On Wednesday a federal judge said the Justice Department must honor an agreement it made with the real-estate industry’s largest trade association to close an antitrust investigation.
The Justice Department investigated whether a lack of transparency to buyers around the roughly 5% to 6% commission rate for agents had caused artificially high transaction costs, despite disruptive forces such as the proliferation of online listings and venture capital-funded startups. In nearly every residential real estate transaction in the U.S. the buyers’ agents are paid by the home seller and not directly by the buyer.
In November 2020, the Justice Department reached a settlement with the National Association of Realtors, which agreed to help provide more transparency to buyers about commissions and prevent agents from marketing their services as free to buyers.
Months after President Biden took office, the administration withdrew from the settlement, saying it didn’t adequately protect the Justice Department’s right to investigate other conduct by the trade group that could affect competition and harm home buyers and sellers.
The National Association of Realtors went to court and asked a judge to prohibit the department’s antitrust division from reopening its investigation of industry practices that it had agreed to close as part of the settlement. U.S. District Judge Judge Timothy J. Kelly in Washington granted that request Wednesday.
“The government, like any party, must be held to the terms of its settlement agreements, whether or not a new administration likes those agreements,” Judge Kelly wrote.