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A settlement in a federal class action lawsuit against Massachusetts’ main residential real estate listings service has been proposed, leaving it off the hook as plaintiffs continue their battle against several large, national brokerages.
MLS PIN agreed to pay $3 million to Jennifer Nosalek, Randy Hirschorn and Tracy Hirschorn, who sued the listings service along with Coldwell Banker parent Anywhere, Berkshire Hathaway Home Services’ and Real Living Real Estate’s parent companies, Keller Williams, RE/MAX. The trio claimed that MLS PIN’s commission rules, and the brokerages’ roles in upholding them, violated federal antitrust laws and filed a class-action lawsuit seeking to have them overturned.
The lawsuit is one of several across the country challenging the system where home sellers pay for the buyer’s agent’s commission, as well as their own. Typically, this rule is enforced by the multiple listings service where a property is advertised.
According to the terms of the settlement agreement, MLS PIN denies it’s liable for Nosalek’s and the Hirschorns’ claims, but in addition to paying the trio it also agreed to modify its listing rules to no longer require that sellers pay the buyer’s agent’s commission. The rule changes agreed leave who pays the buyer’s agent’s commission open to negotiation between the buyer and their agent and between the seller and the buyer’s agent. Under the changes, the seller can request a Realtor association tribunal adjudicate disputes over commissions. The seller’s agent will be required to notify their client that sellers no longer have to pay the buyer’s commission and that they can decline any request from the buyer’s agent to pay their commission.
In addition, regardless of how much a listing offers to pay the buyer’s agent, should the buyer make an offer different from the terms spelled out in the listing, the seller can negotiate who pays the buyer agent’s commission.
The settlement doesn’t cover any of the brokerages named in the lawsuit, meaning that they will still have to fight out Nosalek’s and the Hirschorns’ claims, potentially exposing them to bankruptcy if they lose the case. A memo from the plaintiffs’ lawyers accompanying the settlement notes that Nosalek and the Hirschorns didn’t think MLS PIN had enough money to “contribute significantly” to a fund to compensate past sellers for buyers’ agent commissions they were forced to pay. That memo adds that the $3 million MLS PIN has proposed to pay the plaintiffs will instead be put into a fund that will pay their lawyers to continue working the case.
The settlement also specifically shields MLS PIN’s shareholders – unlike many MLS systems, it’s owned by a group of Realtors and not by a Realtor association – from further suits unless they were the brokerage parent companies named in the initial lawsuit.
