Courting Controversy: Exploring the Implications of the Burnett v. NAR Antitrust Lawsuit
Courting Controversy: Exploring the Implications of the Burnett v. NAR Antitrust Lawsuit - The Genesis of the Lawsuit
The genesis of the Burnett v. NAR antitrust lawsuit can be traced back over a decade, though tensions had been simmering long before the case made its way to federal court. Back in 2005, the Department of Justice filed an antitrust lawsuit against the National Association of Realtors (NAR), asserting that NAR's policies regarding access to Multiple Listing Services (MLS) databases stifled competition. Though the suit was ultimately settled in 2008 without NAR admitting wrongdoing, it planted the seeds for future legal challenges.
Another important development came in 2015, when the Consumer Financial Protection Bureau (CFPB) began examining industry practices, honing in on commission splits. Though REALTOR commissions had historically held steady around 6 percent for decades, the CFPB raised concerns that consumers were losing out on potential savings from technological innovations and increasing efficiencies. Their inquiry put further pressure on the longstanding MLS policies.
Tensions continued mounting over the next few years, as new lower-priced alternative brokerages like Redfin emerged. Their business models challenged the status quo by offering to rebate commissions to buyers. But gaining broad MLS access to facilitate these types of listings remained an obstacle.
So when Christopher Moehrl, a Minnesota homebuyer represented by a discount brokerage, brought suit against the NAR in 2019, the stage was set for a legal battle. Moehrl alleged that he had missed out on savings because NAR rules allowed traditional brokers to deny MLS access to competitors offering lower commissions. The plaintiffs asserted that these policies stifled market competition and consumer choice.
Though NAR maintained its rules were necessary to maintain order and prevent free-riding, the judge allowed the case to move forward as a class action in 2020. After lead plaintiff Sawbill Strategies withdrew, it was renamed Burnett v. NAR. But the core arguments remained the same. With MLS access intertwined with commissions and competition, the stage was set for a legal showdown.