Should I Still Offer Compensation in MLS Pin?

Anthony Lamacchia:

How will you communicate? Offers of compensation. Are you guys still using MLS PIN? Are you going to allow broker or broker sharing of commissions? Those are just some of the questions that I am getting literally every day of every single week right now as we approach the settlement implementation date for the new settlement.

Remember, for those of you who are operating your business on MLSPIN, there is a bit of a conflict between what’s going on in the MLSPIN case and the NAR case that is settling. The settlement terms don’t match up to the proposed settlement terms in the MLSPIN case. And that’s why and I talked about this in my last video.

Judge said, we’re putting a stay on the case. Well, now, for those of us that operate an MLS PIN, which is one of the largest privately held MLS, MLSs in the country. There’s a little bit of this in-between awkward period of, well, what do we do? How do we communicate offers of compensation when sellers want to offer them?

So I’m here to talk about the way that I see it, the way that, we’re going to be doing things at our company, which stretches six states and 660 agents. the majority of the business is done in Massachusetts, but we also do a significant amount of business in surrounding states, but mostly in mass. And most of our business is done on MLSPIN. So I want to walk through this with you all. Now, keep in mind, if you’re outside of LaMacchia Realty, I’m not your broker. I’m not even your actual advisor. I’m not an attorney, folks. As I stated in a tweet to Rob Hahn, someone who thinks they know what they’re doing. I barely graduated from high school. So be cautious how much you listen to my advice here, but I’m going to go through it. Here we go.

We as a company, have decided that we’re not going to be posting compensation in MLS pin. We just don’t think that’s a wise thing to do. Even though technically speaking, if you really get down to the nitty gritty legal argument, it could be done. Even though it doesn’t fall completely in line with the Na settlement. But remember, MLS pin is not under the Na settlement because it’s not a realtor owned MLS, but we’ve chosen not to because it is clear to us that this is the direction our business is headed, and we feel that we can properly communicate compensation when necessary through other mean now.

Does that mean that no one should? Wow. I think if you do, you’re taking a little bit of a risk. Now PIN has talked about how they’re going to have some check boxes to make it more convenient. That’ll say things like, yes, compensation is offered. No, it’s not at all. Or no, it’s not, but it’ll be offered outside of the MLS. You all can choose how you want to utilize those check boxes. We haven’t decided definitively, but I can tell you that a numerical amount of compensation will not be posted in MLSPIN.

And keep in mind, the posting of compensation in MLS is really brokered or broker sharing of commissions, which is how the business has worked for many, many years. And I’ve talked about this all the way back to last October, when I’ve talked about how the plaintiff’s attorney, Mr. Kaczmarek, has said, find me and other business. When I demanded him find me another business, that the seller pays the buyer’s compensation, and I was busy answering 19 other questions, so I didn’t get into that but when I borrow money, I pay for the banks title search. I pay for the bank’s lawyer, I pay for the banks, other fees. Right. These things do occur. So now what’s going to happen is most companies, even though under the NAR settlement, they say it is okay to continue to share a broker to broker compensation, we as a company have decided we’re not taking part in that.

It’s pretty darn clear that’s where the industry is headed. It’s pretty darn clear to us that that was somewhat of the impetus of the lawsuits to begin with. In truth be told, it really isn’t necessary. If a seller wants to offer compensation out to a buyer’s agent’s brokerage, okay, or a buyer representative representatives brokerage, they’re free to do that, right?

No one. I know that the DOJ says they shouldn’t be able to do it, but as it stands right now, there’s not a law stopping that. Okay. And I don’t think there ever will be because in my opinion, as I’ve stated in many past videos, that would need to be an act of Congress. Okay, that would have to be some big, big deal.

And I don’t see that occurring. So the way it stands, we will be talking to our seller clients about what is best for them. And when they ask various questions about what is best for them, we will be answering them. As I’ve described in past videos, when I was challenged, by the gentleman that I named a few minutes ago about talking to sellers about these kinds of things in sellers asking, should I offer compensation?

Shouldn’t I? Should I be willing to offer compensation? Should, you know, to to allow it to be built into the transaction, shouldn’t I you, as the realtor, should be adhering to your fiduciary duty at all times. You’ve got a duty to have these conversations with sellers and talk to them about what you believe is best for them. And when you’re representing a buyer, you’ve got a fiduciary duty.

And it’s it’s it’s, state law in most states to talk to them about the expenses related to their purchase. You’ve got a duty to do that. Licensing law hasn’t changed. Okay. Fiduciary duties haven’t changed. Some of the ways that business is done are changing. I mean, really, is it not somewhat ridiculous that now we’re going to say we’re not accepting this is what we’re doing at my company and many companies, we’re not accepting compensation from other brokerages, but we will accept it from sellers.

Now that I was a major part, obviously, of that decision. I think that’s the right way to go. But really, is that going to make anyone safer? No, but it is what it is, folks. The case landed where it landed. The settlement landed where it did. The folks at Nar did the best job they could, negotiating the best deal they could to get out of this.

Both. And they negotiated a very good financial deal. Some of the terms of the settlement. I don’t love them, but folks, they don’t love them either, right? Tough to negotiate and drive a hard bargain when you’ve lost a case because a jury, a jury got fooled in western Missouri. Okay? There’s not a lot you can do about that.

So I want to point that out, and I want to point out how we’re not going to be good at going down the road of broker to broker compensation. We stated this to our entire company last Wednesday on July 10th. The next day, Inman came out with an article about how the California Association of Realtors is retracting some of their forms and redoing them.

And I read some of the statements from the California Association of Realtors, and I liked how they worded it. They said nothing we were proposing in our forms was illegal. We are simply stating that we’re going to make a change to not have broker to broker compensation. That was something we decided about a month ago. Sounds like they decided over the last several weeks and that’s why it got out.

The DOJ has their eyes on that, and I believe that business can be conducted just as easily without truly harming buyers and sellers, just by handling the compensation directly. Listing broker gets paid from seller buyers. Broker brokerage gets paid either directly from buyer or from buyer through maybe a closing cost credit that you could argue seller takes part in, or through putting it into an offer and requesting it from seller.

Even the Department of Justice back in March said they were okay with that, and I believe that’s the direction most of the business is going to go. Now, six months, a year from now and that’s the norm. Is anyone going to be safer? Is anyone going to be better off? I don’t think so. But if that’s what we need to do, that’s what we do.

How will we? This is another question I’ve gotten. How will we communicate compensation without doing it through the MLS? Well, I’ve heard all kinds of stories about how different companies might posted on websites and things like that. But the Nar settlement says that if you put a website link in MLS, it can only go to the home page of the brokerage.

I don’t want to get into various realtors clicking on our home page, though. I love the advertising and having to find compensation for a property. Having that out there all over the place confusing people so we’re not taking part in that. It doesn’t mean that those who are wrong. I’ve heard of some companies coming out with QR codes that will take them to direct pages. That’s something we may entertain,

As of right now, we’re going to be communicating with buyers brokers directly. Our agents are going to be doing it via text, via email. Of course, there’ll be some verbal conversation. We’ve also come up with an email system where we’re going to have some of our staff who’s going to be, replying to emails that buyer brokers will obviously send requesting compensation information as they should, because if they’re adhering to their fiduciary duty on behalf of their buyer, they should be finding out about the expenses related to that buyer’s purchase, just as they would if there was a failed septic, a failed well mold all over the house, a leaking roof, etc. buyers, brokers ask they send an email. We’re going to have staff people that reply to that email and explain specifically what the compensation being offered is, if it exists, if that particular seller wants to offer that compensation, and we are going to make sure that that’s explained in a proper manner. So I caution any of you, I caution realtor friends and other companies to be careful.

Be thoughtful. Think about how are you going to communicate compensation? Okay, there’s a lot of people out there that are flying around in helicopters looking for reasons to sue our industry, looking for more pockets to pick from our industry. And it isn’t right, but that’s what’s going on. So make sure you have your T’s crossed, your eyes dotted.

Make sure you have the proper training on how to write these things into contracts, on how to negotiate these things, and how to work with your fellow realtors to make sure that the contracts are right. The language is right so that everyone is clear from the beginning. It’s highly important to make sure we continue to be transparent despite having an element of our transparency being taken away.

The posting of broker compensations in the MLS is, in my opinion, is an element of transparency and it’s being taken away. But we realtors Mr.. Kevin Sears, the great president of Nar, says Realtors are problem solvers. It’s our job. It’s your job to make sure that we still keep the transparency high, make sure the contracts are written correctly, work with one another, communicate. We all need to work together for the greater good, which is the home buyers and the home sellers of America. And I call on all realtor friends to do that. Thank you all. Good luck. I’ll be back with more videos. Stay tuned into my Instagram and right here on YouTube. Crush it in real estate.

Thank you and good luck.

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