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US opens antitrust probe of real estate brokerage industry
US ANTITRUST officials are investigating potentially anti-competitive practices in the residential real estate brokerage business, with a focus on compensation to brokers and restrictions on their access to listings.
The probe was detailed in a civil investigative demand, which is akin to a subpoena, issued by the Justice Department to CoreLogic, which provides real estate data to government agencies, lenders and other housing-market participants.
The US residential real estate industry has long faced criticism that it stifles competition among brokerages, protecting agent commissions that are higher than those paid by sellers in many other countries.
In 2008, the Justice Department reached a settlement with the National Association of Realtors (NAR), a trade group, that was designed to lower commissions paid by consumers by opening the industry to internet-based brokers.
The investigative demand to CoreLogic, dated last month, follows a lawsuit filed against the Realtors association and real estate broker franchisors, including Realogy Holdings, claiming they conspired to prevent home sellers from negotiating commissions they pay to buyers' agents.
The Realtors association filed a motion to dismiss the lawsuit, arguing that it misunderstands the role of brokers.
"We believe this case has no merit and have moved jointly with the other corporate defendants to dismiss the case," said Realogy spokesman Trey Sarten.
CoreLogic spokeswoman Alyson Austin confirmed the company received a civil investigative demand "relating to an investigation of practices of residential real estate brokerages". CoreLogic is not the focus of the investigation, she said.
In June 2018, the Justice Department and Federal Trade Commission, which share antitrust jurisdiction in the US, held a workshop on the residential real estate brokerage industry that touched on the possible barriers to competition and the impact of past regulatory actions, among other issues.
According to the investigative demand sent to CoreLogic, the Justice Department is seeking information about the ability to search real estate listings on multiple listings services based on compensation offered to buyer brokers as well as practices that restrict CoreLogic's distribution of listings data.
News of the investigation was cheered by REX, an online brokerage that charges flat fees that it says are lower than those charged by traditional brokers. "Any effort to shed light on these practices is good for the American consumer," said REX's chief executive office Jack Ryan. "Now is the time to drive change in the industry." BLOOMBERG