Massachusetts FSBOs Soon To Eliminate All Real Estate Commissions

Nosalek v MLS PIN Lawsuit

The landmark real estate lawsuit, Burnett v. National Association of Realtors (NAR), filed in 2019, is a class-action lawsuit on behalf of home sellers in Missouri and border towns and has far-reaching effects, including on Massachusetts FSBOs.

A similar and parallel lawsuit originally filed in December 2020 in United States District Court, D. Massachusetts, the Nosalek v. MLS PIN lawsuit, named after its lead plaintiff, alleges that the broker-owned MLS PIN, the largest MLS system in New England and the MLS Entry Only New England exclusively uses, is not directly required to abide by the National Association of Realtors (NAR) rules.

Three pieces of subtle background information not commonly known by the average consumer:

  1. There are hundreds of multiple listing service (MLS) systems across the US, nearly all of them are owned and operated by a local Association of Realtors and those local MLS systems are obligated to follow NAR rules.
  2. Historically, NAR rules stipulated that if a listing agent entered a listing into an MLS, in doing so they must make an unconditional offer of compensation greater than zero (to buyer’s agents) on all listings of property for sale. Effectively, the seller, who is represented by the listing agent, is obligated to offer compensation to the buyer’s agent representing the buyer of their property.  In conjunction with the loss of Burnett v. NAR, NAR is beginning to publish new buyer-broker compensation guidance that aims to eliminate the buyer-broker compensation mandate for good.
  3. While MLS PIN is technically not owned and operated by a local Association of Realtors, MLS PIN has effectively adopted all NAR rules in its operation.

The Nosalek v. MLS PIN lawsuit reached a tentative settlement in 2023.  In the initial settlement plan, MLS PIN consented to revamp its commission framework, pay $3 million, and collaborate in legal action against other defendants, including Anywhere, RE/MAX, Keller Williams, and HomeServices of America.

“Revamp its commission framework” means MLS PIN will be forced to remove the requirement that listing agents must offer buyer’s agent compensation to list a property in MLS PIN.

Such changes will result in a bonanza for Massachusetts FSBOs, it will be the ultimate panacea for a FSBO, they’ll be able to use an entry only MLS listing, get the distribution and syndication power of an MLS, and will eliminate all real estate agent commission. If you know how entry only MLS listings work, the listing agent commission is already removed, and with these upcoming changes, the FSBO will no longer be forced by MLS rules and regulations to offer a buyer’s agent commission.

However, in September 2023, the Department of Justice (DOJ) stepped in, opposing the settlement on the grounds it merely tinkered with buyer-broker commissions and failed to enact substantial procedural reforms.

In the interim, MLS PIN will sit tight and not make any changes, yet it’s simply a matter of time until the DOJ will completely upend MLS PIN operations and eliminate the buyer’s agent compensation requirement which means that at some point in the future, Massachusetts FSBOs who use entry only MLS listings will eliminate all real estate agent commissions when they list and sell FSBO on the MLS.

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