DOJ’s “Statement of Interest” Filed - MLS Pin Case

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Anthony Lamacchia is the Founder and CEO of Lamacchia Realty, a multi-state real estate company.

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Summary of 'DOJ’s Statement of Interest Filed - MLS Pin Case'

In this video, Anthony Lamacchia discusses the Department of Justice’s (DOJ) recent filing in the MLS Pin case, which he believes will lead to significant changes in the real estate industry. He meticulously analyzes the 33-page document, highlighting key points and expressing his concerns and disagreements with the DOJ’s stance.

Anthony points out the DOJ’s desire to eliminate the offering of cooperating brokerage compensation entirely, not just within MLS listings but in all transactions. He challenges the DOJ’s assertions about steering and commission rates, arguing that real estate commissions are subject to negotiation and market pressures, contrary to the DOJ’s implication that commissions are fixed and artificially inflated.

He also criticizes the DOJ’s comparison of U.S. real estate commissions with those in other countries, providing counterexamples to dispute the claim that U.S. commissions are significantly higher. Anthony is particularly concerned about the potential impact of the DOJ’s proposals on buyers, especially veterans, and the practicality of alternative compensation models, such as hourly rates for buyer agents, which he believes could end up costing buyers more.

Anthony appreciates the DOJ’s acknowledgment of the possibility for buyers to request sellers to pay buyer broker commissions through the sale proceeds, a practice common in commercial real estate. He predicts this could become the norm in residential real estate, though he questions the benefit for both buyers and sellers.

Throughout the video, Anthony emphasizes the importance of training and preparation for real estate professionals to adapt to the impending changes. He invites dialogue with the DOJ to better understand the nuances of the real estate industry and offers his insights to help shape a fair and practical regulatory environment.

Anthony concludes by promising to provide further updates and encourages real estate professionals to stay informed and engaged with the ongoing legal developments.

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Read the Full Transcript For 'DOJ’s Statement of Interest Filed - MLS Pin Case'

Anthony Lamacchia: Statement of interest of the United States. “This is one of many cases alleging that buyer-broker commission rules stymie competition and raise prices for home sellers and buyers through artificially inflated real estate broker commissions. In seeking approval for their proposed settlement, the settling parties assert that it will eliminate the allegedly anti-competitive rule at the heart of this action. This is not accurate. Far from curing the rule’s defects, the proposed settlement perpetuates the very same competitive concerns that trouble the current rule because the proposed settlement is not fair, reasonable, or adequate.”

That, folks, is the opening paragraph in the Department of Justice’s statement of interest that they submitted to the court yesterday in the Nosalek-MLS PIN case. This is something that we have been waiting for for six weeks. I had done a video on Sunday predicting that I had a feeling they were going to say they didn’t want any offerings of compensation mentioned in the MLS any longer. They not only did that, but they actually went further. They went even further. They said they don’t want sellers offering that out at all. Now don’t mishear me there. They didn’t say they have a problem with it being in the transaction, but they don’t want it offered.

I’m going to get into those details a little bit further. Now, I want to point something out because yesterday I received about 20 Facebook messages, Instagram, text messages, emails from various realtors saying, “Did the DOJ rule, did the DOJ rule? What happened? Is MLS going to change? When’s it going to change?” I want to remind you of what I said on Sunday and that was just a brief off the cuff video that I did for my son skiing lesson. What I had said was the DOJ was filing a statement of interest and they were doing that because the judge basically said to them, “Hey, you guys continue to say you have a problem with these settlements. If you have a problem with it, it’s time that you file how you feel in an official capacity and you have until February 15th to do that.”

This does not mean the judge agrees. Even if this judge agrees and tries to force it on the parties, there will be some period of time before these changes occur and it will likely somehow get connected or consolidated is the word that keeps coming up with other cases. This is not going to change overnight. However, if you are a realtor that is at a brokerage that is not talking about this stuff, that is at a brokerage that doesn’t seem concerned about this stuff, or you’re a broker owner that doesn’t really know how to tackle this, you need to start to be concerned. You need to start to pay attention. One thing that is for sure our business is going to change.

Just like in the ’90s when we lived through the changes with buyer agency and fiduciary duties and all of these things became a thing, and some people hemmed and hawed then, this is going to go down in history as one of those times that there are historic changes. I read you page 1. Let’s move into page 2. Lots and lots of mentions of steering. This is a phrase that has come up many times by plaintiff’s attorneys and various things in the Sitzer/Burnett case or now it’s the Burnett case, but I want to talk about that for a minute, and I want to read this to you. This is a 33-page document. I broke it down to the 12 or so pages I’m going to talk about.

“The modified rule still give sellers and their listing brokers a role in setting compensation for buyers’ brokers. As long as sellers can make buyer-broker commission offers, they will continue to offer customary in their ‘Commissions out of fear that buyer brokers will direct buyers away from listings with lower commissions, a well-documented phenomenon known as steering.” I have a couple of problems with that. I get their point, but I have a couple of problems. Number one, they say customary. I’m going to mention it further in this document. They keep these articles, these things that they pedal in the media. 5% and 6% commissions, these consistent commissions, customary commissions.

Folks, we have commission pressure every single day. There’s entry only companies. There’s companies charging discounts. When the market’s extremely hot like it’s been in the last three years, there’s downward pressure on commissions. As I’ve said before, we wish it was that easy, but it’s not. Now I’m going to move on to page 3. Want to read you some of the language. The problem with the proposal here– This is the start of the quote, “The problem with the proposal here is it makes cosmetic changes while authorizing the seller to continue to set compensation for the buyer’s broker.” I don’t entirely agree. Buyers-brokers have agreements, many of them with buyers and they can work that out amongst themselves, but I hear what they’re saying. Back into the quote.

“Instead, the parties could propose an injunction that would prohibit sellers from making commission offers to buyer’s brokers at all.” It doesn’t say prohibit from putting it in MLS PIN. It says at all, literally at all. The other part of this I’m going to go into further in the document. That’s page 3. Page 4, high commissions worldwide. I just want to fire back on this a little. I think they’re copying the playbook of a certain plaintiff’s attorney out there, or plaintiff’s attorneys in certain cases about commissions. Real estate broker commissions have barely budged from the 5% to 6% charged for decades. It’s two to three times more than other developed countries. Not true.

They’re failing to mention other things. The Wall Street Journal, I believe it was, did a lengthy article a few months ago and it was funny. The title was “America pays more commissions than anyone” then in the details, “Japan pays 7.2.” The last time I checked Japan’s a developed country. Argentina, I believe the average is over 6%. I just wanted to poke a little hole in there. No disrespect to them, but I wanted to point it out. All right. Now I’m going to skip to page 7. “The Supreme Court ruled in 1950 that the adoption by a local real estate board, the Washington Real Estate Board of standard rates of commission from its members was illegal.” Folks, I have never denied that 30 years before I was born the realtor associations were doing something wrong.

As happened in the early 1900s, multiple industries, multiple associations did things and pushed envelopes that they should not have 70, 100, 150 years ago. That’s part of the reason the Sherman Act was put in place and it was right to be put in place. They always seem to mention these things from years ago to paint a picture. It’s like, that was 73 years ago. That’s not happening now. None of our associations are setting fees. None of our associations have these fees set anywhere. Now I’m going to move to page 8. I find page 8, this comment here to be a little bit of a contradiction. Follow me, it might be a little deep to explain, but I’m going to give it a try.

“Their commissions were (and continue to be) paid by the seller rather than directly by the buyer. Any suggestion that a buyer broker services are free or available at no cost is inaccurate and misleading. The buyer-broker commission has a very real cost to buyers who ultimately pay through the higher purchase price.” I just want to point out, many folks on that side, DOJ, plaintiff’s attorneys, why is it that the seller’s paying the buyer? Why is that happening? Why is that happening? Then they say here the buyer’s paying it. Folks, I’ve made that argument in other videos. That’s an age old debate of who really pays the commission. Without a buyer coming to the table with money, there is no money to pay anyone. I wanted to point that out.

I also want to pick on the part about through higher purchase prices. I don’t agree. That’s an example of an intricacy or a part of the business that isn’t quite understood or it’s being misunderstood. Prices are landing where they are based on supply and demand. That’s why they’re landing where they are. Very little, if any impact from commissions. There’s pressure on pricing, upward pressure when there’s low inventory right now. When there’s higher inventory like there was 15 years ago, there’s downward pressure. We are in a supply and demand business. Hope that makes sense. Moving on.

Page 12, “Here, the settlement is not fair.” This is them repeating it, but I’m reading it to you. “Not fair, reasonable, or adequate because it provides no meaningful benefit to class members. It makes insignificant and largely cosmetic changes to the rule.” I don’t really agree with that. I understand that they may try to say if the interface is changed on the MLSs and there’s no mention of buyer compensation being offered, it could still be offered not on the MLS. I think they’re alluding to that and that’s what they mean by cosmetic and I’m only surmising there. One of the things that MLS PIN agreed to in the settlement was that real estate brokers, agents and members of MLS PIN moving forward would provide a disclosure to every seller they meet with, whether it was in the listing agreement around the commission section, or in a separate document stating that this commission is negotiable, and you do not have to pay monies to a buyer’s agent.

Folks, if that’s not the most anticapitalistic thing I’ve ever heard of, I don’t know what is. That in itself, gets in the way of competitiveness, gets in the way of business. When you go to buy a car, do they say to you, “Yes, the car costs $30,000, but I just want to give you this disclosure to show you that it’s negotiable?” What? That’s crazy. It’s not the case. When you hire someone to do work at your house.

When you go to the bank and you want to get a loan and then they put on your settlement statement that you have to pay the lender’s attorney fee, the lender’s title insurance, do they give you a disclosure that says, “Oh, those fees that you are paying on our behalf are negotiable?” No, they don’t. That’s not largely cosmetic. That means that what, 38,000 members of MLS PIN now when they go on listing agreements have to pull out a disclosure.

I can’t think of an industry that you’re forced to do that. I really can’t. I just named two industries where– I gave examples of industries where you don’t have to give disclosures, but I gave an example of one industry, the lending world, where you don’t have to give disclosures saying, “Hey, these are the fees you have to pay, but they’re negotiable.” It’s crazy.

I don’t think we should have agreed to that. MLS should have agreed to that in the settlement, I should say, and I don’t agree that that’s simply a cosmetic change. I understand they’re making an argument to the judge to judge the honorable Judge Patti B. Saris. I hope she sees the video. Moving on. Just reading again. “The critical issue is not how much a seller should offer a buyer broker, but whether a seller should set buyer broker commission at all.”

Somewhat of a repeat there, but I wanted to just read it to you. Page 14. “The properties listed with lower commissions were less likely to sell and took longer.” That’s a shock. I’ve already talked about this in other videos. Folks, now that I saw this, it makes me hone in on it even more. 2006 to 2011 properties were generally selling slower because of the high inventory market.

For some reason, they keep pigeonholing the argument that, “Oh, well, that’s because buyer’s agents are avoiding those properties.” Not true. What’s happening is those sellers are hiring brokers that aren’t as good at negotiating, likely aren’t doing nearly the amount of marketing. When home sellers work with brokerages like my brokerage, that is a full-service marketing machine, their homes inherently sell for more.

When they work with brokerages that have realtors like ours, real estate agents who are very good at negotiating, have a ton of practice, have a lot of experience, they’re inherently going to be able to negotiate more and remember that is their fiduciary duty. I’m going to get into that more in a few minutes. That is their fiduciary duty.

They’re doing what they’re supposed to and the others that they’re selling for less are taking longer to sell. You get what you pay for. That’s capitalism. Page 15. I thought this was interesting. “While it is certainly appropriate for listing brokers to inform their clients of relevant rules, the formal notification requirement does little to alter the status quo.” I understand what they’re getting at.

They’re saying it is okay for a listing broker to explain rules or compensation needing to be offered or things like that, and I’ve mentioned that even recently. Realtors have a fiduciary duty, and that duty is one that is critically important that they explain how things work in the practical world to their seller. They also have that fiduciary duty when they’re talking to a buyer.

When you’re working with a client, you have to be transparent, you have to be obedient. Think about obedient. It goes back to the steering subject. Buyer wants to see your property. You’re not going to not show them the property. Duty to disclose. You have to tell the seller things about how best to sell their property for the most money, how to attract the most buyers.

Those are all things that are necessary. Next. Page 20. “Prohibit offering in buyer-broker–” Let me go into here. “The settling parties–” This is what they’re proposing. “An alternative injunction would better serve the class.” When they say the class they– Remember, there’s plaintiffs, and then the class is those that were affected over the period of time that is allowed under the statute of limitations.

“The settling parties could agree to an injunction that prohibits offers of buyer-broker compensation by MLS participants.” Notice they didn’t say in MLS. Then they go on to say, “Well, buyers would be responsible for determining the compensation of their broker in a buyer-broker representation contract.” They’ve clearly done some homework. They’ve clearly listened to all sides and brushed up on some things, but it’s pretty clear they don’t want sellers offering it, and they’re not limiting that to just in the MLS.

Then another part of page 20 they get into the Consumer Federation of America. I’ve mentioned them before. There’s a gentleman there who’s done a lot of hard work for many years on behalf of consumers, but I feel that they’re missing it on this one. They’re missing it on this case because they’re not understanding the negative impact that this is going to have on buyers veterans.

I brought that up in a recent debate I did in HousingWire. Veterans under the current mortgage finance system are going to have a very hard time with some of these changes, but let me keep going. They do go over an alternative in here, which surprised me, but I’m going to get to that. One thing that they do on page 21 is they talk about one way that agents could be compensated is to be paid hourly. Department of Justice I have a message for you, if that occurs, many, many buyers will be spending substantially more.

I heard about a recent study from a very smart real estate friend who said that when a survey was done on many buyers, buyers felt that their buyer’s agent spent between 20 and 30 hours on their sale. When it was actually added up over the whole duration, pre-sale, during sale, et cetera, it was 200 hours. You take a professional realtor who knows what they’re doing, and you charge hourly and they start charging for all those hours that the buyers don’t see. Just like all those hours that a typical attorney charges. Most attorneys work hourly, not on contingency fees. How many of us? I’m a business owner of many businesses. We receive legal bills every single month.

There’s hours– “Oh, geez, I didn’t know about that. Geez, I spent four hours on that.” That’s what’s going to happen. Buyers are going to spend more. Then what I want to know is when would that be submitted? How would that be submitted to be negotiated into the sale with the seller, or paid at closing or that’s when you’re getting into the out-of-pocket area? Wanted to mention that.

Now, I want to go on to something that I give them some credit for mentioning in here. I think that it was good of them to throw this out there because they’re trying to show that they are aware that– I think they’re aware and maybe they’ve seen my videos. I’m sure there’s others who have spoken up to them, but they’re aware that, “Hey, buyers coming out of pocket could be a problem.”

I think they are aware of the fact that all of this is very likely going to lead to less buyers being represented by buyer’s agents and more buyers running around unrepresented. That’s just a fact. It’s going to, and that isn’t a good thing. The consumer advocates should be very concerned about that, but let me read this part here. “A change that makes it the buyer’s responsibility to negotiate broker commissions directly with her buyer broker would not force buyers to pay their commissions out of pocket.”

I found it interesting that they use the out-of-pocket phrase. I’ve been using that in my videos. Back into the quotes. “While some buyers might choose to pay their buyer brokers out of pocket, others might request in an offer that the seller pay a specified amount to the buyer broker from the proceeds of the sale. Thus–” That’s an important word there. “Thus, the current practice could continue where the seller factors the commissions into the offer the seller is willing to accept.” That’s interesting.

Again, I want to say, I think it’s good of them to put that in there because entities like this aren’t often providing solutions. They’re often picking at problems, and I thought it was good of them to put this in there. I will say I did not expect that. Let’s face it, folks, that’s been the commercial real estate world for decades. If someone’s representing the buyer, they’re putting the commission into their offer, they’re submitting it, and it’s getting negotiated along with the sale.

I do believe, realtors that are listening, I do believe that is the world that we are headed to. I don’t necessarily think that’s a good world for buyers really, even, or sellers, but if that’s where we end up, that’s where we end up. I’m not the ruler in this. I’m not the decider. Is it possible that DOJ could put some rule in place nationally? I assume that would have to be done legislatively. I don’t know if they could, but with all that’s going on, it’s possible that a judge is going to file a ruling. There’s going to be a precedent set and that may stick in some way, shape, or form. I want to mention what I mentioned earlier and then I’m going to round out here. Training is key here, folks. Training is key here. We just went through a market for two years that running as fast as you could sold you the most homes. We’re out of that market. Yes, we’re at the time of year there’s a bit of that going on. Lower inventory in the winter, very few properties getting listed, agents have to run faster, but by and large that market’s behind us now that rates are up and as inventory comes up, that’ll change.

Agents need to be on their toes. Agents need to be taking training serious. Brokerages, broker owners need to be training their agents on how to do this. Much of this stuff I’ve been training our agents on since 2012. I’ve been training agents on across the country since 2012. Not on commissions specifically, never on numbers of commissions, but on obtaining buyer contracts, buyer representation agreements, preaching your value, et cetera. Some of this we’ve already been doing for more than a decade. There’s some other brokerages out there that have been doing it.

To see this document and everything that I’m talking about including past videos that I had done on the Burnett case and other legal updates that I’ve done along the way, along with all the backup of things I’ve ever claimed, like in the debate. I made a lot of statements in there. They were all factual. The materials for those statements are on recases.com. All you have to do is log on to recases.com. This video will be there. The full document will be there.

I purposely mentioned the pages for you so that you could pull the document up on a PDF, listen to the video, you don’t have to look at me, and scroll and see the language. We may put in a statement or two that I’ve read over on screen, but it would be good for you to read it and see it. Last thing I want to mention, just want to throw it out there because I have been very critical of the attorneys involved in these cases. I want to point out the DOJ is being critical of them too, and I applaud them for that.

I’m going to read the footnotes from page 23. Footnote 18, “Plaintiff’s counsel has not offered a detailed accounting of how much of the three million might ultimately be distributed to the class members, or how much distribution of funds would cost. Counsel’s back of the envelope math appears to assume class counsel is awarded 30% of the three million, $900,000, expense reimbursements of $200,000, claims administrative costs $250,000, and the named plaintiffs are awarded $7,500, leaving a balance of $1.6 million in change. With an estimated 280,000 punitive class members, the pre-class member distribution appears to be $5.87 before reasonable distribution costs.”

Folks, have I been saying for several months that most of this on the attorney’s side is a money grab? Okay, I have been saying that, and I haven’t been shy about that, and I stand behind it. I applaud the Department of Justice for calling that out in there. Good job. I also have another message for the Department of Justice. I’ve never spoken to any of you, but I would be happy to. As I stated in the beginning of the video, I’m uniquely qualified to speak to any of you. In my opinion, I’m uniquely qualified.

We sell a lot of homes here. We have over 500 realtors, and I myself have sold over 1,000 properties on my own and with my team back when I was selling homes every single day. I don’t do that any longer. If there’s anything that I could do to help folks at the Department of Justice better see the light on some of the intricacies of our business, I would be happy to do that. Realtor friends, I will be back with another update within a week or two. Stay tuned to Crush It In Real Estate on all channels, and for little updates that I put out here and there, follow me on Instagram, where I put out many thoughts here and there @AJLamacchia. Thank you.