Not homesellers, not homebuyers, not the Department of Justice (DOJ), but real estate agents themselves are now suing the National Association of REALTORS® (NAR) for alleged conspiracy and antitrust behavior, focused on the requirement that agents join NAR and local REALTOR® associations to access the MLS.
Filed yesterday in federal court in Michigan by two brokers and one agent affiliated with Sotheby’s, the lawsuit is seeking to certify a class of brokers and agents, and claims that the NAR settlement specifically made REALTOR® membership and MLS access less valuable.
“(T)here is now no guarantee of broker commission associated with using the MLS. This truly eliminated the sole purpose of the NAR and (Michigan Association of REALTORS®) sponsored MLS systems by eliminating the guarantee of compensation between brokers,” the lawsuit said.
Beyond the settlement, though, the lawsuit goes to the larger issue that many regulators and real estate critics have hinted at, even as consumer-led class-actions and DOJ inquiries have seemingly homed in on specific MLS or NAR rules.
“The requirement of membership in the (named REALTOR®) organizations constitutes a conspiracy to monopolize the use of the MLS and creates barriers to the market for all REALTORS®, agents and brokers who seek to enter the market but who do not wish to belong to one of the (named REALTOR®) organizations,” the lawsuit claims.
Two brokers and three agents are named plaintiffs in the lawsuit—Douglas Hardy, Glenn Champion and Dylan Tent. All are affiliated with Signature Sotheby’s, which claims three offices and over 130 agents across Southeastern Michigan, according to its website. Hardy is the owner of Signature Sotheby’s, while Champion serves as president and managing broker.
Besides NAR and the Michigan Association of REALTORS®, the lawsuit names two local REALTOR® boards, with the plaintiffs claiming that they had to join all of these organizations in order to access the MLS. It also targets Realcomp II, the software company that “manages” and “regulates” the MLS.
While many of these accusations are not new, coming from brokers and agents today, they take on a very different tone—and maybe more importantly, reopen new legal challenges to the current structure of real estate.
The requirement that agents join a REALTOR® board in order to access the MLS has a long and tortured history of legal challenges going back to the 1970s. Currently, the legality of that stipulation depends on jurisdiction, with various federal courts having issued conflicting rulings over the last half-century, allowing some states to fully restrict access to the MLS, while others must allow non-NAR members to use those systems.
But with the DOJ’s unflagging push to further regulate real estate, and with seismic shifts caused by commission lawsuits, it seems possible that courts—and lawyers—will be willing to revisit the question.
In its investigation, which has mostly taken place behind closed doors, the DOJ has not specifically pushed for REALTOR® associations to divest MLSs. But antitrust lawyers at the department have made it clear they want brokers to stop sharing compensation, and pushed for rules that would go further than the NAR settlement to address this.
Two associations that own REcolorado, one of the largest MLSs in the country, cited the recent regulatory uncertainty in their decision to sell the MLSs to a private third-party.
NAR, in a blog post on its website addressing the issue, says that “limiting MLS access to REALTORS® is legitimate and lawful, and…litigation challenging the MLS membership access rule can be successfully defended.”
An NAR spokesperson told RISMedia via email that the organization “stands by the pro-competitive, pro-consumer local broker marketplaces, which local associations may choose to provide as a member benefit.”
“Furthermore, NAR stands by the practice changes required by the proposed settlement because they bring buyers and sellers greater transparency on compensation and protect consumer choice. NAR will defend against these baseless claims in court,” the spokesperson said.
The facts
According to the lawsuit, Hardy, Champion and Tent contacted NAR and the local REALTOR® boards “and requested that they be allowed to use the MLS system without being members.”
“Alternatively, Plaintiffs requested they be allowed to drop their membership in these organizations altogether. These requests were echoed and repeated in June and July of 2024,” the lawsuit claims.
Realcomp II “uniformly” denied these requests, the lawsuit says, “reiterating that membership…in these entities was mandatory without exception.”
The lawsuit notes that NAR does in fact allow MLS access to non-REALTORS® in some areas (again, based on previous legal challenges and rulings in certain jurisdictions).
Why file the lawsuit now, since most of these rules have been in place for years or decades? Again, according to the plaintiffs, the NAR settlement removed the major value proposition of the MLS—namely, that buyer agents would receive an offer of compensation.
“The decision, made largely without any input by the Defendants (sic) members, greatly diminished any value created by the compulsory membership requirements,” the lawsuit says. “Further, while NAR and MLS (sic) have argued that the removal of this information is for the benefit of the consumers, plaintiffs believe it is contrary thereto and invites side negotiations, disharmony among agents/brokers and confusion for the consuming public.”
The lawsuit mistakenly claims that NAR agreed to settle the Burnett lawsuit in November 2023.
Currently, the lawsuit is not seeking to certify a national class, instead limiting its scope to agents and brokers in Michigan. The lawsuit also notes that Realcomp II chose to implement that ban on offers of compensation on July 16, well ahead of the mandatory national deadline of August 17, claiming this caused further hardship for local real estate professionals.
A lawyer for the plaintiffs did not immediately respond to a request for comment. Hardy and Champion did not immediately respond to emailed requests for comment.
Editor’s note: this story was updated at 11:58 a.m. eastern time with comments from NAR.
