The cooperative sharing of listing information and commissions through the MLS is being placed under the microscope by the Department of Justice. Two different lawsuits—Moehrl and Burnett—have named the National Association of REALTORS® in them.
Inman columnist Bernice Ross, president and CEO of BrokerageUp and RealEstateCoach.com, yesterday called the lawsuits “most likely … duds.” One lawsuit has sought class action status. But Ross says there are procedural issues with the plaintiff’s complaint that likely won’t allow the lawsuit to get far or to reach class action status.
Still, she writes the industry will need to proactively address the underlying issues regarding agent compensation to avoid ongoing legal challenges.
At the root of the recent challenges, NAR’s Handbook and Code of Ethics require sellers to make a blanket unilateral offer of compensation to any broker representing potential buyers for a home to be listed on the MLS. Plaintiffs claim that amounts to price fixing and artificially inflates the residential real estate broker commissions paid by home sellers. Without the rules, plaintiffs argue, sellers would not compensate the broker representing the buyer.
But to win class action status, plaintiffs will have to show the sellers would not compensate a buyer’s broker in a transaction on their own, despite a long history showing they have and likely will.
Ross raises factual problems with the complaints, including claims that listing agents’ commission rates are not transparent. Ross notes that the commission rate appears on every listing agreement, on the MLS, and on every offer.
Mantill Williams, NAR’s vice president of public relations and communication strategy, has called the complaints “baseless” and have “an abundance of false claims.”
“The U.S. Courts have routinely found the Multiple Listing Services are pro-competitive and benefit consumers by creating great efficiencies in the home buying and selling process,” Williams says. “NAR looks forward to obtaining a similar precedent regarding this filing.”