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Righting a wrong or just greedy? Local home sellers make federal case out of commissions paid to real estate agents
OK, few consumers are enamored with how real estate agents do business, especially when it comes to shelling out as much as 5 to 6 percent in commissions with the sale of a home.
But does the residential real estate business really need to be targeted by a budding class action lawsuit in federal court, as if it were Big Tech, Big Oil, or heaven forbid, Big Tobacco?
Such appears to be the aim of a trio of aggrieved home sellers, whose legal assault on the home sales industry is making its way through federal district court in Boston.
The lawsuit takes on the local industry online listing service, Pinergy, previously known as MLS Property Information Network, accusing the company and the brokerages that list homes on the site of “anti-competitive practices” that are “substantially inflating” the cost of selling a home with jacked up commissions.
A loss in court could result in Pinergy and brokerage firms like Re/Max and Keller Williams having to shell out millions, if not tens of millions, to compensate home sellers, while potentially crippling the online listing service’s business model.
“It has put a cloud over the whole industry,” said Gordon McGinnis, one of Pinergy’s original shareholders who, along with his wife, recently retired after running their own residential real estate company for many years on the South Shore.
No legal spitball, the lawsuit, first filed in 2020 and never reported in the local media, is quite serious, having survived efforts by Pinergy’s owners, a mix of real estate agencies and Realtor groups, to dismiss it.
In fact, Pinergy has suspended dividends to individual shareholders for two years now as it apparently seeks to conserve money in case of an adverse judgment. That amounts to tens of thousands of dollars in lost income for each shareholder.
Not alone, similar class-action lawsuits have been filed in other parts of the country by home sellers and their lawyers against their local multiple listing services, including in Missouri.
For its part, the lawsuit takes aim at a key part of Pinergy’s requirement that sellers, in order to have their homes included in the online listing service, agree to pay a sales commission to their broker.
Under longstanding industry practice, the home seller pays the entire commission, whether it’s five or six percent, to his or her broker. The seller’s broker, in turn, is then effectively obligated to split the proceeds with the buyer’s broker, under the listing service’s rules.
In particular, the home sellers – represented by a trio of unhappy campers who sold their homes in the suburbs south of Boston - object to having to effectively pay a commission not just to their own real estate agent, but to the broker who brought the buyer to the table.
On the sale of a $500,000 home, that could amount to as much as $15,000 for the agent representing the buyer, courtesy of the home seller.
All that said, is anyone truly shedding tears right now for all the poor home sellers out there, unable to decide which of 15 different all-cash, no-contingency offers from buyers to pick from?
We didn’t think so.
Rebels without a clue: Quartet arrested after early morning bucket banging session outside Boston mayor’s house
We thought Universal Hub’s headline - “Four Covid screamers detained outside mayor's house this morning” – summed things up just perfectly.
Marie Brady, Catherine Vitale, Shannon Llewellyn and Danielle Mazzeo, were arrested Wednesday morning outside Mayor Michelle Wu’s house in Roslindale.
The quartet, who apparently showed up at 7:30 a.m. “to bang on buckets and yell,” were charged of violating a new city ordinance that bans "targeted residential picketing" outside somebody’s house before 9 a.m.
The City Council, in turn, passed the ordinance in the wake of weeks of loud and raucous protests outside Wu’s house at all hours of the day and night by anti-vaxxers and others.
However, not even the Herald, which has been fairly sympathetic, at least on the editorial side, to the anti-vaxxers, could explain what the latest dustup outside Wu’s home was meant to accomplish, or even what it was about.
Along with some bucket banging, the group chanted “free speech is not a crime” and “shame on Wu.”
The motley crew of antivaxxers and disgruntled city employees the four represent clearly hate the new mayor.
But their over-the-top harassment of Wu has backfired spectacularly, earning her sympathy even among critics.
Priced out: Black buyers leaving Boston as home prices surge
Black home buyers are increasingly leaving the Hub for cities and suburbs to the south of the city, a new report finds.
As prices in Boston surged, home loans to Black borrowers in neighborhoods across the city fell 16 percent from 2019 to 2020, the latest year analyzed by the Massachusetts Community & Banking Council report.
But home loans to Black home buyers rose rapidly during that first pandemic year in Taunton, Fall River and other Southeastern Massachusetts communities with more affordable prices.
Yet when it comes to racial equity, mortgage lending in Massachusetts remains a mixed bag, the report indicates.
On the plus side, more than 11,000 Black and Hispanic/Latinx households obtained mortgages in 2020, the highest in three decades and a record number.
But on the downside, the percentage of home loans going to Black and Hispanic/Latinx borrowers remains “well below their respective share of the population,” the report finds.
Quick hits:
No police cuts after all: “Boston City Council approves $3.99 billion budget” Boston Globe
At least 500 great whites have cruised the waters off the Cape since 2010: “Cape Cod great white shark researchers continue work on trying to forecast sharks: ‘Finding patterns is really difficult’” Boston Herald
Really perfect timing for a big bonus for the MBTA’s GM: “Poftak gets nearly $80,000 in bonus payments” CommonWealth Magazine
What is Contrarian Boston?
I have fielded emails over the past couple of months asking what Contrarian Boston is about.
Here’s a link to our mission statement – you can find it in the “about” section.
For a more prosaic, nuts-and-bolts description, read on.
An online newsletter, Contrarian Boston publishes every Monday, Wednesday and Friday. In Contrarian Boston you’ll find analysis of the day’s news, and original reporting as well.
Our focus is:
· Politics and all levels of governance, good and bad, with an emphasis on state and local, with some national mixed in;
· Economic growth and business, especially real estate, housing and new development projects;
· The media and why it does what it does;
· Education, from school board spats to the doings of multibillion-dollar university endowments;
· And whatever else catches our fancy.
The reasons why blacks do not enjoy the same homeownership rates as whites are numerous. The primary one being a much lower level of personal income. The median income for blacks is 30% lower than whites. Blacks also suffer higher levels of unemployment, as well as lower educational attainment rates. Lower black homeownership rates are the result of widespread socio-economic disparity and not the cause.