The Council of Multiple Listing Services is establishing a separate nonprofit with its own board of directors to fund MLS legal battles, and the trade group’s CEO hopes to begin accepting contributions soon, possibly within two weeks.
Jessie Edgerton, CMLS CEO, told Inman on Monday that the organization is “in the final stages of creating the document set and banking infrastructure to begin receiving contributions.” She said she hopes to reach that point by the end of next week, though she called the timeline “very aspirational.”
“This will be a separate 501(c)(6) entity with a separate governance structure and a separate board of directors,” Edgerton said.
CMLS is finalizing more than $1 million in contributions to the fund, Edgerton told The Real Deal, which first reported the fund last week. She declined to confirm specific commitments to Inman but said CMLS has received “a number of verbal and informal written commitments of funds” from people in the industry who want MLSs to be able to use the courts to maintain their independence.
The CMLS fund is the second announced in the dispute. CRMLS said Sept. 30 that it was forming an MLS Cooperation Legal Defense Fund and had approached the California Association of Realtors and NAR legal action programs for support. CRMLS General Counsel Ed Zorn later told Inman that the fund is intended to help MLSs beyond CRMLS.
The fund comes as Compass and several MLSs fight in federal court over rules that fine agents for publicly marketing office-exclusive listings outside the MLS. California Regional MLS filed suit Oct. 5 seeking a declaratory judgment that its cooperation rules are lawful, and Compass filed its own antitrust suit against CRMLS on Oct. 16. Six more MLSs in Arizona, California, Colorado and North Carolina filed similar declaratory judgment suits against Compass last week as well.
At CMLS’ conference in Fort Lauderdale, Florida, in late September, Compass CEO Robert Reffkin told MLS executives the brokerage would begin filing antitrust suits against MLSs that fine or punish agents for publicly marketing office exclusives. Edgerton, who led the onstage conversation with Reffkin, said about 1,500 people attended the session.
Edgerton said her members are private companies that set rules based on what each believes serves its participants and local markets. When that group is told “the largest and most powerful public real estate brokerage and franchise in the world will sue them into submission,” she said, “that feels like the right time for a trade organization to set up a legal action fund.”
Edgerton made a similar argument in a LinkedIn post, writing that the courts exist to resolve disputes on their merits.
“When a company can win by threatening to outspend its opponent, the size of its legal budget replaces the strength of its argument,” she wrote. The post did not name Compass.
Compass has argued that homeowners should be able to publicly market office-exclusive listings without their agents facing MLS fines. A Compass spokesperson previously told Inman that MLSs supporting more than 350,000 agents in 12 states already allow the type of public marketing Compass favors.
How the fund will work
The fund’s governance and decision-making process is still being set up, Edgerton said, but funding decisions will go through outside antitrust counsel and an independent board that will review applications on a case-by-case basis.
“We will take cases of import to the MLS industry at large, and we will ensure that there is objectivity in all phases of the decision-making process,” she said.
Member MLSs will not have automatic access to the fund. They will apply, and the independent board will decide on each request.
She said she views a legal action fund as a standard function of a trade organization and plans to keep it running after the current disputes are resolved.
“This is a standing up of a new initiative that will be part of CMLS’s infrastructure on a go-forward basis,” she said.
Member response
Edgerton said the Compass dispute has left her members feeling more empowered than anxious.
“As strange as it may sound, I feel a sense of empowerment from my members,” she said.
She acknowledged that litigation is stressful, particularly when the threat comes from “an entity that has, to put it mildly, a much larger reservoir of financial resources for litigation.” She said that stress shifts when MLSs see themselves defending an infrastructure that is “deeply pro-consumer,” adding, “I mean both buyers and sellers.”
Members are also frustrated at spending time and money on litigation that Edgerton said serves individual large companies rather than the health of the industry. She said MLSs would rather focus on “AI and the intersection of AI with data transparency,” including “how that’s affecting real estate consumers, how that’s affecting brokerage.”
She added that a decade of antitrust and commission lawsuits “has created a lot of uncertainty in consumers’ minds about our industry.”
What agents should know
“MLS listing rules across the country give enormous amounts of flexibility for agents and consumers to make the choices that they need to,” Edgerton said.
She urged agents and brokers to study their local MLS rules directly rather than relying on outside narratives about them.
“I guarantee that in the vast majority of instances, the MLS is working alongside you to create all of the pathways you need to serve not only your buyer clients, but your listing clients,” she said.
“There are always going to be use cases where your client will want or need privacy,” she said, adding that agents who understand their MLS rules can find a path that serves those sellers.
She noted that listing clients often become buyer clients, and a market split into closed systems could work against them when they buy.
“We have to, as an industry, keep in mind that there are two sides to every transaction,” she said.
Edgerton also pointed to lenders and appraisers, who rely on MLS data to value the homes banks lend against. If that data becomes less reliable because listings are siloed, she said, homebuyers could have fewer paths to ownership. She made the same point on LinkedIn, writing that the MLS “supplies banking institutions the data integrity they require to put a mortgage within reach of a first-time homebuyer.”
“Once that data set starts crumbling, your clients lose, and ultimately we all lose,” she said.
