More On NAR’s MLS Policy Statement 8.0: A Step Forward On Clarity

(The following are the personal opinions of the author, Sam DeBord. They do not necessarily reflect the views of RESO or its members.)

The “Clear Cooperation Policy” proposed by the National Association of REALTORS’ MLS Technology and Emerging Issues Advisory Board is creating plenty of industry discussion. The policy would ensure that MLS participant brokers who market their listings publicly also input those listings into the MLS for cooperation.

Rob wrote a very thoughtful piece on this policy proposal. This is exactly the kind of discussion and feedback that NAR is seeking from the industry in the lead-up to consideration of this policy at NAR’s Conference in San Francisco six weeks from now.

Rob and I have talked about this issue extensively, and I’m personally grateful for the insights and passion he’s put into driving for a better MLS marketplace, whether or not there’s agreement on the best path. I’d also like to thank the volunteers and staff who spent many hours crafting a collaborative proposal to improve the professional-client-consumer marketplace.

On to clarity.

Ultimatum or compromise?

The core of Rob’s argument is that the industry needs to provide a black-and-white, all-in-or-all-out answer for participating in the MLS. It’s a pure argument:

“This is not an issue where negotiation and compromise can work. This is a rare situation where the issue is black or white, pregnant or not-pregnant, and halfway measures simply do not serve.

“Furthermore, this issue is the hill for the MLS to fight on and die on, if it must be.”

On compromise between brokers and MLSs

The nature of the broker-MLS relationship is complex. How much freedom is a broker willing to give up in setting common rules across the broker cooperative? Brokers have agreed to abide by a growing set of rules over time to ensure clarity in their MLS marketplaces, but their flexibility has limits.

How instructive must guidelines for MLS practices be to create the most marketplace benefit while respecting the individual rights of a brokerage to creatively compete? The answer has always been a balancing act.

So it should be no surprise that policy proposals come with compromise. They must enhance outcomes for professionals and consumers by focusing on what’s happening today, and what’s coming in the future. They also often give a nod to tradition and inertia of well-known practices. When they are crafted in this way, it’s usually for the sake of digestibility and a pragmatic desire to find a solution that will carry the day.

That’s likely an unsatisfying answer to those seeking a grand mandate, but it’s a strategy steeped in the experience of painstakingly complex industry processes. It’s a viewpoint shared by the many MLS and broker members who crafted the policy proposal, and other viewpoints should be engaged in the discussion. If the greater industry wants a pure ultimatum, that needs to be said.

Retention of office exclusive and coming soon opportunities

Rob writes:

The real problem, however, is that the combination of the office exclusives exemption and the Coming Soon exemption creates a giant hole in the policy that swallows the rule. It makes the rule more or less useless in terms of tackling the real problem here.

So, to take just one example, Compass can take a listing, tell its 8,000+ agents about it, have them spend two months making phone calls to their sphere (surely a phone call is the very definition of “one-to-one promotion”), do a big push for 24 hours, and then submit the listing to the MLS. The fact that by that time, buyers have already been lined up ready to go means that the MLS is not the marketplace for dealmaking, but merely the filing cabinet for records.

If Compass’s 8,000+ agents do not impress you, then how about NRT’s 50,000 agents?

NRT’s 50,000 agents across dozens of states aren’t going to call all of their clients about a listing in Akron, OH. This is going to be a single market phenomenon.

Could a brokerage enact a robust single market agent-to-client direct outreach program outside of the MLS? They can today, and they could under the new policy. Office exclusives have been around for a long time, yet many, many agents will still input listings in the MLS as their primary practice because they understand the client and consumer benefit.

Is calling consumers directly on the phone the future of real estate marketing, such that it makes Policy 8.0’s effects on digital marketing practices “useless?” Or has listing awareness become almost exclusively a web-based activity?

Let’s not throw the clarity on public marketing out with the bathwater. Incentives for MLS inclusion would be significantly increased with the new guidelines in Policy 8.0. With the near ubiquity of digital marketing for real estate listings today, MLS inventory would almost certainly grow.

A pragmatic approach

There’s no need to discount the desire some may have for an ultimatum and a complete paradigm shift. The reality of the politics and bureaucracy that an all-or-nothing policy must pass through, though, makes it less likely to come to fruition.

The MLS can find its “hill to fight on and die on,” but it needn’t be a hill designed in a way that ensures a quick death. Is the industry truly ready to tell its brokers that if they want to have office exclusive listings, they can’t be MLS participants? A pragmatic observer probably wouldn’t bet on it, but if that’s the will of the industry, let the voices be heard.

VOW and the DOJ

Rob also writes:

While I am certain that NAR Legal has looked into the issue, and given that the NAR-DOJ consent decree expired last year there may be greater latitude here, I am nonetheless a bit worried about including VOW in the definition of public marketing.

The reason is that the original rationale behind the DOJ lawsuit and the resulting consent decree is that VOW (which stands for Virtual Office Website) was a way to deliver brokerage services online. The understanding that we have lived with for 10 years is that anything you can share with a client in person sitting in your physical office may be shared with that client over a VOW.

This is an important area for discussion and an ever-present focus during MLS policy discussions at NAR. There are two different issues here: MLSs MUST allow brokerages to display certain data within a Virtual Office Website (DOJ agreement). Brokerages MAY decide to display that data. The options are in no way restricted by the proposed policy.

“In the weeds” scenarios must be considered. A brokerage could have VOW MLS listings commingled with the brokerage’s private non-MLS listings on the same website. The intent of the policy is to make it clear that these so-called “private” listings are being publicly marketed by the MLS participant in this kind of scenario. These listings also need to be input with the broker’s MLS for cooperation.

It’s not a restriction, but an addition. Sales people know the philosophy well: It’s not “Yes, but…” it’s “Yes, and…”

More or less prescriptive? An eternal policy question

Via Rob:

Let us note the very important ‘includes, but is not limited to’ language, which opens the door to local determination as to what does and does not constitute ‘public marketing.’ What is unclear from that ‘not limited to’ language is whether the local MLS might decide that a single email sent by an agent to her client does in fact constitute ‘public marketing’ despite the section of the FAQ that plainly states that ‘one-to-one promotion’ is not public advertising.

Much as the broker-MLS relationship is complex, the MLS-NAR relationship is complex. Many MLSs ask NAR for policy with significantly detailed rules and interpretations. Others ask for less specificity and more flexibility for local interpretation. Like many industry relationships, it’s another balancing act. Saying “MLSs want X” is akin to saying “Agents want Y.” It’s never that simple.

An expanded FAQ could answer even more of these practical questions–now is the time to voice them so they can be considered. To Rob’s question on interpretations, one might assume that an MLS making interpretations would read the FAQ. If you’ve been in the industry long enough to understand RDR, you know what assuming gets you. NAR will, as it has in the past, continue to strive to give as much guidance as the industry needs.

Bring on the discussions

NAR’s volunteers and staff have been collaborating for months to provide this starting point as a policy proposal. October will be a month filled with conversations, disagreements, and constructive suggestions as to how we move forward.

The industry doesn’t have to move as slowly as it has in the past. There is clearly a need to progress and reinforce the value of the MLS—arguably the most visible pro-consumer benefit that the industry has ever created.

You’re the “most informed readers in real estate.” How we move forward requires your feedback today.

-swd

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2 Comments

Join the discussion and state your opinion. Some comments may be held in moderation. I try to get to them as soon as possible, but may be traveling or unable to approve comments immediately. I do not censor comments, but reserve the right to remove anything that looks like spam, trolling, or just outright inappropriate.

  1. Sam and ROB,

    Undoubtedly, the MLS marketplace platform works and is a valuable destination for clearing residential real estate. Clearly, today, the platform provides the most elaborate sell side data – the listings.

    A question is; does execution through the current MLS system result in better (net) sales prices for sellers? If it does – great. If it doesn’t – why not use an alternative? (I understand some sellers value convenience over price).

    What if a marketplace outside the MLS can collect buyers and sellers themselves while offering convenience and competitive prices? Sure the exposure numbers may be lower than MLS’s, but don’t 10% of the agents do 90% of the business – maybe a platform can collect that 10% on their own? How does the MLS model compete with that?

    So, my question is why the MLS? Again, for those that want it and need it – use it. If the customer can get what they want elsewhere whether by convenience or price – why not?

    IMO, the MLS, while a great marketplace should not, and will not, be the only viable marketplace solution for buying and selling real estate. I think any kind of mandate will insure new participants jumping in with a two-sided model that works. After that, more marketplace platforms, then more…..until the market decides the best of breed.

    We’ll see.

    Thanks,
    Brian

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