can filter out listings that have commissions that are less than a certain percentage.

The National Association of Realtors and affiliated MLSs enforce these rules to reduce the competition for real estate listings. According to the DOJ, these rules violate Section 1 of the Sherman Act because they “unreasonably restrain trade.”

The DOJ claims that the NAR’s Free-Service Rule, which prohibits MLS participants from representing brokerage services as free, is anti-competitive. It also can lead to higher prices for buyer broker services.


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