Department of Justice Sticks its Foot in the Door of the 9th Circuit to Argue Against Buyer Agent Commissions

By: Trey Van Dyke (3L) and D. Keith Dunnagan, Esq.

March 28, 2023

On March 10, 2023, the Department of Justice (DOJ) filed an amicus brief in the 9th Circuit Court of Appeals case Top Agent Network (TAN) v. National Association of Realtors (NAR), weighing in on an antitrust lawsuit against the real estate industry’s largest trade group. The District Court for the Northern District of California (located in San Francisco) dismissed the case with prejudice, meaning District Judge Vince Chhabria would not allow TAN to amend their complaint and start anew. Judge Chhabria commented, “[i]t may well be that NAR’s policy has anticompetitive effects. But it is not anticompetitive to the extent that it prevents members of an exclusive listing service like TAN from concealing listings from NAR’s subscribers while simultaneously benefitting from access to NAR’s service.” Top Agent Network, Inc. v. Nat’l Ass’n of Realtors, 554 F. Supp. 3d 1024, 1026 (N.D. Cal. 2021). TAN subsequently appealed to the 9th Circuit Court of Appeals, which is where the case presently sits.

The TAN lawsuit, which was filed in 2019, accuses the NAR of violating antitrust laws by requiring home sellers to pay commissions to the buyer’s agent, even if the seller doesn’t want or need the services of a buyer’s agent. The lawsuit argues that this practice artificially inflates home prices and harms competition.

In the amicus brief, the DOJ argued that the NAR’s rules on buyer’s agent commissions violate antitrust laws and harm competition in the real estate industry. The brief states that the NAR’s rules restrict price competition and result in higher commissions and fees for consumers. The DOJ also argued that the NAR’s rules on buyer’s agent commissions prevent new, innovative business models from emerging in the real estate industry. By requiring home sellers to pay commissions to the buyer’s agent, the NAR’s rules make it difficult for new business models that don’t involve buyer’s agents to compete.
The DOJ’s amicus brief is significant because it adds the weight of the federal government to the TAN lawsuit. The DOJ’s position could influence the outcome of the case and could have far-reaching and drastic implications for the real estate industry.

The NAR has defended its rules on buyer’s agent commissions, arguing that they are necessary to protect the interests of home buyers and ensure that they receive high-quality service from their agents. The NAR has also argued that its rules do not violate antitrust laws.

The TAN case is currently before the 9th Circuit Court of Appeals, and a decision is expected in the coming months. The outcome of the case could have one of the most significant impacts on the real estate industry in decades and could fundamentally change the way that commissions and fees are structured in real estate transactions.

The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.

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