Deja Vu All Over Again…Could the current antitrust litigation take us to the past?

A jump backwards to pre 1996, when all brokers and agents in residential real estate sales and members of a Multiple Listing Service represented the seller. Subagency was the rule of the day.

The Offer of Compensation was formally introduced nationwide by NAR in 1996.

As a result of the current class action antitrust litigation, perhaps MLS again might become a sub agency model, with brokers refuting the offer of sub agency if they want to represent buyers. MLS reverting to the old compensation vehicle might be an unintended consequence of the current trial (Sitzer)and the other current litigation (Moehlr, Nosalek, and the DOJ action against NAR).

If offering $0 compensation is not enough, what is, or will be enough to satisfy the DOJ? It seems that the DOJ in intent about the removal of the Broker Compensation clause in the NAR MLS Model Rules.

Prior to 1996, the Compensation Vehicle for MLS was the Unilateral Offer of Subagency. Everyone represented the seller so no seller could complain that they were forced to pay a buyer broker.

Seller’s had 100% representation, from fiduciaries…Subscribers and Participants of the MLS.

Agency Disclosure laws passed in the mid 1980s created a trap for agents working with buyers.

Agents often disclosed to buyers that they represented the buyer when in fact, as Participants in the MLS, they represented sellers by virtue of the MLS construct as a “Unilateral Offer of Subagency.”The result of their false disclosure was a documented divided agency.

To keep this undisclosed dual agency/divided agency from happening, the CAR (California Association of REALTORS) Model Rules and then the NAR Model rules were changed, making the Compensation Vehicle for MLS an Offer of Compensation, Sub Agency Optional, instead of a Unilateral Offer of Sub Agency.

Another “fix” at the time would have been to allow MLS participants to opt out or refute the offer of subagency and contract with the buyer directly.

No one, including the folks at CAR and attorneys I communicated with when the agency disclosure laws were first passed, had any procedure for opting out of the Offer of Sub Agency. Instead, then the model rules were changed to the offer of compensation, the rule being challenged today.

What if we went back to the old compensation model, an offer of subagency? Those who want to represent buyers could then contract with the buyers, and sellers would not be required to offer compensation to a broker representing the buyer, against the best interest of the seller.

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