The National Association of Realtors, in a 2023 industry report, said that in much of the United States, transactions involving the Multiple Listing Service system accounted for nearly 90 percent of real estate deals.
The same can’t be said on the South Fork of Long Island, however, where some agents and brokers say that market conditions set it apart from the industry’s trends elsewhere. The traditional Multiple Listing Service (M.L.S.) simply doesn’t play as big a role here, they say.
This will likely have the impact of buffering the South Fork real estate market from an October class-action ruling by a judge in Kansas City, Mo., that impacts regions where M.L.S. is more widely used. The case effectively accused real estate agents of colluding to inflate commissions and of orchestrating a standard practice of the seller paying the buyer’s broker a fee. The judge decided in favor of thousands of house sellers, resulting in a $1.8 billion-and-counting settlement in March. The National Association of Realtors (N.A.R.) is paying out $418 million, with additional sums coming from other companies and large agencies.
On the East End, everything, including commission rates, is negotiable, said Judi Desiderio, the chief executive officer of Town and Country Real Estate. “There has always been intense competition on the East End, so the thought of collusion is comical. It’s so highly competitive that that just doesn’t happen.”
There is, however, a thing called “co-broking,” she said, referring to the practice of working together even with competitors for the benefit of all parties involved.
“When I first got into the business 38 years ago, there was no sharing of listings,” Ms. Desiderio said. “As time evolved, it started to become ‘you can’t hold your listing in-house unless the owner requires you to do that,’ so then co-broking happened. . . . It’s the right thing to do with the sellers, and the right thing to do if another agent brought the buyer — you negotiate satisfactorily.”
Another issue, according to Simon Harrison, a broker who owns a real estate agency based in Sag Harbor, is that the N.A.R. has an incredibly far reach in the industry — seemingly everywhere but here.
“The influence of the N.A.R. is not any larger here. In fact, it’s shrinking across the country. The influence is, I think, waning,” he said. “Out here we are very much not in N.A.R. land.”
“What the issue is, it’s fair to say, is that there are two million licensed agents and brokers across the country, and only one-and-a-half million are in the N.A.R.,” he said. “That number is dropping, but the N.A.R. kind of had some control over what multiple listing services were doing. That they guided specific, uniform paperwork was what was at issue.”
Indeed, changes to the M.L.S. language have already trickled down as a result of the lawsuit. The Long Island Board of Realtors, a group of more than 30,000 real estate professionals spanning Nassau, Queens, and Suffolk, summed up the changes on its website: “Any mention of compensation in the M.L.S. platform is strictly prohibited and will result in removal of the information and an automatic fine.” There will be new language created for “pre-sale concessions” that allows sellers and their agents to disclose any incentives that the seller is offering to buyers, but “it cannot be used exclusively for sharing offers of compensation to buyer brokers or other buyer representatives.”
“This is a period of significant industry change, and we are confident in our shared resilience and ability to find opportunity in this new landscape,” the Long Island Board of Realtors said on its website.
Kieran Brew of the Serhant agency said that Out East, a system used by many local real estate professionals on the East End, bears some similarities to the M.L.S. “Could they look at Out East and say that is tantamount to an M.L.S.? If you advertise a broker/buyer split, is that the same thing? I don’t know — it hasn’t been tested in court. A lot of these things are being appealed.”
It’s such a hot topic, apparently, that four separate real estate companies here declined to allow their agents to weigh in on the issue.
“All of this lit up like a Christmas tree because of the market we are in,” Ms. Desiderio said. “Inventory is low. Affordability is at the lowest it’s ever been. Interest rates are higher than they’ve ever been for how long now, 20 years or something like that. It’s a perfect storm. Now you throw this lawsuit and it’s the star on the top of the Christmas tree.”
She questioned the intent of the original suit. “What was the damage done in Kansas City, and what was the objective? Do you think you have to throw the baby out with the bathwater? Almost 90 percent of all buyers and sellers say that they would work with a real estate professional again. . . . [Agents] have oodles of knowledge about the marketplace, about financing, about the past, rental values, land values, home values, construction values.”
Mr. Brew said he thinks “that there are many of us who think the sandbox is really small, we all need to play nice, and cooperation works better than confrontation. But at the same time, it’s very competitive — there is not a ton of business and a lot of it is being done by a small number of people.”
“Because there is a small number of people,” Mr. Brew continued, “we have to have a certain amount of reliance on each other. I had a seller ask me about this whole situation on the advice of his lawyer — ‘What’s going to happen?’ I said as a seller, do you really want to be the only guy who’s not paying the buyer’s broker? Don’t you think it’ll put you at a competitive disadvantage to be the only seller who is not paying the buyer’s broker?”
So what, now, on the South Fork, where the number of real estate agents swelled from about 2,500 to more than 4,000 during the pandemic?
“Until something changes, nothing changes,” Mr. Brew said. “There really hasn’t been anything to say, ‘This is how we’re going to do it from now on.’ “
Mr. Harrison echoed his sentiments. “My listing agreements are not changing. They’ve never needed changing,” he said. “It’s part of how I get a property listed and sold. I need those commissions to continue operating, as does every other company out there — it’s part of the food chain. We sell four to five billion dollars’ worth of real estate every year out in the Hamptons.”
This story has been updated since it was first published to incorporate corrections and clarifications.