Reasonable adjustments to current policies can satisfy both sides of the Clear Cooperation Policy debate, consultant Chris Marzke writes, benefitting clients, developers and real estate professionals.
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Most brokers would agree that having a comprehensive multiple listing service that promotes cooperation by all members is imperative to the future of the real estate industry and benefits buyers, sellers and brokers alike. During the heat of the COVID pandemic, when listings were in short supply, some brokers chose to hold back listings from the MLS for a period of time in an attempt to sell them within their own company to maximize profits.
Also during this time, the concept of a private listings network (PLN) was formed to allow brokers to share “Coming Soon” listings before they hit the MLS. The National Association of Realtors (NAR) felt these practices eroded the strength of the MLS and potentially harmed buyers and sellers.
In response to these trends, NAR implemented the Clear Cooperation Policy (CCP), which requires all listings to be entered into the MLS within one day of marketing the listing to the public. This policy is facing serious challenges from some big-name brokerage leaders opposed to its restrictions and claims it’s an illegal restraint of business. The last thing anyone wants is more lawsuits that will give our industry more bad press and risk losing the public trust, so we need to find a compromise everyone can support.
Who is at the helm?
Listing brokers have always been in control of how they market and sell their listings, and brokers must retain that control. For various reasons, some brokers choose to keep some listings as “office exclusive” or “pocket listings” that are only shared within their own company. This business practice is not new, but some have recently called to question the motivation of such a strategy.
Sure, these listings can be detrimental to the seller if the motivation is strictly to increase broker profits over getting the seller top dollar. However, in many instances, it is the seller that is directing the listing broker not to share the listing on the MLS for privacy reasons. We need to follow the direction of our sellers but we have the obligation to inform them of the risks of not exposing a listing to the entire pool of buyers by entering it into the MLS.
Pocket listings by themselves do not pose an existential threat to the MLS structure as some have argued. However, PLNs that allow brokers to share their listings with other select brokers prior to listing in the MLS are a serious threat as they dilute the cooperative nature of the MLS and open the door to bad actors.
With PLN listings, there isn’t someone reviewing those listings for accuracy like there is with MLS, so the listing broker may choose to put their interest in getting a higher commission above their client’s interest of getting top dollar or the listing information may not be accurate.
In my opinion, any broker who chooses to market their listings on a PLN should lose their ability to later list that property on the MLS for the protection of the MLS and to promote the best interests of buyers and sellers.
Secret agent listings
Further, the commingling of MLS-provided listings with private “non-MLS” listings on public-facing websites like PLNs, third-party portals and broker-owned websites is another serious threat.
In my opinion, any broker, portal or PLN that is found to have commingled MLS-provided listings with their pocket listings under standard search display should be fined and lose the right to receive a broker feed of MLS listings for an extended period of time.
After reading the language of the CCP, I personally believe it’s fine as drafted. However, there are examples of issues occurring with the implementation of the policy by the 500-plus MLS networks.
Some MLS networks have required all listings to be submitted to the MLS within one day of getting the listing signed, not one day from marketing the listing publicly. This can be problematic for many brokers, especially those working with luxury properties that require substantial pre-marketing investments for professional photography, 3D virtual tours, floor plans, listing videos, top-shelf brochures and staging services. It may take up to two weeks to get all of these services completed, so it’s impossible to get the listing entered into the MLS within one day unless the listing agent takes the risk of ordering those services before the listing is signed, which isn’t a smart business decision.
This situation can be mitigated if the MLS allows a “Coming Soon” option for listings, and those listings don’t begin accruing days on the market until the date the listing goes to active status in the MLS. This policy could be mandated for all MLS networks to follow, and doing so would mitigate many concerns raised by opponents of CCP.
New construction
Another example of a potential conflict with the CCP is in the case of a new construction development with many units at varying stages of completion. The listing agent wants to get all of the units sold as soon as possible, but the CCP causes a dilemma. Either enter the listings in the MLS while the units are still under construction and accumulate days on the market, giving the impression of slower sales, or wait until the units are almost complete before listing on the MLS and risk having sales delayed after completion costing the developer money.
This situation is further stressed by the policy prohibition of marketing pocket listings to the general public, so a listing agent or developer is not permitted to market their listings on a development website to generate interest while the units are being built.
Let’s be reasonable
This situation can also be dealt with reasonably without the need for a change in the CCP. By mandating a “Coming Soon” status for all MLS networks, the listing agent or developer can enter all listings into the MLS at one time so other brokers can assist in selling them from day one.
These “Coming Soon” listings would only be viewable by other brokers and not marketed to the general public unless the listing agent chose to do so. The days on the market would begin when the listing goes live to the public in the MLS.
Because a “Coming Soon” listing does meet the requirement of the CCP, the listing agent or developer is free to market their project to the public however they choose and can make listings active in the MLS when they are closer to completion so days on the market do not accumulate and have a negative impact on sales.
Disclaimer: The views expressed within that piece are by Chris Marzke as the CEO of CMA Real Estate Consulting, LLC and do not reflect the views of @properties Christies International Real Estate where I hold my Associate Broker license from transacting real estate.
Chris Marzke is a real estate broker with over 20 years of experience assisting clients in Southwest Michigan. Connect with him on Instagram.
