In a white paper specifically focused on the Clear Cooperation policy, Carter addressed that highest level of anxiety that appears to be pervasive in the wake of so much legal scrutiny and upheaval: How do MLSs avoid policies or practices that draw more lawsuits?
Clear Cooperation notably was cited by two separate private listing services in class-action lawsuits that were both in advanced stages and on-track for high stakes trials before being settled (one in early 2024, one last month).
But Carter wrote that removing so-called “Mandatory Cooperation” policies like Clear Cooperation actually creates more opportunities for buyers or sellers to sue MLSs (and brokerages) based on the proliferation of other anti-competitive practices that he claimed would occur in that world.
“The demanded policy changes effectively deny buyers the right to choose their own real estate agent,” he wrote.
Carter laid out a scenario where an exclusive listing agent could simply ignore a buyer agent, forcing the buyer agent to “approach the listing agent directly.” That opens up the possibility of buyers suing the MLS and anyone else involved for effectively preventing them from working with the agent of their choice.
Any seller who wants to keep the property off the MLS can use a non-exclusive listing agreement, Carter wrote, even with current rules.
Is there a chance that MLSs that continued to enforce Clear Cooperation could be sued? Seemingly yes, as both major lawsuits that targeted NAR were not necessarily dismissed permanently—both left open the possibility of reviving the claims that the rule violates antitrust statutes, at least as it related to NAR (CRMLS and other big MLSs settled at least one lawsuit under terms that have not been disclosed).
An ongoing lawsuit against NAR and big brokerages by Utah-based discount firm Homie Technologies extensively cites Clear Cooperation as an alleged effort by real estate incumbents to quash listing service startups, and steer consumers to REALTOR®-controlled ecosystems. That lawsuit is still in the early stages.
Is the situation then a “damned if you do, damned if you don’t” scenario for MLSs?
Carter doesn’t think so. He told RISMedia that his MLS’s settlement did not require any policy changes.
“All of these other (Clear Cooperation) lawsuits, they’ve been litigated, and we’ve come out of it with no policy changes. So that being said, we are just in a period of heightened scrutiny on everything that we do, and just because something may lead to a lawsuit, doesn’t mean it’s the wrong thing to do,” Carter said.
Outside of Clear Cooperation, there are policies that have already been changed by litigation: namely, mandated buyer agreements and bans on advertising commission on MLSs. While MLS leaders, including Carter, have reported that compliance was near universal following the NAR settlement, questions remain about the role of MLSs in enforcing these new rules.
While NAR lawyers previously told RISMedia that it is legally the MLS’ responsibility to ensure buyer agents were signing agreements with clients before, Lund said that is neither practical nor legally sound.
“The MLS has never been the broker of record. They’re not responsible for the behavior of the agent—the broker is,” he said. “And even in cases where agents break rules in the MLS, the broker’s responsible—I mean the agent might pay the fine, but it’s the broker’s duty to supervise their agents. It’s not the MLS’ duty.”
Lund added that he believes that agents are complying with the settlement and signing deals, but that very few (if any) MLSs are actually checking and enforcing that rule.
RISMedia’s own data showed that at least early on, compliance with buyer agreements was tepid at best. Nearly half of agents and brokers, in fact, admitted to not signing agreements with buyer clients in the first six weeks following the NAR settlement.
According to Miller, who lives and practices law in Minnesota—a state which had mandatory buyer agreements even before the settlement—even the agents who sign agreements are often just “slipping” that document in with all the other documents in an offer, all quickly signed by the parties without an extensive review, and in violation of rules requiring the agreement to be signed before touring homes.
He added that these practices and lack of compliance “will draw the attention” of class-action lawyers. The attorneys behind the seller-focused commission lawsuits, who negotiated the NAR settlement, have already said publicly they are prepared to come back and single out individual companies or MLSs for not complying with the settlement. What exactly that would look like is unclear, but could take the form of new lawsuits, court orders or injunctions.
Lund said he believes agents are using, and will continue to use, buyer agreements for a more basic reason—because they won’t get paid if they don’t. That might make the question of who enforces compliance less urgent, at least in terms of the buyer agreements, if contracts become habitual and widely adopted. Other MLS leaders, including Canopy CEO Anne Marie DeCatsye, have previously told RISMedia that they are shoring up education around buyer contracts and are confident in adoption of the forms.
But Miller argues that MLSs are still potentially opening themselves up to liability. If MLSs are, in practice, still restricting access to listing data—which he argued belongs to the sellers themselves, and not the brokerages—then they’re opening themselves up to lawsuits, as unrepresented buyers or other parties (like real estate attorneys) are effectively forced to hire a REALTOR®, rather than pursue alternate methods of buying or selling a home.
While Bell doesn’t necessarily agree with this premise, he said that it’s possible that a court could side with someone making this argument at the local level (or with an MLS or REALTOR® association that breaks with NAR, as was attempted in Phoenix), and send a “big message” to NAR and incumbents.
Would that kind of scenario set off a wave of national lawsuits and copycats, the way the Burnett verdict did? Miller said he doesn’t necessarily see the next (hypothetical) phase of litigation playing out like last year.
“A state class action in state court on state law—there’s plenty of damages. If you’re talking about forfeiture of commissions, it doesn’t take many transactions to get you (to) the hundred million dollar mark,” he said. “State law…is probably better right now than doing a federal case in a lot of situations.”
At an even higher level, Miller echoes what Carter said regarding increased legal scrutiny, but with a very different perspective.
“I saw a lot of lawyers make horrible mistakes. They didn’t understand this industry, and now there’s a lot more awareness. They’re learning a lot more about what’s going on in this industry,” Miller said.
There is also the DOJ, which is still actively investigating the Clear Cooperation policy, and has indicated it is willing to push further on issues like buyer agreements.
All of that might be changing, however, under a new presidential administration—though it’s still unclear how new personnel and new directives at the DOJ might affect the scrutiny of real estate practices.
Barbaro said he doesn’t believe the DOJ will follow the same path as it was under the former administration—although he added that only months ago, federal antitrust law enforcement had some specific, major goals beyond the NAR settlement.
“I’ve heard directly from people in the room what they were asking for,” he said. “I don’t think it was really that they wanted effectively (that) a seller couldn’t pay a buyer’s compensation at all.”
Instead, the DOJ was pushing for “negotiated compensation at every step,” where the home sale negotiation would include a regular back and forth on commission for agents. Barbaro also said he thinks the DOJ was preparing to “get involved” in the MLS-REALTOR® association relationship.
“I think calling them different organizations is really the problem. (SmartMLS has) pretty much a 100% overlap with Connecticut REALTORS®, right?” he said. “They’re really not different organizations.”
