March 26, 2024
Robby Braun, partner at Cohen Milstein Sellers & Toll, addresses ‘misconceptions’ about the NAR deal’s impact and says Realtors who try to ignore the changes ‘will get left behind’
If the court approves the settlement reached with the National Association of Realtors, listing brokers will still be able to make offers of cooperative compensation to buyer brokers outside of the multiple listing service. Some will initially try to continue with business as usual, but the deal will eventually result in “a wave of innovation” that drives down commissions for consumers.
That’s according to Robby Braun, partner in the antitrust practice group at Cohen Milstein Sellers & Toll, one of the law firms representing plaintiffs in the Moehrl and Umpa commission suits. The firm is also co-lead counsel for the plaintiffs in the NAR settlement.
Inman interviewed Braun’s colleague at Cohen Milstein, Benjamin Brown, when the firm first filed Moehrl five years ago. Now that the case looks to be heading toward a resolution, Inman talked to Braun about what the impact of the proposed NAR settlement could be on commissions, steering and new business models, and whether the deal might meet the approval of the U.S. Department of Justice.
Inman: You guys reached out and said you wanted to talk about misconceptions about how impactful the settlement will be, the extent of the changes that Realtors can expect and why Realtors should take the settlement and the changes that it will bring to the industry seriously or they’ll risk falling behind. So what misconceptions are you referring to?
Braun: There are a few of them. One of the misconceptions I’ve seen posted in some places is this idea that the settlement will result in some sort of perpetual release on a going-forward basis of Realtors who engaged in potentially anticompetitive practices. The release only goes forward up until I think preliminary approval of the settlement, backwards. So if there are further anti-competitive activities in the real estate industry, Realtors may be liable for that.
Another one has to do with this idea that people are going to be able to sidestep the practice changes reflected in the settlement simply by making offers of cooperative compensation off of the MLS.
It is true that the settlement doesn’t prohibit on a categorical, blanket basis, all off-MLS offers of cooperative compensation, but it does impose certain limitations on those offers and what can be done to facilitate those offers of cooperative compensation.
MLS data cannot be used to facilitate offers of cooperative compensation off of the MLS. If someone were to receive an MLS data feed, and they wanted to create some sort of website that hosts offers of cooperative compensation from multiple different brokers, the MLS, once it learned about that practice, would have to cut off their MLS data feed.
I’ve seen some places talk about workarounds, potentially through, for instance, Zillow, or the Zillow-owned site ShowingTime. Those practices won’t be permitted under the settlement.
Misconception No. 3 is this idea that the settlement won’t actually impact anything because brokers can continue to make offers of cooperative compensation unilaterally and not in connection with the MLS or using MLS data feeds. That’s true so far as it goes, but from our perspective, this settlement is going to really spur a new wave of innovation in the real estate industry.
You’re going to see a lot of folks who are experimenting with different types of compensation models and compensation levels. You’re going to see discount brokers. You’re going to see people who are looking to make the process more efficient. You’re going to see some consumers, including on the buyer side, experimenting with not using a broker at all to save money. You’re going to see people using other sorts of professionals, like real estate attorneys instead of brokers.
Maybe in the first year or two, there are going to be some people who ignore the new world that we think this settlement will engender, but ultimately, these innovators and discount competitors are going to increase price competition in the marketplace that’s going to drive down commissions for consumers. People who are in the industry and don’t realize it and don’t account for that are going to get left behind.
Read Moehrl Attorney: Market Shift After NAR Settlement ‘Will Take Time’.