In documents filed Monday, the Department of Justice acknowledged for the first time that it sent a civil investigative demand to CoreLogic relating to a probe into unidentified residential real estate brokerages, an indication that the scope of its inquiry is larger than previously known.
The statement of interest was first reported by Law360, a legal trade publication, which cited a source close to the inquiry saying that the investigation is likely not limited to just one company. It’s part of one of two class-action lawsuits alleging that the sharing of a commission between the listing and buyer broker violates the Sherman Antitrust Act by inflating seller costs.
“Although the United States generally does not comment on the existence or non-existence of pending investigations, it acknowledges that a Civil Investigative Demand relating to an investigation of residential real estate brokerages was published in a trade publication,” the filing reads. “The focus and scope of that investigation, however, have not been publicly disclosed.”
In the civil investigation the Department of Justice demanded CoreLogic turn over a bevy of information, including all documents relating to any members’ ability to search based on compensation offered by listing brokers to buyers’ brokers. It also requested documents related to any policy or language governing the licensing of MLS data, policies relating to data protection and destruction and datasets on the frequency of searches.
In the document, filed in the Western District of Missouri as part of the class-action lawsuit filed by Joshua Sitzer and other plaintiffs, the Department of Justice does not take a position on the lawsuit but seeks to correct what it calls an “inaccurate portrayal” of the 2008 consent decree by the National Association of Realtors (NAR). As a result of the consent decree, NAR said its affiliated multiple listing services would not discriminate against or impede the operations of brokers using virtual office websites to deliver brokerage services to customers.
According to the filing, NAR makes two references to the consent decree. It alleges that the consent decree authorizes NAR to “limit membership in an MLS to persons who make offers of cooperation and compensation to other members of the MLS,” the filing reads.
According to the filing, NAR also asserts that other attacks on the rules governing MLSs have been rejected because courts have recognized the efficiency and consumer benefits provided by multiple listing services. The statement then cites the consent decree, noting that NAR is permitted to make MLS membership contingent on a broker’s agreement to actively endeavor, or make and accept offers of cooperation and compensation.
The Department of Justice believes NAR is inaccurately portraying the consent decree in the filing.
“The consent decree resolved the United States’ antitrust claims against NAR for its exclusionary policies targeting brokers using innovative platforms,” the filing reads. “In that case, the United States did not examine the rest of NAR’s policies, including those at issue here, and therefore those policies simply were not subjected to antitrust scrutiny. Importantly, those other policies were in no sense analyzed and found consistent with antitrust laws.”
While the two class-action lawsuits are litigated in court, multiple listing services and brokerages are beginning to take it upon themselves to make buyer’s broker commission more transparent. Starting Tuesday, a Northwest MLS rule change will soon allow 30,000 agent and brokers in the Seattle area to publish the amount of commission sellers offer a buyer’s broker on their websites and Redfin has already said it will follow suit.
Neither Jack Bierig, the lawyer representing NAR, nor NAR immediately responded to a request for comment.
Read the entire filing below: