HousingWireHousingWire
U.S. District Court Judge Patti B. Saris is ready to see some movement in the Nosalek commission lawsuit, which has been pending for five years now, but that doesn’t mean she is going to approve MLS PIN’s settlement without properly examining the details.
On Tuesday, at the preliminary approval hearing for defendant MLS Property Information Network’s (MLS PIN) settlement, Judge Saris refused to grant preliminary approval to the settlement as the plaintiffs and defendants were hoping to expand the class to include commercial property sellers and mobile home sellers.
During Tuesday morning’s zoom hearing, Judge Saris noted that she was under the impression this lawsuit only involved residential real estate and that none of the named plaintiffs were involved in commercial sales or those involving mobile homes.
Despite arguments from MLS PIN’s attorney Matt Goodin, Judge Saris felt that both of these classes of properties were too different from the residential properties at the heart of the lawsuit to be added to the settlement class.
“Commercial people are a whole lot more sophisticated than people buying residential homes, and it’s usually more money involved,” Judge Saris noted.
Conversation then moved to MLS PIN’s insistence on maintaining sellers’ ability to make offers of compensation to buyers’ brokers through the MLS if they so choose, unlike MLSs affiliated with Realtor associations, which have removed offers of compensation from the MLS due to provisions in the National Association of Realtors’ (NAR) settlement.
“I’m just trying to understand why this matters,” Judge Saris said. “Why do you care so much?”
Goodin noted that he and his client feel that if sellers are unable to include offers of cooperative compensation on the MLS, if they want to do so, it would be a commercial speech issue and infringe upon their first amendment rights.
To this, the Department of Justice (DOJ), which was represented on the call by Katherine Clemons, noted that case law allows speech to be restricted if that speech is found to restrict trade or further anticompetitive practices, which for Judge Saris, brought about the fact that she does not feel she has seen or heard any evidence of sharing offers of buyer broker compensation on the MLS having anticompetitive effects.
“I was completely in the government’s camp until I heard that 25% number,” Judge Saris said, referencing MLS PIN’s statistic that only 25% of properties listed in its MLS include offers of buyer broker compensation greater than $0 since MLS PIN changed its rules surrounding offers of cooperative compensation in July 2024.
She noted that this differs from what happened at Northwest MLS when it allowed for offers of $0 buyer broker compensation. However, attorneys for MLS PIN and the plaintiffs noted that the real estate industry was in a very different place when Northwest MLS made that change.
Judge Saris also wanted to know if the 75% of sellers who choose not to make offers on the MLS made offers of compensation to buyers’ brokers elsewhere online or on a yard sign. She also posited that if it is unknown to others using the MLS that the offer of buyer broker compensation was negotiated down during closing of the home sale, that lower compensation number would not be reflected on the MLS, leading sellers who wish to advertise their offers of compensation on the MLS to inflate their offers to keep them in line with others listed in the MLS.
The DOJ also noted that these offers in the MLS were typically viewed as “blanket offers of compensation” meaning that the buyer and their broker would then have no incentive or reason to negotiate how much they would compensate their broker for a successful transaction, which in their minds suppresses competition among buyer brokers and maintains elevated prices.
While Judge Saris said she was “sympathetic” to the DOJ’s views, she still wants evidence of an antitrust violation.
“What I haven’t seen yet is whether it has an anti-competitive effect,” she said. “I haven’t seen that evidence.”
In order to gain a better understanding of whether or not this practice has harmed consumers, Judge Saris has asked the DOJ to consult with economists and real estate experts to provide data on how this practice has artificially inflated agent commissions and to file an amicus brief before the final approval hearing for the settlement.
MLS PIN and the plaintiffs have until April 22 to file changes to their current settlement agreement. This includes addressing the additions of commercial and mobile home sellers, as well as any cost-cutting measures they can find to lower the cost of the class notice, which could drastically reduce the amount of settlement funds available to class members. No hearing will be held to discuss the settlement amendments, but assuming the settlement will be granted preliminary approval, she said to expect a September final approval hearing for the settlement.
