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July 19, 2024
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DOJ ‘formal inquiry’ delays release of C.A.R. forms

The California Association of Realtors informed members that the DOJ expressed concern over new forms related to the NAR settlement and MLS practices.

The Department of Justice continues to bear down on the real estate industry, from its ongoing push to reopen an investigation into NAR, to legal filings in cases involving NAR, REX and Zillow and MLS PIN

That scrutiny has extended to MLS operations, with the California Association of Realtors notifying members today that the organization is delaying its planned release of 21 forms following a “formal inquiry” from the DOJ.

What are the forms related to? In accordance with NAR policy changes taking effect August 17 — notably, the requirement that MLSs remove offer of compensation fields from their platforms — MLSs have been working to update their systems, forms and member resources. C.A.R., the nation’s second largest association, said it releases new and revised forms each June, and this year, 21 of the 67 forms expected to be released on June 25 were related to the NAR settlement and its impact on MLS practices.  

Why is the DOJ interested? The DOJ has been critical of NAR rules and policies, and argued in the MLS PIN case that policy changes don’t go far enough to eliminate anticompetitive practices. The agency suggested that rules should prohibit sellers from offering any compensation to buyer agents — something that neither the MLS PIN nor NAR settlements require. While MLSs will no longer be allowed to display offers of compensation for a listing, sellers can include concessions, in some cases specifically earmarking funds for buyer agent compensation

If the forms in question allow listing brokers and buyer brokers to share commission information that ultimately results in an offer of compensation, that would likely invite the attention of the DOJ, suggested an industry expert who asked not to be identified. 

In its statement of interest in the MLS PIN case, the DOJ voiced clear objections to commission sharing: “As long as sellers can make buyer-broker commission offers, they will continue to offer ‘customary’ commissions out of fear that buyer brokers will direct buyers away from listings with lower commissions — a well-documented phenomenon known as steering. When sellers make such offers, buyer brokers need not compete on price to attract buyers.”

C.A.R. did not indicate what concerns were raised by the DOJ, but the organization is delaying the release of the 21 forms as it continues “to review not just the NAR settlement but also Department of Justice (DOJ) statements to the industry” and the agency’s specific inquiry into the forms.

What C.A.R. had to say: In the post and email to members, C.A.R. President Melanie Barker wrote, “We are in the midst of significant changes within our industry and, as such, there will be times when we have to adjust our plans, our timeframes, and even our expectations.”

Real Estate News has reached out to C.A.R. for comment.

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