Guidance on Using an Online Platform that Publishes Offers of Cooperative Compensation

QUESTION: I have seen some new online platforms that are giving listing agents the opportunity and ability (for a fee) to market their listings while making public offers of compensation to cooperating agents. This sounds very much like the same practice that was part of the old MLS system. Can you provide some guidance on whether there are risks associated with using one of these platforms?

ANSWER: In the aftermath of NAR’s settlement this past March, online vendors quickly began emerging that were similar to the old MLS system, where multiple agents and firms could publish their listings with  offers of cooperative compensation. While there is no specific “rule” prohibiting these sorts of platforms, there are serious risks to consider.

The attorneys who filed the Burnett antitrust lawsuit in Missouri argued that NAR, real estate firms, local boards, and MLSs engaged in a conspiracy to raise real estate commissions by establishing and implementing rules that required home sellers to pay cooperative compensation to buyer agents. Some of these rules were located in the MLS. Though NAR denied these allegations and defended itself and the MLS rules, a jury nevertheless awarded a large verdict to the plaintiffs. You can read more details about the lawsuit here.

NAR settled the lawsuit while it was in the process of pursing an appeal. As part of the settlement, a host of new MLS rules were announced, including rules to eliminate cooperative compensation offers from the MLS. Those new rules have taken effect within the last couple of weeks and have been the subject of many Q&As in the REALTOR® Rundown.

An important part of the settlement is that it was not just NAR that was released from liability. It was a vast majority of individual REALTORS® and REALTOR® firms as well as state associations, MLSs, and local  boards. Had the settlement not included REALTOR® members and firms, then each one of them, together and individually, may have had to face and defend against the same antitrust allegations NAR had to  combat. The settlement made sure that did not happen, at least for a vast majority of NAR’s members and related firms and entities.

Based on this history, the risk of using an online platform that operates like the old MLS cannot be understated. Agents and firms may well be subject to the same antitrust allegations and exposure to liability that NAR faced in the Burnett lawsuit. Antitrust cases are expensive, and many insurers no longer offer protection against these sorts of claims. The settlement will offer no protection in these circumstances, and using one of these online platforms may even jeopardize the protection that the settlement currently provides, which could open the door to further liability.

Some of the lawyers from the Burnett case have made it clear that they are open to pursuing further litigation. Before engaging with an online platform that facilitates cooperative compensation, agents and firms  are therefore strongly encouraged to consult legal counsel. Even further, as we have stated before, any firm that is advertising cooperative compensation on its own website (and not with other firms or agents) or  on social media should also consult with legal counsel.

Release Date: 08/22/2024