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The largest multiple listing service in New England agreed on Friday to overhaul its policies, pay $3 million and cooperate against the remaining real estate franchisors named in an ongoing lawsuit over commissions.
Plaintiffs in the case — known as Nosalek for its lead homeseller — will use settlement money received from the broker-owned multiple listing service MLS PIN to fuel the ongoing suit against defendants Anywhere, RE/MAX, Keller Williams and HomeServices of America, according to legal documents filed last week in the U.S. District Court for Massachusetts.
According to a proposed settlement agreement, MLS PIN shareholders, who are brokers, will be covered by the settlement unless they’re defendants in the lawsuit while homesellers in the settlement class will receive “substantial benefits” from the MLS, including $3 million to go into a fund and MLS PIN’s “cooperation” in the continuing litigation, including providing requested documents and depositions.
“Plaintiffs believe that MLS PIN was not and is not in a position to contribute significantly to individual Class Member monetary recoveries,” attorneys for the plaintiffs wrote in a supporting memo. “However, plaintiffs respectfully submit that the creation of a $3 million Settlement Fund with a substantial litigation fund … will benefit the Class by funding Plaintiffs’ active prosecution of their and the Class’ claims against the Broker Defendants who remain in the Action, including funding expert testimony.”
Previously known as Bauman after another homeseller, the case was filed in December 2020. Like federal commissions suits Moehrl and Sitzer/Burnett, it 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 in violation of the Sherman Antitrust Act.
However, Nosalek differs in one important respect from the other suits: the National Association of Realtors is not named as a defendant, but MLS PIN is. The MLS, which has a full-time staff of 60 employees, boasts approximately 46,000 subscribers in six New England states and New York. Many of the brokers who are subscribers of MLS PIN are likely to be franchisees of the remaining defendants.
MLS PIN declined to comment for this story, citing pending litigation. In the agreement, MLS PIN denied wrongdoing or liability, but said it agreed to the settlement “to avoid the further risk, expense, inconvenience, and distraction of burdensome and protracted litigation, and thereby to resolve this controversy, to avoid the risks inherent in complex litigation, and to obtain complete dismissal of the Action as to MLS PIN.”
According to the legal filings, of the $3 million, up to $900,000 will go toward attorneys’ fees, up to $200,000 will go toward expenses, about $250,000 will go toward notifying settlement class members, and each of the three named lead plaintiffs will get up to $2,500 for being class representatives. The plaintiffs will ask the court to use the remaining funds of at least $1,642,500 to pay for future expenses for the litigation against the remaining defendants “for the benefit of Settlement Class Members.”
In an emailed statement, Keller Williams spokesperson Darryl Frost told Inman, “We are aware of MLS PIN’s decision to settle the claims against it. We are not a part of the settlement. We do not believe the claims against us have merit and will continue to defend ourselves vigorously.”
Keller Williams declined to comment further.
The suit alleges that MLS PIN is not directly required to abide by NAR rules but nonetheless adopted a rule similar to a NAR rule that requires listing brokers to offer a blanket, unilateral offer of compensation to buyer brokers in order to submit a listing to MLS PIN. The plaintiffs call the rule the “Buyer Broker Commission Rule.”
As part of the settlement, MLS PIN agreed to change some of its policies to make the offering of compensation to buyer brokers optional, similar to changes broker-owned Northwest MLS has adopted.
If the court approves the deal, MLS PIN will be required to incorporate the following language, among other changes, into its rules:
“The Service will accept for Filing a Listing only if the Listing Broker has first certified, through the appropriate key, code or symbol on the Property Data Form as specified by the Service, that the Listing Broker, before entering into the Listing Agreement with respect to that Listing, notified the Seller (i) that the Service does not require the Seller to offer compensation to Cooperating Brokers, and (ii) that, while a Cooperating Broker may request compensation from the Seller in lieu of requesting from the prospective purchaser all or a portion of any compensation to which the Cooperating Broker and prospective purchaser may agree for the Cooperating Broker’s services to that prospective purchaser, the Service does not require the Seller to accede to such a request.”
Asked for comment on the settlement and whether NAR is anticipating any similar rule changes, NAR spokesperson Mantill Williams told Inman, “The practice of the listing broker paying the buyer broker’s compensation saves sellers time and money by having so many buyer brokers participating in that local marketplace and thus creates a larger pool of buyers for sellers.
“For buyers, these marketplaces save them the burden of extra costs at closing, enable them to receive professional representation and make homeownership possible for more people. For these reasons, NAR will continue to fight for consumer protection.”
In a Substack post, industry consultant Rob Hahn opined that the settlement was “a HUGE win for MLS PIN” given its “minuscule” $3 million price tag and “very minor” changes to its compensation rules. But the fact that MLS PIN went out on its own gave him pause.
“The unity of defendants is utterly broken,” Hahn wrote. “If MLS PIN can go do a deal and hang the brokerages out to dry, then NAR can do the same. Brokerages now know that. How that impacts things moving forward remains to be seen.”
Hahn also emphasized that the MLS rule changes “will have very little impact on buyer agent compensation” and likely won’t do anything about a chief complaint in the lawsuit: that buyer agents steer buyers away from listings that offer less than the typical commission in a market.
“Nowhere in the settlement or in the language of the rules is there a prohibition against advising the seller to pay or not pay compensation,” Hahn wrote.
“It makes me wonder if the plaintiff lawyer who negotiated the settlement read his own Complaint.”
He added, “The Nosalek lawyers, it turns out, were just after the money. The rule changes in the settlement just make things worse for everybody, and obviously they don’t care.”
The changes make things worse because they not only facilitate steering, but they allow listing agents to change the compensation after a listing is entered into the MLS to potentially favor buyer agents within their own brokerage or disfavor buyer agents from non-traditional brokerages, according to Hahn.
Because of these problems, he predicts that the deal might attract the attention of the U.S. Department of Justice or the Federal Trade Commission, who have already shown their interest in MLS compensation rules.
“Steering remains at the heart of these lawsuits, so any settlement that doesn’t address that merely kicks the can down the road, either for the DOJ/FTC to address or for future class action lawsuits to address,” Hahn wrote.
“I do get a strange feeling in my belly that MLS PIN has merely exchanged a civil lawsuit for a full-blown DOJ investigation,” Hahn added.
Inman has reached out to plaintiffs’ attorney Douglas Needham of Izard, Kindall & Raabe for comment. We will update this story if a response is received.
RE/MAX declined to comment, citing pending litigation. Anywhere and HomeServices did not respond to requests for comment.
Editor’s note: This story has been updated with comments from industry consultant Rob Hahn’s Substack post and RE/MAX’s declination to comment.
