Feds plan antitrust suit over real-estate listings

WASHINGTON — In a widening push to promote price competition in sales of residential real estate, government antitrust enforcers are preparing to sue the National Association of Realtors, alleging that its policies will illegally restrict discounting of sales commissions and put online competitors at a disadvantage.

The move, the latest effort by the Justice Department and the Federal Trade Commission aimed at protecting buyers and sellers of homes, could help take some of the sting from high real-estate costs. It comes as a hot housing market has caused prices to surge, sharply boosting income for brokers and sales agents, whose commissions typically amount to 5 percent to 6 percent of the sale price.

Last year, sales of new and previously occupied homes totaled nearly eight million units, and commissions amounted to $61 billion, up from $42.6 billion in 2000, according to estimates by industry publication Real Trends. The median sale price for an existing home was $188,833 for the first quarter of 2005, up 41 percent from the same quarter of 2000 and 80 percent from that period in 1995, according to Thomson Datastream.

The Justice Department is expected to charge that the NAR, in a proposed 2003 bylaw, illegally adopted practices intended to stifle Internet-based rivals and discounters, according to lawyers close to the case. These competitors often charge commissions below the traditional 6 percent that is divided between buying and selling agents.

The NAR bylaw would allow its more than 1.2 million members to withhold their property listings from online brokers if they chose to do so. The date for it to take effect, which has been pushed back several times because of discussions with the Justice Department, now is this July. The NAR is the nation’s largest trade group for brokerage firms, agents and others involved in selling real estate.

The government is also targeting industry-backed efforts to get state legislatures and real-estate boards, which set licensing standards, to enact regulations that in effect protect full-service real-estate agents and their commissions. Some brokers offer fixed fee-for-service, or menu, pricing that can lower consumers’ costs, and others rebate a portion of the commission.

The Justice Department and the FTC have warned several states in recent months that such laws hamper innovation and competition, and have formally objected to industry-supported proposals in Oklahoma and Texas.

The Justice Department last month sued a Kentucky state agency that sought to restrict rebate payments to customers by residential-real-estate agents and brokers. In a complaint filed in U.S. District Court in Louisville, the U.S. charged that the five-member Kentucky Real Estate Commission illegally conspired to impose and enforce the rebate ban in order to fix commissions and deprive consumers of price competition by brokers.

The commission’s executive director declined to comment on the suit. The NAR said the federal agencies are simply “lobbying on behalf of limited-service brokers” and improperly interfering in a largely state-regulated industry.

The government’s legal assault comes as NAR members struggle with competition from discounters, especially those using Web sites to attract customers with online listing information that used to be tightly controlled by local real-estate agents. The controversy is expected to be the hot topic at a convention of the politically powerful Realtors’ association, which meets in Washington this week and is scheduled to be addressed by President Bush.