The discussion of modifying Clear Cooperation to make it optional–or removing it completely from the NAR MLS policy–continues to smother the real estate media news cycle. Headlines are leading out with stories every day, and the conversation across social media is rabid. This is an important issue for cooperation among real estate brokerages nationwide. The policy was implemented on the backs of an escalating trend among brokers to withhold listings from the MLS, making it harder to find all inventory for home-buyers, and potentially withholding properties from minorities.
The industry decided to better define an all-in commitment to cooperate among real estate brokers. The foundation of the MLS is sharing listings among brokers. Clear Cooperation is a restatement of a policy that has always been fundamental to the MLS. It’s the difference between the MLS and an advertisement.
In the earliest days, real estate brokers would meet in person to share a list of their properties for sale (pocket listings) and recent sales prices. The information shared allowed professionals to have data that made them smarter. These meetings turned into professional associations which emerged into the NATIONAL ASSOCIATION of REALTORS® (NAR).
What those early pioneers never did was market another broker’s listing. In fact, that is still prohibited in MLS policy today without the expressed permission of the listing broker.
Naturally, those pioneers also shared buyer wants. If the listing broker had a property that a buyer broker was looking for, they would agree to introduce their clients and share the transaction fee (called a commission).
To me, the Clear Cooperation issue for brokers is not the submission of the listing to the MLS, it’s the IDX program that forcibly markets the property widely to millions of websites. Brokers cannot market their listings without giving that opportunity to every broker.
The MLS Becomes a Marketing Platform
Leading up to the year 2000, MLSs supported the listing of properties on the internet. In 2000, NAR passed its first national policy called IDX (or internet data display). This was a breakthrough change that enabled consumers to shop for homes for sale on their own without an agent.
From NAR – NAR’s leadership convened a special work group consisting of members of the Multiple Listing Issues and Policies Committee, Professional Standards Committee, and Risk Management Committee to determine how real estate applications on the Internet might be enhanced so that REALTORS® can inform and serve their clients and customers while, at the same time, assuring that the Internet does not become a medium for exploitation or abuse of the professional relationships and duties by which REALTORS® are legally and ethically bound.
Compass CEO provides reasons why some listings should not be marketed in the MLS
In a recent Op Ed in Inman News, a leading broker shared reasons why consumers may not want the marketing in the MLS. Rather, they want a selective marketing program that is coordinated and agreed to with their listing broker.
- A family member is seriously ill, and the family wishes to maintain privacy to avoid additional stress.
- A couple going through a divorce prefers to avoid public attention until their affairs are settled.
- An individual is moving for a confidential job opportunity.
- The property is undergoing recommended improvements; the owner wants feedback on how the improvements may impact sales price before showcasing it to potential buyers.
- Sellers want to test the asking price privately without accumulating unnecessary “days on market.”
- The sale involves sensitive family legal arrangements.
- An estate sale involves parties not ready to acknowledge the sale publicly.
- High-profile clients and law enforcement officials need discretion due to privacy concerns related to security or public image.
- Photos: MLS entries typically require exterior and, often, interior photos of the property. Clients might wish to keep certain home features private for security or privacy, such as ADA improvements, high-value artwork, luxury items or floorplans.
- Address details: Clients may feel that exposure of their property’s location could impact their security and privacy, especially in cases involving high-profile individuals or those with concerns regarding disclosure of their location.
NextHome CEO provides reasons why every listing should be marketed in the MLS
- I remember the days of the MLS book when my parents received it once per month. Yes – a book that was printed once per month with all active listings at that time. They still had to call every real office to see what was available for sale.
- I remember when 30% of the listings in Silicon Valley were off market from 2012-2020. It was a DISASTER! Imagine going to the MLS and knowing 30% of the inventory was not even there. Imagine having to explain to your client why they are finding inventory at other companies you didn’t know existed. Imagine the conversations when your client says the agent at the firm told me I had to work with a Compass agent to get access to it.
- I remember when sellers sued real estate brokerages who convinced them off market (exclusive) sales would benefit them. Watch the lawsuits that will fly in a few years when the seller felt they were influenced to keep their property off the MLS.
- Imagine a world where buyers have to register at 30 different brokerage websites to see what’s for sale!
- Imagine a world where you have to call every real estate brokerage to see what’s for sale, or not even have access to that inventory anyway.
- Imagine a world where you have to work at a large real estate brokerage to have access to inventory or you can’t work in the business. Small independents will get wiped out.
- And if Compass thinks this will help them, every large real estate brokerage will be forced to follow suit. EXP is massively larger than Compass in Agent Count and Transaction volume. Compass agents will have to play in the same sandbox as everyone else. They will not get access to EXP, or HomeServices inventory either and you can see where this will go. This is the future we’re moving towards and greed will drive it.
- The MLS system we have in the United States is by no means perfect, but it’s the best in the world which is why every other country is trying to copy it. CCP is a good policy in principle. Getting rid of it is not the answer to its issues. Like anything, it can be refined to make it better. I for one am fine if there is a national disclosure that clearly explains the pros and cons of not having your home on the biggest real estate marketplace on the planet. It’s the same disclosure for everyone, and brokerages cannot change it. If the seller truly understands their decision, signs that document, and chooses to keep their home off market – I’m fine with that. However, I know that, with a truthful and honest conversation with them about the pros and cons, 99% of them will never not put their home on the MLS.
The Department of Justice Threat
The cornerstone of addressing this issue with urgency is the active investigation by the Department of Justice into the Clear Cooperation Policy. From their perspective, the Clear Cooperation policy creates MLS monopoly power, preventing the freedom of creative enterprise. There are a couple start-up MLSs that are not associated with NAR who were put out of business when a broker could not market their listing in their MLS (TAM and PLS) – without also marketing the property in the Association MLS.
A Simpler Solution
Maybe the solution to all of this is to eliminate IDX. Only the MLS or the listing broker may publicly advertise listings for sale.
Agents working with buyers will still be able to access listings for sale in the MLS.
Consumers shopping on their own will only be able to search on MLS consumer sites that follow the fair display guidelines.
Broker websites like Zillow will only be permitted to advertise their own listings unless other brokers agree to advertise on their website.
