NAR reaches agreement with Department of Justice

Will Mendelson Leave a comment

After being sued by the Department of Justice on Nov. 19, NAR reached an agreement later that day with the U.S. Department of Justice to create rules that more explicitly lay out the intent of NAR’s Code of Ethics and MLS policies regarding commissions and MLS participation. 

Before reaching the agreement, the Department of Justice filed a lawsuit against the National Association of Realtors, alleging that the organization violates antitrust law, including commission arrangements and consumer disclosure requirements. 

In the lawsuit, the federal government alleges that NAR has adopted a “series of rules, policies, and practices governing, among other things, the publication and marketing of real estate, real estate broker commissions, as well as real estate broker access to lockboxes, that have been widely adopted by NAR’s members resulting in a lessening of competition among real estate brokers to the detriment of American home buyers,” the DOJ said in a press release on Nov. 19.

Specifically, the DOJ alleges that NAR violated the Sherman Act and “restrained” free trade in the following by:

  • “prohibiting NAR-affiliated multiple-listing services (“MLSs”) from disclosing to prospective buyers the amount of commission that the buyer broker will earn if the buyer purchases a home listed on the MLS;
  • allowing buyer brokers to misrepresent to buyers that a buyer broker’s services are free;
  • enabling buyer brokers to filter MLS listings based on the level of buyer broker commissions offered and to exclude homes with lower commissions from consideration by potential home buyers;
  • limiting access to the lockboxes that provide licensed brokers with physical access to a home that is for sale to only brokers who are members of a NAR-affiliated MLS.“

These practices have been largely adopted by NAR-affiliated MLS networks. The complaint alleges that, “Therefore, agreements among competing real estate brokers each of which reduce price competition among brokers and lead to lower quality service for American home buyers and sellers.”

NAR VP of Communications, in a statement emailed to Chicago Agent, said its rules and policies “have long sought to ensure fair and competitive real estate markets for home buyers and sellers. In response to questions from the DOJ, we have been working to explain our rules. We have reached an agreement that fully resolves the questions raised by the DOJ about the MLS system and commissions. Most of the changes seek to more explicitly state what is already the spirit and intent of NAR’s Code of Ethics and MLS Policies regarding providing information about commissions and MLS participation. We’re proud to be associated with the MLS system that puts consumers first and benefits home buyers, sellers and small business brokerages, and is constantly building upon these principles. While NAR disagrees with the DOJ’s characterization of our rules and policies, and NAR admits no liability, wrongdoing or truth of any allegations by the DOJ, we have agreed to make certain changes to the Code of Ethics and MLS Policies while we remain focused on supporting our members as they preserve, protect and advance the American dream of homeownership.”

See also: updates on the buyer-side lawsuit against NAR.

Full House: Pandemic buyers want room for multi-generations

Kerrie Kennedy Leave a comment

It’s only been eight months, but the coronavirus pandemic has already drastically altered homebuyer behavior and choices, according to a new report from the National Association of Realtors.

Among the findings in NAR’s recent Profile of Home Buyers and Sellers report, buyers who completed their transaction after the pandemic began in March were more likely to purchase a multi-generational home.

The U.S. Census Bureau defines multigenerational families as those consisting of more than two generations living under the same roof. Many researchers also include households with a grandparent and at least one other generation.

Multigenerational home purchases accounted for 15% of sales after March, versus 11% before.

In addition, buyers who purchased after March (when the pandemic began) were more likely to relocate to the suburbs and were more likely to pay more for that home – regardless of its location – paying an average of $339,400 compared to $270,000 for those who purchased before April.

Not surprisingly, this group also had higher household incomes – $100,800 compared to $94,400 for pre-pandemic buyers.

Among NAR’s findings, those who bought a home during the pandemic are expected to remain there for 10 years. That is compared to 15 years for those who purchased prior to the COVID-19 outbreak.

“The coronavirus without a doubt led home buyers to reassess their housing situations and even reconsider home sizes and destinations,” said NAR Vice President of Demographics and Behavioral Insights Jessica Lautz in the report.

“Buyers sought housing with more rooms, more square footage and more yard space, as they may have desired a home office or home gym,” she added. “They also shopped for larger homes because extra space would allow households to better accommodate older adult relatives or young adults that are now living within the residence.”

The survey also evaluated seller behavior prior to and after the pandemic began.

Like buyers, pandemic sellers cited a desire to be close to family and friends as the top reason to sell, especially among those moving large distances.

Another takeaway was the sense of urgency sellers were feeling. Owners who sold in 2020 were more likely to say that their need to sell was “at least somewhat urgent.” Those who closed in April or later were more likely to sell because their home was too small – 18% compared to 13% of those before April.

“So many sellers were eager to get out of their old home and move to something bigger that would better meet their needs during quarantine,” Lautz said.

With lockdowns in place, sellers who sold after March were more likely to use technology as a marketing tool. They were also more likely to use virtual tours — 27% after March compared to 16% pre-pandemic.  

Pandemic buyers turned to technology as well: 97% of pandemic buyers searched for their homes online, up from 93% a year ago. The time spent looking for a home declined to eight weeks from 10, the shortest search since 2007.

“Some buyers purchased their homes before ever physically seeing them in person,” said Lautz. “They researched, viewed photos online and did virtual tours from their computers and phones, and ultimately made an offer through their agent.”

According to the report, 88% percent of pandemic buyers reported using an agent to purchase their home, a near historical high. More than half of buyers found their agent through a referral or said they had used the agent in the past.

“We are all in unknown territory with this pandemic, so it’s no surprise that more buyers than ever turned to agents to help them navigate through some of the uncertainties and one of the most complex, competitive markets any of us have ever seen,” said NAR President Vince Malta in the report.