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Missouri lawsuit over Realtor fees in home sales draws Justice Department’s interest

Lawyers in the Justice Department’s antitrust division are taking a keen interest in a Missouri class action lawsuit that alleges a conspiracy among national real estate brokers to charge inflated fees, noting in a filing this week that it is investigating the matter.

A pair of Kansas City law firms earlier this year sued major residential real estate brokerage firms on behalf of Missourians who sold a house since April 2015, arguing that common practices among real estate agents stifle competition and harm owners.

Specifically, the lawsuit took aim at requirements that seller’s pay the buyer’s broker a commission, often an amount at or around 6% of the sale price of a house. It also accuses brokerage firms of charging inflated commissions more generally.

The lawsuit also challenges multiple listing services, which are databases of houses that are bought and sold and only accessible to buyers and sellers represented by real estate agents. Those agents have to follow National Association of Realtors rules, including the agreement that sellers pay commissions of a buyer’s agent.

The Missouri lawsuit is similar to one filed in Illinois that some observers have said could put the business model of residential real estate brokerages at risk.

The NAR, a trade group for real estate brokers, filed a motion to dismiss the lawsuit. The NAR claimed in part that the Justice Department had given its blessing to the rules that limit access to multiple listing services when the two parties resolved a dispute in 2008.

The Justice Department on Monday, in a rare filing of its type in a civil case, said the NAR had inaccurately portrayed the 2008 settlement.

A spokesperson for the NAR did not return a message seeking comment on the matter.

“It cannot be overstated how damaging this is to the NAR’s credibility with the court,” said Brandon Boulware, a Kansas City attorney representing plaintiffs against NAR and other brokerage houses.

A footnote in that filing acknowledged that the Justice Department had issued a civil investigative demand — an official request for records or information in an investigation — relating to an investigation into residential real estate brokerages.

The footnote did not specify the precise nature of the demand, but the Justice Department does not usually disclose the existence of its investigations.

The Justice Department’s interest in the case, as well as its initial steps taken to investigate the matter, suggests that it’s watching the Missouri case closely.

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