Pinergy MLS Anticompetitive Buyer-Broker Commission Rules Class Action

MLS Property Information Network, Inc. (MLS PIN) owns Pinergy, said by some to be the seventh-largest multiple listing service (MLS) in the US, serving 41,000 real estate professionals in licensed in New England and New York. The complaint for this class action alleges that MLS PIN has engaged in anticompetitive behavior because home sellers must agree to specific “artificially inflated, supra-competitive commission rates” if they wish to list their properties on Pinergy.

The class for this action is home sellers who paid a broker commission in connection with the sale of residential real estate listed on Pinergy.

This complaint brings suit under antitrust laws. The defendants include MLS PIN (owner of Pinergy) and some very large relator companies: Realogy Holdings Corp. (which owns and franchises firms like Century 21and Coldwell Banker), HomeServices of America, Inc., HSF Affiliates, LLC, BHH Affiliates, LLC, Re/Max, LLC, and Keller Williams Realty, Inc.

Only licensed real estate brokers and salespersons can handle sales of real estate. Salespersons must be affiliated with and supervised by brokers. The National Association of Realtors says that 89% of sellers and 88% of buyers use the services of real estate brokers.

Brokers and agents are normally paid by commission, which is figured as a percentage of the property sale price. The commission for a sale is usually listed in the agreement between the seller and the seller’s broker or seller-broker. If a buyer has a broker, the buyer-broker’s commission is paid as a portion of the commission paid by the seller. The Pinergy agreement sets the amount the seller will pay the buyer-broker.

The complaint alleges, “The membership in Pinergy is generally comprised of nearly all residential real estate brokers and their affiliated agents in Pinergy’s service area. Listing a property for sale on Pinergy is essential to marketing a property effectively to prospective buyers.”

MLS PIN “requires all seller[-]brokers to offer compensation to buyer[-]brokers.” Other rules and procedures make it difficult for sellers to offer less. The rules are enforced by MLS PIN and associated realtors.

According to the complaint, a “home that is not listed on an MLS is very hard to find for prospective buyers.”

Originally, the complaint says, brokers worked in the interests of the seller; buyers’ agents were subagents of the listing broker or seller-broker. When this system collapsed and buyer-brokers began representing the interests of buyers, there was little incentive for sellers to pay the commissions of agents who were not working in their interests.

The complaint alleges that, rather than adjusting to the different situation, the defendants in this case “sought to enforce a scheme designed to maintain supra-competitive commissions and impeded lower-priced competition.” One of the ways they did this, the complaint says, is through the rules on buyer-broker commissions, which “shift[] a cost to the seller that would be paid by the buyer in a competitive market.”

Article Type: Lawsuit
Topic: Antitrust
Tags: Antitrust, Collusion and Price Fixing, Requiring Consumer to Pay Higher Prices