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The U.S. Department of Justice is going to be a “bigger problem” for brokers and agents than a multibillion-dollar verdict in an antitrust commission suit tried in October, National Association of Realtors President Kevin Sears warned agents.
Sears, who became the trade group’s president one month ago after Tracy Kasper resigned the post, spoke at the Crush It in Real Estate conference in Boston on Feb. 1. His appearance was captured on video by Jack Gately of the Online Real Estate Academy over the weekend.
Sears addressed a lawsuit known as Sitzer | Burnett which was originally filed in 2019 and won class-action status in April 2022. The suit alleges that some NAR rules — including one that requires listing brokers to offer buyer brokers a commission in order to list a property in a Realtor-affiliated multiple listing service — violate the Sherman Antitrust Act by inflating seller costs.
The Sitzer | Burnett trial ended with the jury finding that NAR, Keller Williams, RE/MAX, Anywhere, HomeServices and two of its subsidiaries, BHH Affiliates and HSF Affiliates, conspired to inflate broker commission rates paid by homesellers. The jury awarded $1.78 billion in damages to a class of approximately 500,000 Missouri homeowners. If that award stands, it would be trebled by law to more than $5.3 billion.
“The jury found that we were guilty,” Sears told event attendees.
“At the end of the day, even though our policy and what we do is right, being a sports guy, all you have to do is look at the scoreboard: We lost.”
In his video commenting on Sears’ appearance, Gately said that Sears’ admission of NAR’s loss was “refreshing” and “you could hear a pin drop at this point” among the crowd of hundreds of real estate agents.
Sears went on to say that NAR is appealing the multibillion-dollar Sitzer | Burnett verdict, but “the bigger problem” for the industry is the DOJ.
“We’ve been in their crosshairs for as long as I’ve been involved at the National Association of Realtors,” Sears said.
“We had a settlement with them in 2020. In 2021, they reneged on the deal. We sued them and we won in court. So they’re pissed off at us, I mean, just candidly.”
An appellate court in Washington, D.C. is currently weighing whether or not, over NAR’s objections, the DOJ will be able to reopen an investigation into the commission rule at issue in Sitzer | Burnett and in ever-multiplying lawsuits across the country.
Sears also referenced a proposed settlement in a similar antitrust lawsuit lodged, not against NAR, but against broker-owned multiple listing service MLS PIN. The MLS reached a deal in that case — known as Nosalek — with the plaintiffs, but the DOJ has expressed unspecified “concerns” about the deal. The federal agency has until Feb. 15 to file a statement of interest in the case before the court decides whether to preliminarily approve the settlement.
Notably, the DOJ has not intervened, at least so far, in proposed settlements by Anywhere, RE/MAX and Keller Williams in the Sitzer | Burnett case and other commission cases nationwide. Unlike NAR and MLS PIN, the franchisors are not the parties responsible for any potential changes to the rules at issue.
Sears mentioned the DOJ’s review of the proposed Nosalek settlement and said, “The reason I’ve spoken so much about this is because the way that we operate our business is going to change. It is going to change whether we embrace it and adapt, or it’s going to be forced down our throats.”
Sears noted that he is a practitioner himself and had a closing the previous week. “It was the very first time I used a buyer representation contract because the change, it’s happening,” Sears said.
He said he pointed out to his client that compensation from the listing broker was posted in the MLS, but also told the client, “‘I never understood why it was up to the seller or the other broker, what I’m worth. This is what I’m worth and you’re agreeing that if the compensation isn’t offered to equal that, you’ll match it’ and my client said, ‘Kevin, that makes perfect sense.’ Because I went through everything that we were going to do in the transaction. [There are] 180 steps in a typical transaction on the buy side.”
Inman asked NAR how the DOJ is a bigger problem than the Sitzer | Burnett verdict, whether Sears intends to imply that the DOJ’s attention on NAR goes beyond its duty to enforce antitrust laws and how NAR expects the way Realtors operate their businesses will change. NAR did not respond. We will update this story if a response is provided.
Watch Sears talk about the Sitzer/Burnett verdict and the DOJ at the event:
(Video courtesy of Jack Gately)
Editor’s note: This story has been updated with additional quotes and a video clip from Sears’ appearance at the conference.
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