Real Estate Industry Faces Federal Antitrust Suit
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And I'm Melissa Block.
The Justice Department is cracking down on what it calls anti-competitive practices by real estate brokers. Today The Wall Street Journal reports that the US plans to file an antitrust suit against the National Association of Realtors. The government says the trade group allows its members to block the distribution of real estate listings to lower-cost competitors. As NPR's Jim Zarroli reports, the action is one of several being taken against the industry.
JIM ZARROLI reporting:
The case involves a bylaw that's been approved by the National Association of Realtors but hasn't yet taken effect. The bylaw would allow real estate brokers to block competitors from having access to information about their listings, the properties they're currently selling. US officials say that would stifle competition from some of the new Internet-based brokerage services, which often charge lower fees than traditional brokers. Justice Department officials would not address reports that they have decided to file suit. And Steve Cook, a spokesman for the group, said he knew nothing about any legal action.
Mr. STEVE COOK (Spokesman, National Association of Realtors): As far as we know, we're still in discussions with them. In fact, we have a meeting scheduled with their attorneys on Wednesday.
ZARROLI: The investigation is one of a series of moves taken by the Justice Department to stop what it sees as anti-competitive practices. In March, the department sued the Kentucky Real Estate Commission, which has passed a law barring brokers from giving rebates to customers. US officials also sent a letter to the Texas Real Estate Commission. The commission is considering a regulation that would require agents to provide a full range of services, in effect protecting traditional brokers. Aaron Farmer, who runs a discount brokerage company in Austin, says the regulation would make it harder for businesses like his, which offer no-frills services, to operate.
Mr. AARON FARMER (Real Estate Broker): They're saying that, `Oh, well, we're going to try to protect the consumers,' but there's no outcry. Where's the consumer outcry? No one's been harmed.
ZARROLI: US officials also are investigating allegations that brokers in Oklahoma were refusing to show their listings to customers of discount brokers. These moves are coming at a time when the traditional real estate brokerage business, in which agents take a 6 percent commission for selling a home, is breaking down. Tom Barnett is deputy assistant attorney general in the department's antitrust division.
Mr. TOM BARNETT (Deputy Assistant Attorney General, Justice Department): You would expect that new developments, new models that put pressure on them, cause more competition, cause them to lose business is something that they would resist. And from what we see, the traditional full-service brokers are resisting on a number of levels.
ZARROLI: But Steve Cook of the National Association of Realtors scoffs at the idea that the real estate industry is trying to thwart competition. He says his own organization has 1.2 million members and is growing fast, and he says the new discount brokers are a part of that.
Mr. COOK: I can't think of an industry that's more competitive. You know, anybody who's been involved in buying or selling property in America knows how competitive real estate agents and brokers are.
ZARROLI: Some industry officials complain that the federal government shouldn't be injecting itself into the real estate business, which has traditionally been regulated by the states. But the Justice Department's Tom Barnett disputes that.
Mr. BARNETT: Preserving competition is the fundamental federal policy of the United States government. That's what the antitrust division is charged with, and that's what we're trying to do here.
ZARROLI: All of this is occurring at a time when the real estate market is booming in much of the country. US officials say the industry made $60 billion in commissions last year, and that's driven the stakes in these battles especially high. Jim Zarroli, NPR News.