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A major national real estate consultancy is urging brokers and listing agents to act quickly to update their policies and marketing materials following a settlement between a trio of Massachusetts home-sellers and MLS PIN in a class-action lawsuit over buyer-agent commissions.
MLS PIN agreed late last month 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 settlement is still awaiting the judge’s final approval and the plaintiffs’ suit will continue against the brokerage companies even if their settlement with MLS PIN is approved.
But the settlement means the commission system that has dominated the residential real estate business for decades has “hit a critical point” and brokerages, agents and the National Association of Realtors must act quickly, T3 Sixty President and CEO Jack Miller and Executive Chairman Stefan Swanpoel wrote in an open letter Tuesday.
“The recent settlement between MLS PIN and plaintiffs in the Nosalek case reveals that foundational change to the structure – a decoupling of buyer broker compensation from listing broker compensation to some degree – will most likely occur sooner than later. These changes could come because of a settlement, a judge’s injunction or, if the industry is smart, by key stakeholders’ proactive adjustments to their policies and practices,” the two said.
A failure to pivot now, they said, meant “harming consumers,” exposure to “significant” legal and regulatory risk and uncertain revenues.
The letter included three recommendations.
First, NAR should make mandatory changes to its MLS policies and code of ethics that require buyer’s brokers to have signed buyer-broker agreements that “clearly spell out” compensation terms before a buyer’s agent shows an MLS-listed property, Miller and Swanpoel said, and dive into lobbying efforts to make sure mortgage lending rules are clarified to allow loans to explicitly finance buyer’s agent compensation.
Second, the two said, brokerages need to start requiring buyer-broker agreements when agents start engaging with buyers “as soon as possible” and develop education and training tools for agents that can explain why buyer’s agents are valuable.
Lastly, individual listing agents should audit their sales and marketing materials, Miller and Swanpoel said, to make sure the materials are up-front about how they and buyers’ agents are compensated and how valuable it is to offer a buyer’s agent commission.
