Consumer Advocates Speak Out on Court Decision on Real Estate Consolidation

Advocate Andy

Advocates say opinion limits consumer redress against large real estate firms

Advocates with the Consumer Federation of America (CFA) are lamenting a decision by a U.S. District Court that they say will be harmful to consumers in the real estate market.

The pro-consumer group had hoped a settlement in a case brought against the National Association of Realtors (NAR) would have given the U.S. Department of Justice more power to investigate anti-competitive practices that keep real estate commissions artificially high. Further, current law offers little recourse to homebuyers in a market dominated by a few consolidated firms.

According to Stephen Brobeck, a research fellow with the CFA, consumers lose billions of dollars a year due to inflated real estate commissions. The decision in the case against the large realtors group allows these practices to continue.

“The court’s decision will limit DOJ’s ability to investigate anti-competitive industry policies costing consumers billions of dollars annually<" said Brobeck. "These policies are related to the inability of home buyers to negotiate buyer agent commissions that are directly paid by listing agents and their seller clients. Multiple listing services require listing agents to offer non-negotiable commissions to buyer agents in MLS home listings, which helps explain why research has shown that commissions are high and relatively uniform. The reform of this anti-competitive policy must now come from courts in Illinois and Missouri that are deciding class action lawsuits against NAR and many large real estate firms.”

With no federal judicial relief in sight, Brobeck noted that the best hope for consumers now rests in state courts.

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Andy Spears is a middle Tennessee writer and policy advocate. He reports on news around public policy issues - education, health care, consumer protection, and more.

Nashville, TN

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