- 2 days ago
On today’s episode, Editor in Chief Sarah Wheeler talks with Senior Real Estate Reporter Brooklee Han about the DOJ’s continued involvement in real estate commission lawsuits — as well as their decision to let the Compass-Anywhere deal go through.
Related to this episode:
DOJ is still keeping a close eye on real estate commission rules
https://www.housingwire.com/articles/antitrust-real-estate-commissions/
WSJ: DOJ leadership halted antitrust review of Compass–Anywhere deal
https://www.housingwire.com/articles/compass-anywhere-merger-doj/
To learn more about Trust&Will visit trustandwill.com
The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate
Related to this episode:
DOJ is still keeping a close eye on real estate commission rules
https://www.housingwire.com/articles/antitrust-real-estate-commissions/
WSJ: DOJ leadership halted antitrust review of Compass–Anywhere deal
https://www.housingwire.com/articles/compass-anywhere-merger-doj/
To learn more about Trust&Will visit trustandwill.com
The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate
Category
🗞
NewsTranscript
00:00welcome everyone my guest today is senior real estate reporter brookley han to catch us up on
00:12the doj's continued involvement in real estate commission lawsuits as well as their decision to
00:17let the compass anywhere deal go through first i want to thank our sponsor trust and will for
00:22making this episode possible brookley welcome back to the podcast thanks so much for having me
00:27thank you for being on i hate to say it but it's like um you know i i love having you on to give us
00:34the uh the latest on what's happening at the lawsuit so i hate that there are lawsuits that
00:39we're having to be on but i love having you on so so there you go keep us updated so these of course
00:45you are our senior real estate reporter here at housing wire and you have famously been covering
00:50all the lawsuits over the real estate commission um lawsuits that happened you know the settlements
00:56all of that things but there's some some other things happening now um we'll get to those the
01:01first thing i want to do is talk about one lawsuit where we see the department of justice has weighed
01:07in yet again um this when a lot of people expected like that under trump we wouldn't have so much doj
01:13involvement in these lawsuits um and yet uh here we are so maybe catch us up to date on what this uh
01:20lawsuit is and why the doj cares and why our audience should care about it yeah absolutely so
01:26really high level you know in late december the doj filed a statement of interest in the davis lawsuit
01:32which is a home buyer commission lawsuit so so brunette was filed by home sellers this is filed by
01:38a home buyer similar to uh the two batten lawsuits if you're familiar with those um and this lawsuit was
01:47just filed against howard hannah real estate services that's the only defendant in it and in
01:53kind of the back and forth of how this is being litigated howard hannah has obviously filed a motion
02:00to dismiss this lawsuit and in that it has essentially claimed that it was following rules promulgated by
02:08a trade association um and that the allegations of a conspiracy can't be substantiated because it
02:16centers on rules and conversations that happen within realtor associations um the doj really pushes back
02:26against this argument in its statement of interest um arguing that policies even those promulgated by a
02:33trade association can constitute concerted action or conspiracy and violate antitrust law um and as a
02:41result of this the doj claims that a per se analysis of um the commission rules uh which assume that a
02:51rule is inherently anti-competitive on face value should be used in uh evaluating kind of this lawsuit
02:58whereas howard hannah had requested that the judge apply a rule of reason analysis and in a rule of reason
03:04analysis it considers any potential pro-competitive effects that a rule would have along with
03:11any anti-competitive effects um and so i think this is obviously important because it applies to nar
03:19but then it also could potentially apply to the other trade organizations within the housing industry
03:24um but also for trade organizations in general in the greater you know economic world outside of housing so
03:31i think this is going to be one that a lot of folks pay attention to within housing and outside of housing
03:37that's what really struck me about this was the fact that if you are a company out there and you're
03:43following the rules that your trade association has come to and you know one of the reasons you
03:48have a trade association is you're like they have the um you know they have the budget to have the
03:53lawyers and to come up with these policies and procedures that i can follow and they're going to
03:56help us it's like for the doj to come in and be like even if you follow those rules um that doesn't
04:02protect you and we're going to come we might come after you personally or we're going to let other
04:06people come after you personally i thought that was a pretty big deal and i think other people
04:10looking at this thought that was a pretty big deal absolutely it definitely is but it's also i think
04:16in some ways shouldn't be surprising to the housing industry or to the real estate industry
04:20because we've seen the doj take a similar stance um you know in the lead up to the final approval
04:27of the national association of realtors a commission lawsuit settlement agreement the doj did file a
04:33statement of interest there um and it was kind of an unexpected one it took a look at buyer agency
04:40agreements or buyer representation agreements which were mandated by the settlement um claiming that
04:46those agreements could potentially be anti-competitive um and if they were in the future found to be
04:53anti-competitive there would be no legal protection for brokerages who were agents who were using them
05:00to claim that they were just using them because they were following like the rules set out by the
05:04settlement and that would offer them no legal protection so i think obviously this is different
05:09it's on a settlement it's uh rules promulgated by a trade association but i think it's very similar
05:15and that like this other thing will not offer you the legal protection that you may have assumed it would have
05:21man okay so one of the other points that um one of the analysts that you talked to or experts that
05:27you talked to in in the reporting of this said that in some ways it really delegitimizes the mls's the
05:33multiple listing services which is how everybody you know gets their list well it's all that's a whole
05:39other discussion but um delegitimize delegitimizes the mls's because you know one of the reasons you join an
05:46mls is for protection and now the doj is saying like yeah that protection doesn't exist yes and i
05:54mean the mls's this past year and really the past couple of years have had i don't want to call it an
06:00identity crisis but like a value crisis um with the removal of offers of cooperative compensation from
06:07the mls they a lot of mls's have really questioned what their value is what they provide agents and a lot
06:14of agents have questioned that as well especially those who were really upset by the settlement and
06:19upset by um how things played out with sitzer burnett um and you know obviously the listings
06:27are on the mls but there are other things that um mls's were trying to or thinking about offering
06:34um to subscribers to agents um and one of those things a lot of people felt was that legal protection
06:41and if that's not there you know it's it's really it's another challenge that mls's may have to face
06:48um and you know we're seeing a lot of mls's we're seeing especially the national association of realtors
06:55really try to pass off any um legal risk to other folks in the industry um nar went through a massive risk
07:06assessment and it's really taken a back seat to kind of promulgating some of these rules or
07:13enforcing rules and giving it to the local mls's and the local realtor associations um and you know
07:21wait we may see them take a step back from rulemaking and enforcing as well in the future
07:26uh which would really put the onus on brokerages and individual agents and brokers to kind of make sure
07:34that they are following the letter of the law and you know staying up to date on all of their
07:39compliance i have said it before on this podcast and i'll say it again that i'm i'm always surprised
07:45at the doj's interest in nar and and the on you know in the dealings of of realtors in general and
07:54how they get paid just because i've been involved in a lot of transactions on the buyer side on the
07:58sell side and i'm not saying it's the perfect system or like wow everyone loves it but it's like
08:02the benefit you get by being the buyer then you pay for when you're the seller right and even in
08:08sister brunette the most famous case you know those people had also uh bought homes and been the the
08:14recipients of of the fact that the seller was paying so that is just my soapbox i'm just i'm
08:19just surprised like i feel like there are bigger fish to fry in our country in general and injustice
08:23issues than than how realtors get paid but okay i mean you know we will follow them all the way down
08:30absolutely i mean i i know from talking a lot with steve murray at real trends consulting
08:37that you know this this battle between the doj and realtor associations has been going on you know
08:43since well before even i was alive and it's just crazy to think that we're still here i am now
08:49covering this issue and you know at least according to steve and some other attorneys that i speak with
08:54they're like you know what you'll have been retired and this issue will still be going on so um you know
09:00it's it's just a narrative that i think i'll be following for a while that's well you are young
09:06but still that's a long time okay so in in a similar vein but but different so we had the compass
09:12anywhere deal right that was announced this summer huge news and and the big question was like can they do
09:19this right because it it feels like it could be an antitrust you know uh problem there that that
09:25number one buying number two um just a consolidation and then we had news um even just last week about
09:32the doj leadership was like it's so they're gonna let it go through and they did let it go through
09:37absolutely yeah that definitely came as a bit of a surprise i mean um compass and had said uh early on
09:46when they had announced this that they were expecting the deal to close sometime in the second
09:51half of 2026 um and so when it uh had cleared kind of its antitrust scrutiny um window basically that
10:01is set up uh they uh right in early january i think it was january 2nd that window had closed
10:07that cleared the way for a shareholder vote which happened in the middle of last week and then
10:14the transaction actually closed last friday um and i think everyone expected the transaction to close
10:23eventually they just didn't know what would happen if there would be a lot of antitrust scrutiny
10:31if compass would be uh required to divest some offices or um assets of anywhere in some of the
10:40especially in some of these markets because um you know variety of studies have come out some of them
10:45based on our real trends verified data that there are some markets in some cities where a merged compass
10:53and anywhere could have potentially over 80 percent of the market share which is well above um you know doj
11:00ftc antitrust kind of thresholds which um they set out a couple years ago for mergers at i think 30
11:08so you're you're well above that number in some of these markets and so it was definitely a surprise
11:14that there was no increased scrutiny of uh this this merger um but obviously tied in with all of this
11:24is the kind of known notion within housing the doj wants to create change in the real estate industry
11:32compass has said um our compass leadership has said in documents that were disclosed and yet
11:38another lawsuit uh that compass filed against zillow that um you know that the company felt that if
11:46it had an increased market share that what it calls organized real estate so the mls's national association
11:53of realtors um in this lawsuit instance it groups zillow in with that organized real estate group that those
12:00organizations couldn't bully them anymore and they could sway um the organizations in the industry in
12:08general to bend to their will and what they wanted and so you know there is potentially you know this
12:14overlap of what the doj doj might want to see happen in the real estate industry and what compass and
12:21anywhere or emerge compass anywhere wants to see in the real estate industry and i don't know if
12:26potentially those agendas aligned and that's why the doj was willing to kind of allow this to come
12:33through um and you know possibly wait and see if compass would be able to instigate the changes in
12:41the industry um the doj wanted and you know obviously i think because of the size and scale of what compass
12:49now is obviously it carries more gravitas more weight and it's going to be able to instigate change
12:54um will those changes be what the doj you know potentially wants to see within the housing
13:00industry i don't know um and you know that could be another legal battle down the road that we'll be
13:06looking at so who knows who knows i really appreciate you um just giving us those these kind of high
13:12level views because most of us are not in the weeds every day um and even people listening to this
13:17might be in in mortgage or title or appraisal but um especially something like uh one company or uh
13:24you know the combination of compass anywhere having more than 80 share in some markets that's good that
13:30affects a lot of people right that affects people throughout the the house maybe maybe for good
13:34maybe that's the best thing since sliced bread or maybe not but um to me it's it's a very interesting
13:39part of of what happened there and like you said it happened so fast yeah i will note we're we're
13:45recording this a little a few days ahead of the um holiday the federal holiday so if you if listeners
13:52you're like oh that wasn't last friday it was a friday before yeah that's why because um we are
13:56getting ahead so we can uh we can uh have this uh ready for then so okay speaking of lawsuits and
14:03speaking of compass right and one of and our friend zillow compass zillow um they're they're sort of
14:09locked in a battle so let's give us the latest on what's happening there absolutely so the compass
14:14zillow lawsuit uh has to deal with zillow's listing access standards policy which kind of is like
14:21the proxy battle in a way over clear cooperation um and zillow has basically said any listing that
14:32is publicly marketed for more than 24 hours without being able to be displayed on another website that
14:39relies on an idx or vow so virtual office website uh data feed that those listings um will be banned
14:48from zillow for the life of that listing with that agent um compass is the largest proponent or at
14:55least the most vocal proponent of private listings it has its three-phase marketing plan it has its own
15:01private listing network although a lot of brokerages do offer their own private listing network compass is
15:06just as i said the most vocal about it um you know compass definitely uh took a bit of offense i guess
15:15is for the best way to put it to this policy and um filed this lawsuit uh back in i want to say last
15:22june yeah middle of last june right before the policy was slated to go into effect at the end of the month
15:28um and then right before the policy went into effect or actually i think right after um compass filed a
15:36preliminary injunction motion asking the judge to uh basically block zillow from uh enforcing the rule
15:45uh and it's it's listing access standards policy um this there was a bit of a back and forth about this
15:52and like ultimately they decide that they need to have a hearing to to kind of go through all the
15:58evidence and discuss kind of what was going on with this rule and so that happened in the middle of
16:05november and now we're in mid-january um almost two months later and we are still waiting for a ruling
16:12on that and so in talking with attorneys um one this timeline is not like unheard of it's definitely
16:19expected we expected we expected this to kind of be a while potentially um where everyone i think
16:26hopes that we're kind of closing in on when we're going to see um that ruling but um you know one way
16:35or the other it doesn't necessarily indicate um who could potentially win this lawsuit um if the
16:43preliminary injunction motion goes in favor of compass or zillow um but it definitely i think
16:50will it is allowed we may see an increased usage of um private listing networks just because
16:58the um the policy won't be in effect or won't be allowed to be enforced um so we may see other
17:04brokerages or agents going to jump in on private listings so i think that's definitely something to
17:10watch for yeah i do too and again we have um you know the idea of a conspiracy uh this time between
17:17zillow and redfin right that compass is saying that that um some of this was shared with um redfin and
17:24other people before it was shared publicly and and gave them a heads up and so it again it's just
17:30interesting to me there's so much intrigue around this and and there is and and and big stakes too
17:37absolutely and we know that clear cooperation was a policy that the doj was investigating alongside
17:46um you know uh the cooperative compensation rules um the doj has stated in like a footnote i feel like
17:56it was in the no select lawsuit um that there were a lot of companies claiming that clear cooperation
18:03was an antitrust issue that the doj had issues with it that you shouldn't follow it and you were
18:09um putting yourself at legal risk if you followed it and in that footnote the doj said hold up
18:15we never said that clear cooperation on its own was an issue we were looking at it in conjunction with
18:23these other rules um but obviously yeah we know this is something the doj has looked at
18:28um and we know that kind of that looms out there as well um you know i when nar changed or not changed
18:38but added the multiple listing options for sellers policy along with clear cooperation um we could see
18:45then that nar was kind of taking a step back from rule enforcement because they really allowed the mls's
18:52kind of driver's seat in enforcing this policy and deciding what it would look like within each mls
18:57um and i think we're gonna kind of see that moving forward but yeah it's just it's really
19:03interesting to see how all these things are interacting and playing with each other right
19:08now well brooklyn i appreciate you staying on top of it for um our audience whether that's you know
19:14all the articles you're writing or being on here with me to kind of recap them i know that that this
19:19whole topic is in good hands um with you and i i know that many people rely on you for this coverage so
19:25thank you so much for being on of course thank you
19:28you
19:29you
19:31you
19:33you
19:35you
19:37you
19:39you
19:41you
19:43you
19:45you
19:47you
19:49you
19:51you
Comments