By Diane Bartz

WASHINGTON (Reuters) - The Justice Department and National Association of Realtors tangled on Friday in an appeals court over the government's decision to close, and then re-open, an antitrust investigation into the way people pay the thousands of dollars in fees when they buy or sell a home.

The Justice Department, during the Trump administration, closed an investigation into the realtors organization. The Biden administration re-opened it in 2021 so it could probe how broadly housing listings are available and what fees home sellers pay to the brokers who represent buyers.

The Biden administration has focused on pocket book issues, and for the vast majority of consumers, buying or selling a house is the largest financial transaction they will ever make, with realtor fees a hefty chunk of that money.

Judge Florence Pan, one of three judges on the panel for the U.S. Court of Appeals for the D.C. Circuit, seemed skeptical of NAR's position, saying at one point: It is not unusual for investigations to be re-opened.

Speaking for the government, Frederick Liu of the Office of the Solicitor General acknowledged that the probe had been closed but said it did not mean that it could not be re-opened.

Arguing for NAR, Chris Michel said the agreement reached in 2020 was a contract and that the probe should not have been resumed unless the two rules in question were changed.

The government's concern focused on private listings of homes, which NAR banned but left some exceptions, and a rule that requires sellers to pay the buyer's broker.

Because of concern about pocket listings, or private listings not available to the public, the NAR adopted a Clear Cooperation Policy in 2019 that was supposed to ban pocket listings but has been criticized for allowing exceptions.

The NAR's Participation Rule had required brokers who listed a house to offer compensation to the buyer's broker. The NAR said in October that no compensation could be offered.

The 2020 settlement required the organization either to scrap or change rules in order to give prospective home buyers more information about commissions for the brokers who represented them and to eliminate any misrepresentation that the services were free.

(Reporting by Diane Bartz; Editing by Chizu Nomiyama)