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A large broker-owned multiple listing service that has attracted the attention of the Department of Justice is changing its commission-related rules, despite the federal agency’s view that the rules don’t go far enough.
On June 20, MLS Property Information Network (MLS PIN) emailed its subscribers to inform them that, effective immediately, listing brokers and agents could submit for-sale listings to its platform without offering any cooperating compensation to the buyer broker.
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The change is part of a proposed settlement in a case brought by homesellers known as Nosalek, in which MLS PIN is a defendant. That deal has met criticism from the DOJ’s antitrust division because it continues to allow pre-emptive offers of compensation to be made through the MLS as well as elsewhere. In a statement of interest in the case, the antitrust enforcer called for “an injunction that would prohibit sellers from making commission offers to buyer brokers at all.”
In order to address the DOJ’s concerns, the plaintiffs and MLS PIN have made multiple amendments to the settlement deal, but after the agency continued to object, MLS PIN pushed back in court, saying that the DOJ’s proposal itself violates antitrust law and the First Amendment’s free speech provision. MLS PIN also chose not to opt in to a settlement reached by the National Association of Realtors which would have required MLS PIN to remove offers of compensation from the MLS.
“After careful review, MLS PIN has chosen not to join the proposed NAR settlement,” MLS PIN told subscribers in the June 20 email.
“Instead, MLS PIN has decided to move forward with its own proposed settlement with the Nosalek plaintiffs. Even though MLS PIN’s rules changes presented as part of the settlement in Boston are still awaiting final court approval, MLS PIN has decided to start implementing those rules changes now.”
Like federal commission suits Moehrl and Sitzer | Burnett, Nosalek seeks class-action status and alleges that the sharing of commissions between listing and buyer brokers inflates seller costs and is a conspiracy in restraint of trade, a violation of the Sherman Antitrust Act. MLS PIN, which has a full-time staff of 60 employees, boasts 44,600 subscribers in six New England states and New York.
On June 24, Judge Patti B. Saris of the U.S. District Court in Massachusetts paused the legal proceedings in Nosalek, staying the case pending a ruling on the final approval of the NAR settlement after a fairness hearing on Nov. 26. Saris gave the plaintiffs 30 days to file for preliminary approval of the MLS PIN settlement after that ruling. After that filing, the DOJ “will have 90 days to review the settlement agreement as provided in the Class Action Fairness Act,” Saris wrote.
In a June 21 filing, the DOJ noted it had not been provided the entirety of the MLS PIN settlement agreement as it currently stands and asked Saris to “order that the Plaintiffs produce to the United States all parts of their proposed agreement, including any confidential side agreement.” Saris’s subsequent order does not mention this request.
Regarding MLS PIN’s rule changes, the first change is that property listings no longer have to have offers of cooperating compensation.
“If your seller instructs you not to offer compensation, enter a value of 0 into the compensation fields in [the] Pinergy [MLS platform],” the email reads.
“We would also remind all subscribers that MLS PIN’s Rules and Regulations have never prohibited the seller, the buyer, the listing broker, and the cooperating broker from negotiating and mutually agreeing upon any compensation that differs from the value in MLS PIN.”
MLS PIN also said it would roll out other changes under the proposed settlement “as soon as possible,” though it did not specify when and said it would keep subscribers “apprised of this timeline.”
According to a flyer from MLS PIN, those additional changes are:
- “Offers of compensation, if any, will be made by the seller. Listing brokers and cooperating brokers will no longer split commissions.
- Listing agreements must disclose that the seller is neither required to offer compensation nor required to accede to any cooperating broker’s request for compensation. The listing broker must disclose this to the seller before the seller signs the listing agreement.
- If a seller elects to offer compensation, the listing agreement must also say that the cooperating broker will be an intended third-party beneficiary of the agreement with the right to enforce the same.
- Before posting a listing, the listing broker must certify, in a checkbox designated for this purpose in Pinergy, that the listing broker has notified the seller of the seller’s rights not to offer compensation and not to accede to a cooperating broker’s request for compensation.”
In its email, MLS PIN reminded its subscribers that the court had not officially approved the settlement’s rule changes.
“If the Court in Boston does not approve our settlement, we may need to further modify our rules and Pinergy or revert to our previous rules,” the email reads.
MLS PIN also said it would provide education and training on the changes, including “further communication, video, timelines, and details in the following weeks.”
Inman asked MLS PIN why it decided not to join the proposed NAR settlement, why it decided to start implementing rule changes now, and how its subscribers would be impacted if the MLS had to walk back or otherwise modify those rule changes. MLS PIN declined to comment.
The DOJ also declined to comment for this story.
Editor’s note: This story has been updated to note that the DOJ declined to comment.
