The National Association of Realtors is a Cartel, “NARtel”.
The National Association of Realtors is a trade group, like the American Bar Association, American Nurses Association, or The National Auto Dealers Association (NADA).
Associations use dues from their members to lobby, to protect the industry. It gets questionable when politicians start passing bills that undermine a free market, by preventing competitors or innovative business practices. This is called crony capitalism.
For example, NADA lobbied successfully to prevent car manufacturers from selling direct to consumers in Texas. In America, a free country, you cannot buy a car directly from the manufacturer and save some money, avoid commissioned salespeople and the costly brick and mortar overhead that dealerships bundle into prices.
A trademarked REALTOR® is separate from a licensed real estate salesperson, recognized by the State Real Estate Commission. Most licensed sales people join NAR, here’s why:
Agents have to hang their license up at a brokerage. If a brokerage has an agent that doesn’t pay their NAR dues, the entire office loses its MLS privilege's. Yes, NAR went and bought up all the serious MLS’s. They have the leverage.
- Spent over $100 million on lobbying since 1999
- 2nd largest top spender in lobbying after the U.S. Chamber of Commerce
- Ranked number 2 of 3,513 in lobbying, spending $54,530,861
- Spent $64,821,111 in 2016
In 2001, banks figured out that they should enter the real estate brokerage business, considering the possibilities afforded to them by having mortgages and listings under one roof, dramatically reducing selling commission fees for homeowners notwithstanding. Perhaps NAR’s most notable lobbying victory was a rider they snuck onto the 2009 Omnibus Appropriations Act that imposes a blanket ban on banks from entering the real estate brokerage and management business, permanently signed into law by President Obama. The attorney general, Makan Delrahim, during opening remarks at the DOJ Antitrust Davison’s third roundtable on competition and deregulation, which assessed the consumer costs of anticompetitive regulations, cited that legislation as an example of regulator being “aggressive in preventing new business models and protecting incumbents from entry.”
NAR has a history of horrifying anti-trust officials since the inception of the internet, trying to prevent lower cost alternatives from helping homeowners save money. Less commission means less REALTORS in business paying dues. There are two million licensed real estate agents, and approximately 5.51 million homes sell each year. Its an absurd and stupid saturation, that is only made possible by the inflated 5/6% fee homeowners pay. Most agents aren’t profitable and never will be, as there are only 2.75 homes to go around per agent. NAR doesn’t care, they still pay their dues.
Department of Justice’s investigations and crackdowns on NAR’s anti-competitiveness:
- U.S. v. National Association of Realtors: NAR was accused of discriminating against innovative brokers who use the Internet to provide high-quality, low-priced brokerage services to consumers
- NAR attempted to prevent online-based brokerages from accessing the Multiple Listings Service (MLS). Under final judgement, NAR repealed the policies and replaced them with rules that don’t discriminate.
2. U.S. v. Consolidated Multiple Listing Service, Inc. The justice department challenged several rules mandated by the Columbia, South Carolina MLS that may reduce choice and raise prices for Columbia consumers.
- The MLS board required brokers to perform a prescribed set of services — such as negotiating a home’s sale price and attending the closing — even if the broker’s customer would prefer to perform some of these tasks on his or her own in order to save money on the real estate broker’s fee.
- They gave Columbia real estate brokers the ability to exclude brokers from outside Columbia who could offer local consumers innovative brokerage options that better match their needs.
- On August 27, 2009, the Court entered a Final Judgment that required the Consolidated Multiple Listing Service, Inc. to cease enforcement of these rules and prevented the MLS from passing new rules that would discriminate against innovative brokers.
3. U.S. v. Multiple Listing Service of Hilton Head Island, Inc. In October 2007, the Division filed a lawsuit alleging that the Multiple Listing Service of Hilton Head Island, Inc. violated antitrust laws by enforcing certain rules that unreasonably restrain competition.
- Required member-brokers to maintain a physical office (an effort to thwart virtual brokerages), reside within the MLS service area, and operate their offices during hours deemed reasonable by the MLS.
- Required prospective members to disclose their business history and prior employment and obtain letters of recommendation from three current broker-members.
- Authorized the MLS Board of Trustees to adopt mandatory commission guidelines and to impose discriminatory requirements on Internet-based brokers.
- On May 28, 2008, the Court entered a Final Judgment that required the Hilton Head MLS to cease enforcement of these rules and prevented the MLS from passing new rules that would discriminate against innovative brokers.
4. U.S. v. Kentucky Real Estate Commission: The Division challenged regulations that prohibited Kentucky real estate brokers from offering rebates and other inducements to consumers.
- The United States settled its lawsuit after the Kentucky Real Estate Commission agreed to rescind its rebate ban.