Real Estate

MLS executives imagine a world with no MLS

Under threat by buyer commission lawsuits, MLSs tout value proposition

As the trial for Sitzer/Burnett, the first of the two bombshell class action buyer broker compensation anti-trust lawsuits, kicks off this week, the real estate industry’s multiple listing services are busy preparing for any and all outcomes.

“I think that one of the challenges in this is that there are a lot of possible outcomes,” Denee Evans, the CEO of the Council of MLSs (CMLS), said. “We are optimistic and hopeful that the value of the MLS and the role of the agent will prevail so that we can continue to provide an efficient and transparent marketplace for consumers.” 

While the MLS has operated in the background of the real estate industry for years, it has been thrust into the limelight in recent months through the Sitzer/Burnnet suit and the Moehrl suit.

Both filed in 2019, the plaintiffs in the two lawsuits contend that the National Association of Realtor’s Participation Rule, which requires listing agents to make a blanket offer of compensation to buyers’ agents in order to list the property on a Realtor-affiliated MLS, inflates the costs for consumers, in violation of the Sherman Antitrust Act. NAR argues that the current commission structure, which has been in place for over 100 years, helps consumers.

Although MLSs are not named as defendants in either of the two lawsuits, they will be greatly impacted by the outcome of the lawsuits, and are currently navigating clauses in the settlement agreements posed by defendants Anywhere and RE/MAX. According to the two settlement agreements, the firms are no longer allowed to require agents to belong to NAR.

In doing so, the two firms joined Redfin, who is not a defendant in these suits, in leaving the trade group. With great change on the horizon, MLS executives said they are focusing on showing their value to agents and their clients.

“I think the key for MLSs, brokers and even local Realtor association is to continue to show their value so that if it comes down to a ‘yes’ or a ‘no’ in belonging to the MLS, that we can demonstrate this is why we are a benefit and how the information we provide you benefits consumers and show your value to them,” Merri Jo Cowen, the CEO of Stellar MLS, said.

Since 2017, CMLS has been working to increase awareness of the MLSs value proposition through various campaigns including “Making the Market Work,” “MLS In the Know,” and “Champions of the MLS.”

“I think the biggest opportunity in the industry right now is for all parties to strongly articulate their value,” Evans said. “I don’t think it has even been questioned quite as much as it is being right now.” 

MLS executives believe the true value of the MLS lies in the data in provides agents and their clients with.

“One of our big values is our data,” Cowen said. “It is just something that you can’t get anywhere else. Anywhere else down the line the data is coming from the MLS and it might be supplemented or changed, but the MLS data and the products that we have are what is helping our brokers serve the consumers and keeping the data transparent by ensuring consumers all have the same data.”

Cowen is greatly concerned about what could possibly occur if somehow the MLS ceased to exist as a result of these lawsuits.

“Without the MLS it would totally take us back to the Dark Ages and I don’t think that is the intent,” Cowen said. “I think it would catastrophic if consumers had to go to each portal site to get all of the information because it could be different on each site and there could be listings on one site that aren’t on others.”

Despite the concerns, MLS executives believe the MLS system will remain intact.

“As the aggregator and provider of the data that powers the real estate portals and technology, I believe multiple listing service organizations will remain an intricate part of the industry,” Gene Millman, the president and CEO of REcolorado, said. “We will continue to serve as the central point for collecting data and, most importantly, ensure that data is accurate, complete, and consistent to serve the market.”

Cowen believes that we will see consolidation in the MLS space, especially if fewer agents join NAR and/or their local Realtor associations.

“If some smaller MLSs are struggling we might see some mergers or absorption into neighboring larger ones especially if there is a financial impact or such significant changes that they cannot make them effectively,” Cowen said.

Since the start of the month, four of the largest MLSs in the Southeast, including South Carolina’s Charleston Regional MLS; Canopy MLS in North Carolina; Georgia MLS; and Realtracs, which is the largest MLS in Alabama, Kentucky and Tennessee, have formed the Southeast MLS Alliance, creating a data sharing network.

Regardless, MLS leaders believe the data and transparency they provide the industry will ensure their security moving forward. “I believe the MLS will exist regardless of the outcome of these lawsuits because it facilitates an accurate, transparent and complete marketplace,” Evans said. “What has been built is the foundation of our real estate ecosystem and it is in the best interest of the consumer to have all the information. It is MLS data that powers the marketplace.” 

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