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SALT LAKE CITY — Utah-based real estate innovator Homie just launched the latest salvo against America's largest trade association, filing an antitrust complaint against the National Association of Realtors in federal court in Salt Lake City on Thursday.
The practices of the National Association of Realtors have been under closer scrutiny over the past few years amid a barrage of lawsuits, some of which led to a landmark $418 million settlement earlier this year along with changes to commission practices that guide the conduct of its 1.5 million members, mostly comprised of real estate agents and brokers.
Adding to the group's woes, an antitrust investigation focused on the association by the U.S. Department of Justice that was closed under an agreement struck in late 2020 was reopened earlier this year after a federal court denied an appeal effort by the trade group.
In the March 2024 out-of-court settlement, which is scheduled for final approval in November, the association agreed to pay hundreds of millions in damages to consumers and change a rule that previously made home sellers automatically responsible for paying the commissions of both their agent and the buyer's agent at the close of a sale. Under the new terms, seller's agents will no longer be allowed to include buyer agent's commission rates in their listings and home buyers who choose agent representation for their transactions will need to negotiate service fees on their own.
While agreeing to the settlement terms, the National Association of Realtors has disputed the premise that commission fees for real estate transactions were preset before a listing could be published.
"NAR does not set commissions, and commissions were negotiable long before this settlement," the association said in a March statement. "They are and will remain entirely negotiable between brokers and their clients."
But Homie, a tech startup launched in 2015 with a business model that provides flat-fee services for home sellers along with other products and services, believes that changes wrought in the settlement do not go far enough to address broader association policy and conduct which the Sandy-based company contends are unfair and illegal.
"The whole reason why we're suing is the NAR has worked to artificially inflate commissions and been engaged in anticompetitive practices since we started (Homie)," said Homie co-founder Johnny Hanna.
Hanna said one of the practices that has impacted Homie's business is realtor member agents and brokers steering prospective buyers away from homes listed by Homie due to the perception that buyer agents will be paid a lower commission on transactions involving homes listed by his company. It's a move, he said, that harms sellers and buyers alike and has led to lost business for Homie.
In Thursday's filing, Homie claims the realtors association, along with additional defendants that include some national real estate firms, conspired to exclude companies that were embracing new models and lower-cost real estate services to maintain the high fees of their own legacy business structures.
"Defendants' conspiracy involved the creation of a market structure that facilitated boycotts of new entrants, such as Homie, by incumbent real estate brokerages," the lawsuit reads. "NAR allowed brokers representing home sellers and home buyers to use NAR's MLS (multiple listing service) only if those brokers agreed to adhere to and help implement terms that significantly restrain competition. Thus, innovative entrants, seeking to compete on price and other terms of service attractive to home sellers or home buyers, have been stymied by traditional real estate brokers who acted in concert through the MLS to promulgate a web of rules and practices that created substantial barriers to competition."
The National Association of Realtors did not immediately respond to a Deseret News request for comment on the lawsuit.
Hanna said the rule change the realtor association agreed to in the settlement earlier this year addresses one aspect of unfair practices promoted by the association, but he believes the new rules will be skirted and the practice of presetting commissions will continue but occur off the association's listing sites, most of which are controlled by the National Association of Realtors.
Hanna also noted Homie has been sharing evidence of what it perceives as unfair practices with the Department of Justice since the company's early days and that issues under investigation by the agency reflect the very conduct that's allowed the association to box out businesses that are taking a new and lower-cost approach to mediating real estate transactions.
