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Thursday, 21 November 2019
Agent Resource Center
Agent Resource Center

Lesson Plan For The Future – My Notes on Current NAR/MLS Litigation

Written by Posted On Thursday, 07 November 2019 05:00

The Challenge is to the Offer of Compensation to Agents Representing Buyers, by Agents representing sellers, through the MLS. The claim is that it is anticompetitive.

When looking at these cases, remember that MLS did not emerge in a vacuum but over many years, with input from a host of contributors, including brokers, agents, staff, attorneys as a result of previous problems and litigation.

The MLS has been built upon the concept of Cooperation and Compensation since it moved from a Unilateral Offer of Sub-Agency in the late 1980s with the creation of Agency Disclosure laws, which began in California.

There is currently the major Law Suit and two "Copycat Suits." Class Action Status will make buyers during the stated period, the plaintiffs.

The complaints look to be related to the FTC/DOJ Workshop in Washington DC in July of 2018, with similar premises about the Industry and about MLS.

What has changed since the NAR/DOJ Consent Decree on VOWS?

NAR’s position is that there is strong competition in the Industry.

1. There is wide distribution of property information available to consumers

2. There are Low Barriers to Entry

Plaintiff Attorney’s position:

1. Commissions are still to high

2. Agency is misunderstood

Plaintiff examples showing how real estate should be sold in a competitive market at 2-3 % total commissions are based on 30 year old data from foreign countries.

March 2019 – Complaint filed - Litigation against 4 Brokerages and NAR

1. NAR

2. Home Services of America

3. Reology

4. Keller Williams

5. Remax

Premise: NAR MLS rule requiring Listing Brokers to offer compensation to Buyer Brokers is anti-competitive as it precluded buyers from negotiating the compensation of the agent representing the buyer.

NAR’s Position on the MLS Compensation Rule: The current structure of commission flow through the MLS provides:

1. More liquidity for buyers, and

2. An incentive for brokers to cooperate, bringing more properties to more people.

Offer of Buyer Agent Compensation appears in the Listing Agreement

(Buyer Agency Disclosures and Buyer Representation Contracts were discussed as good practice in this environment).

July 2019 – Complaint Amended

Copy Cat Law Suits - 2 Cases – NAR filed Motions to Dismiss

1. Merrill – 20 MLSs in Chicago Area – Motion to Dismiss Pending

2. Spitzer – 4 MLSs in Missouri – Motion to Dismiss Denied

MLSs are not named defendants

Class Action with Plaintiffs being buyers and sellers during certain time period.

Plaintiffs are:

1. Wrong on the facts

2. Wrong on the economics

3. Wrong on the Law

Available for MLSs are pieces and talking points from NAR on how MLSs work, how they benefit consumers.

Boils down to a communication problem, uninformed consent perhaps.

According to the Redfin Buyer Agent Commission Report, published at the end of August 2019

Mission of Redfin:

“To redefine real estate in the consumers favor”

1000 were surveyed

38% were aware of Buyer Agent Compensation

13% Did not have a clue about it

61% Lacked certainty over how buyers are paid

Recommendation:

Have a conversation with buyers about compensation (btw, this was a standard for me when I was doing buyer seminars and buyer representation in the late 1980s/early 1990).

Conclusion:

DOJ is looking at MLS Rules and practices subject to Section 1 of the Sherman Antitrust Act.

Antitrust is: Effect vs Intent

Cursory investigation shows:

Offers of compensation do not correlate to days on market and sales price. They are marginally correlated in the opposite direction

Buyer Steering based on agents searching the seller offer of compensation through the MLS Compensation Field – The data indicates:

207,275 Saved Searches

3038 looked searched for commission – 1.46%

Some of those may be done to show a buyer how much commission is being offered to the BA.

Many of the same old players and beefs are part of this effort as it includes anti-trust, buyer representation, dual agency, commission structures, the DOJ, FTC, and certain consumer groups and individuals.

Read 636 times Last modified on Friday, 01 November 2019 17:11
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Saul Klein

In 1948, doctors told my father that his life aboard submarines on war patrol in the South Pacific and the depth charging he experienced had rendered him sterile. Although controversial and not widely applied, he was treated with an Ayurvedic therapy called “shivambu.” If you are unfamiliar with this term, I recommend you Google it because against all odds, I came to exist.

That was a loony segue into my life but is a fitting precursor to a career that would be just as incredible.

Like my father, I joined the Navy. However, due to a medical inconvenience, I was honorably discharged after 6 years of commissioned service, all on Sea Duty. This was an opportune misfortune that led me down the path to a successful career in real estate. Both my father and grandfather flirted in real estate brokering and flipping part-time, and I followed suit but making a lifelong career out of it.

With over 40 years in real estate, it is impossible to talk about my experiences in this small window. But I can proudly say that I am well-recognized as an industry pioneer, especially in real estate syndication and education, and one of the few luminaries that paved the way for real estate’s transition to the online world.

Some highlights of my life’s work:
● Co-created ePRO, technology certification course that certified 70,000 students
● Created the first online communities for real estate professionals to network, learn, and sell
● Created "Opt Out" Listing Syndication, aggregating over 1.4 Million Listings in 18 months
● Built the #2 National Listing Syndication Service, Point2 Technologies, sold to Yardi in 2010
● Founder of the California Association of Buyer’s Agents
● Member of the first REALTOR.com Team, pre-IPO, responsible for obtaining first 500,000 listings
● Helped Zillow and Trulia build up their MLS data inventory

Today I continue to lead efforts that bring new technologies to the real estate industry. Feel free to reach out and learn more.

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