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How a Lawsuit Could Shake Up the Real Estate Industry

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Real Estate Agent with Better Living Real Estate, LLC 9152684

Have you ever wondered how much commission you have to pay when you buy or sell a house? If you think it’s too high, you’re not alone. A group of home sellers and buyers in Massachusetts have sued a regional database of property listings and several large real estate brokers, claiming that they conspired to inflate the commissions paid to buyer-brokers in violation of antitrust laws. This case is known as Nosalek v. MLS Property Information Network, Inc., et al., and it’s currently pending in the federal court in Boston.

The plaintiffs allege that the defendants use a rule that requires sellers to offer a commission to buyer-brokers as part of the listing, which prevents buyer-brokers from competing on price and offering lower rates to their clients. The plaintiffs say that this rule results in higher commissions for both buyer-brokers and listing brokers, and higher prices for home sellers and buyers. The plaintiffs seek to represent a class of all home sellers and buyers who paid or received a commission to or from a buyer-broker in the covered area since 2016.

The U.S. Department of Justice (DOJ) has also taken an interest in this case, and has filed a statement of interest urging the court to reject a proposed settlement between the plaintiffs and one of the defendants, MLS Property Information Network, Inc. (MLS PIN). The DOJ argues that the settlement does not address the root cause of the problem, which is the role of sellers in setting buyer-broker compensation. The DOJ proposes that the court should prohibit any offers of buyer-broker compensation on the MLS PIN platform, and let buyer-brokers negotiate their fees directly with their clients. The DOJ believes that this would create more competition and lower commissions in the real estate market.

This case is one of many similar lawsuits that have been filed across the country, challenging the buyer-broker commission rule and its impact on the real estate market.  The outcome of this case could have significant implications for the millions of Americans who buy and sell homes every year. The US Department of Justice (DOJ) is seeking to change the way buyer-broker commissions are paid in the real estate market. The DOJ argues that the current practice of sellers offering commissions to buyer-brokers through the multiple listing services (MLS) is anti-competitive and harms consumers.

The DOJ proposes that sellers should no longer pay commissions to buyer-brokers at all, and that buyers should negotiate directly with their own brokers. The DOJ also wants to increase the transparency of buyer-broker commissions and prevent brokers from steering buyers away from lower commission listings.. The DOJ believes that these changes would promote more competition and lower the commission fees for home buyers and sellers."

The outcome of the Nosalek v. MLS Property Information Network, Inc., et al case could have significant implications for the real estate industry and consumers across the country. The case is still ongoing, and the court has not yet decided whether to approve the settlement or the DOJ’s proposal. Stay tuned for more updates on this important legal issue

 



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Lew Corcoran
Licensed Massachusetts Real Estate Agent
Accredited Home Staging Professional
Professional Real Estate Photographer
FAA Licensed Drone Pilot

Director, National Board of Directors,
Real Estate Staging Association (RESA)

Better Living Real Estate, LLC
15 Wall Street, #9157
Foxborough, MA 02035
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Comments (3)

Michael Lamirande
Long & Foster - Devon, PA
Listing&buyer Agent/ leasing and investment proper

Good read. I can use all the info on this. Need to prepare.

Feb 23, 2024 08:24 AM
Lew Corcoran

Thank you, Michael, for your feedback and for reading the blog post. I’m glad you found the information useful and I hope you are well prepared for the possible changes in the real estate industry.

Feb 23, 2024 12:19 PM
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

It seems like a logical time  to eliminate Dual Agency . It would be dangerous to tell sellers that they have no obligation to compensate Buyer Agents and then ask them for more commission ! 

Feb 23, 2024 09:25 AM
Lew Corcoran

Thank you, Michael, for your comment and for sharing your opinion on the issue of dual agency. I couldn't agree more. It's like you're reading my mind!

Feb 23, 2024 12:21 PM
Michael Jacobs
Pasadena, CA
Pasadena And Southern California 818.516.4393

Hello Lew - many things seem to be combining with nearly ideal timing that can potentially impact real estate in a big way.  And while compensation seems to be a bugaboo-type issue, methinks there might be more to discover/uncover.  There are those who say, time will tell, but I believe that's only one factor out of many.  

Feb 23, 2024 02:32 PM
Lew Corcoran

Wow, that’s a very insightful and thoughtful response, Michael! I agree that the lawsuit could have a big impact on the real estate industry, especially the broker fees that have been criticized for inflating home prices and misaligning the interests of buyers and agents. You also raised a good point that time is not the only factor to consider, but there might be more to discover and uncover as the legal battle unfolds.

Feb 26, 2024 01:20 PM