Not all Dallas Real Estate Brokerages Agree on New Clear Cooperation MLS Rule

Though there will be a period of adjustment, Chris Kelly, CEO of Ebby Halliday Companies, thinks ending off-MLS listings is for the better. That was his reaction to the National Association of Realtors’ new MLS Statement 8.0, the Clear Cooperation policy. The policy prohibits the use of off-market (or hip-pocket) listings except when marketing within a brokerage.

The practice of off-market listings, “is a terrible thing for consumers, and an even worse thing for the industry,” Kelly said. But this has been a decision that’s been in the wings for months, with the only two options being what Kelly likened to “mutually assured destruction.” Either all agents pull their listings and put an end to the MLS as we know it, or rules to eliminate all off-MLS listings are set firm. 

“Why would you knowingly withhold a property like that?” Kelly asked. “You’re only going to frustrate consumers. Plus, it’s just not a good business practice.”

But not all Texas brokerages agree. In contrast, Erik Bahr, Regional President of Compass Real Estate Texas, believes this rule is only going to hurt agents who are just trying to serve their client’s best interest.

“Texas homeowners choose to pre-market their properties for a variety of reasons: to gauge interest while making home improvements, to drive demand for the first open house, or to protect their privacy while they test the market,” he said. “Hindering an individual’s ability to pre-market their home is not only against the best interest of the consumer, but also negatively impacts agents, brokerages, and the industry as a whole.”

Robbie Briggs, President and CEO of Briggs Freeman Sotheby’s International Realty believes that ending off MLS marketing is what’s best for clients.

“The spirit of MLS is that we share information with each other,” Briggs said. “Some companies think it’s best to sell inside their own office, but the best thing for the client is to expose the listing to everyone. For the most part, we are all working together, treating each other and our clients fairly.”

That brings up an interesting point: What about the rule’s provision for office exclusive listings? How does that work? How does it mesh with the spirit of the MLS?

Says Rob Hahn of Notorious R.O.B., the rule stops short of being truly effective at putting the MLS first:

It’s important to recognize that the office exclusive is actually a brokerage exclusive; a brokerage with 10 offices can aggregate all of the exclusive listings and take advantage of that. Further, note that office exclusives are not subject to the MLS rule requiring mandatory submission of the listing to the MLS.

That loophole not only preserves most of the value of exclusive inventory strategies, I argue that it creates a new safe harbor for such strategies.

Based purely on the language of the Policy and the FAQs, it appears that a large national brokerage like NRT, Compass, or eXp can take a listing, hold it off the MLS forever and communicate it to every agent in the company.

Each of those agents can engage in “one-to-one promotion” to all of their clients. I’m assuming that a potential buyer would qualify, but that’s not actually clear, but the real problem is that “one-to-one promotion” is not defined anymore than “public marketing” is clearly defined.

The one business day grace period between “public marketing” and submission to the MLS means that the brokerage and all of its thousands of agents can use that business day to promote, market, advertise and do whatever they need to to generate as many leads as possible… and then submit it to the MLS. If that should happen over the weekend, when most buyers are looking at houses, well… those are the rules.

Of course, the issue arises with ultra-luxury properties and celebrity clients. How do you protect their privacy if their listing has to go public? Kelly says that consumers should know that it’s not all or nothing when it comes to sharing listing information. They have a choice when it comes to how much or how little information regarding their home is shared, and to what sites it’s shown. 

“There are showing restrictions and other ways” to protect privacy, he added.

Additionally, there’s a wrinkle for Compass, as their brand’s “Coming Soon” program may have to be retooled.

“While we’re disappointed with the NAR board’s decision to adopt this controversial policy, our current focus is on working with our Texas MLS partners to ensure that the Compass Coming Soon program can continue to provide consumers as much flexibility as possible when selling their home,” Bahr said. “We are confident in the talent of our Texas Compass agents and have no doubt that they will continue to lend their immense expertise and market their client’s properties in order to best serve their clients and the community.”

Kelly also noted that the new rule doesn’t fully go into effect until May 1, 2020, which gives agents and brokerages plenty of time to figure out a solution that serves their clients.