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Pace of US home price growth slows in September

In this Oct. 27, 2014 photo, a realty sign is posted in front of a home for sale in Carlsbad, Calif.  (AP Photo/Lenny Ignelzi)

U.S. 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 Inc., which provides real estate data to government agencies, lenders and other housing-market participants.

The U.S. 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, 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 Corp., 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. The trade group didn't immediately respond to a request for comment on the lawsuit or the Department of Justice investigation.

"We believe this case has no merit and have moved jointly with the other corporate defendants to dismiss the case," Realogy spokesman Trey Sarten said in an email. "Additionally, we have joined in NAR's motion to dismiss."

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.

The Justice Department declined to comment. The investigative demand was posted on the website Notorious R.O.B., which covers real estate matters.

In June 2018, the Justice Department and Federal Trade Commission, which share antitrust jurisdiction in the U.S., 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," REX Chief Executive Office Jack Ryan said in a statement. "Now is the time to drive change in the industry."

Shares of real estate brokerage companies Realogy Holdings Corp. and Re/Max Holdings Inc. fell after the investigation was reported. Shares of Realogy, with brands including Century 21, Coldwell Banker and Sotheby's, closed 5.2% lower at $7.43. Re/Max shares fell 4.4% to $32.19.