Will Sitzer/Burnett send the industry back to the ‘Dark Ages’?
Bright MLS CEO Brian Donnellan said the verdict could be a blow to fair housing, which “should be concerning to all of us.”
Key points:
- The future of MLSs has become less certain as court cases question their role in alleged anticompetitive practices.
- While a “knee-jerk reaction” isn’t warranted, Bright MLS and others should be looking ahead and focusing on their missions.
- Showing the value of MLS, particularly around equitable access to housing information, will become more important, said Donnellan.
As the real estate industry continues to digest the news of the Sitzer/Burnett verdict and ponder its impact, multiple listing services may be in for a period of soul-searching.
Long seen as the platform for accurate, up-to-date listing information in the U.S., MLSs could face a range of outcomes in the coming years — from the procedural to the existential — depending on how compensation policies and NAR membership requirements change.
If the end result of the commissions lawsuits, which appear to by multiplying, is that real estate practices in the U.S. begin to look more like those in Australia and the United Kingdom, MLSs could fade away and exclusive listing agreements might become more rare. Prior to the Sitzer/Burnett verdict, NAR Deputy General Counsel Lesley Muchow warned that the impact of a loss in the case could be a 19th-century era "Wild West" scenario where "buyers would have to visit every single broker in town in order to see all the available inventory that is out there."
Why the MLS matters, and what comes next
American consumers have come to expect the high-quality, impartial data provided by today's MLSs, said Brian Donnellan, president and CEO of Bright MLS. Bright, the nation's second-largest MLS — and one of 20 MLSs named as a "co-conspirator" in the Moehrl vs. NAR lawsuit — revised its policies over the summer in light of the commissions court cases, allowing listing brokers to enter an offer of $0 in buyer agent compensation.
According to the organization, the change reinforces the idea that commissions are negotiable while also keeping a system in place to efficiently share information. But now that the verdict is in, what lies ahead for MLSs?
Right now, nothing changes for Bright, Donnellan said, as a lengthy appeals process will likely keep the case tied up in court for months or years.
"A knee-jerk reaction at this time wouldn't be prudent, nor is it warranted," Donnellan told Real Estate News.
And regardless of what ultimately happens with Sitzer/Burnett and other cases, Donnellan said the mission of the MLS remains the same: providing a platform that powers more than 90% of all real estate transactions for agents on behalf of buyers and sellers.
A return to the 'Dark Ages' of real estate
Donnellan believes the Sitzer/Burnett verdict was misguided — and may have turned out differently if U.S. District Court judge Stephen Bough had allowed the jury to consider pro-competitive aspects of the existing system.
"The most surprising thing about this case was the complete lack of understanding that this ruling has on fair housing," Donnellan said.
And the importance of providing fair and equitable access to housing should not be understated, he added.
"There is strong potential here to send us back into the Dark Ages of real estate in the United States, where your ability to participate in the U.S. housing market was predicated by what you look like, who you are, and who you know."
That scenario, said Donnellan, "should be concerning to all of us — not just those involved in the real estate profession."