The American Real Estate Association is looking for those 'fined or otherwise harmed' by the National Association of Realtors' pocket listing rule and are interested in 'collective action'
Debate over the National Association of Realtors’ pocket listing rule is reaching a fever pitch and may be headed toward additional antitrust litigation.
On Thursday morning, the American Real Estate Association, a rival trade group launched in the wake of harassment accusations at NAR, began soliciting real estate agents who had “been fined or impacted” by NAR’s Clear Cooperation Policy, which requires listing brokers to submit a listing to their multiple listing service within one business day of marketing a property to the public.
“Many real estate professionals and homeowners have expressed how this policy has negatively impacted them, from fines to compromised client relationships,” the American Real Estate Association said in an email to its network.
“If you have been fined or otherwise harmed by the Clear Cooperation Policy, you may be eligible to join a class action lawsuit against NAR.
Now, it seems, the rival trade group is prepared to go further to end the policy, which went into effect in 2020. Inman talked to Jason Haber, co-founder of the American Real Estate Association, to learn more about the group’s plans about two hours after he sent out the email. This interview has been edited for length and clarity.
Inman: I got an email from you about maybe starting a class action, so I thought I’d give you a call.
Haber: It’s not us. A lot of agents have been coming to us asking about this after we started the petition. Lots of agents around the country who had signed the petition … had said, ‘We’re interested in taking more action than signing a petition and we feel that we’ve been injured as a class.’ I got these messages from people who have been fined — $2,500, $800, $5,000 — whatever it is, around the country. They feel aggrieved by the policy and they want to take action. So right now, we’re just doing a survey to see how many are out there who might be interested in taking a collective action.
So you haven’t hired a lawyer yet or anything?
No, no. We’re in a gathering-of-information phase, and we’re responding to the agents that are out there that are coming to us. They’re coming to us with lots of frustrations about some of these legacy systems and the status quo of our industry. Some have been directly aggrieved by Clear Cooperation. Others have come to us with other frustrations that they have with the mandatory three-way agreement that makes dues mandatory and a host of other issues.
But since the petition was about Clear Cooperation, we’re using this as a gathering point to understand how many agents are out there that are in this position.
I’m looking at this Google form that you have. Have you gotten any responses yet?
It’s few dozen here already, but let me go through it. I have to go through each form just to make sure it’s not nonsense. The important thing is responses are coming in.
Do you have any idea what the basis of a class action would be? What you’d be arguing?
No. There are others out there who are looking at a class-action lawsuit. We haven’t taken the step yet of putting a class together. We’re really sampling the brokerage community to find out how many agents have been aggrieved by this policy and what remedies might be out there for them because a lot of these people are now members of our trade group too, and they’re coming to us. This is a big complaint with the status quo of the industry — that they’ve been subject to these fines for following their clients’ instructions — and how can we, as a new trade group, help to advocate on their behalf.
Are you thinking this could be a lawsuit filed by American Real Estate Association, or would you be helping someone else file a suit?
It’s very early. No decision’s been made on that. This is just a gathering of information. But I do think that we take this very seriously because this is what agents are telling us. We haven’t gone to agents with this. Repeatedly, agents have come to us. We constantly hear this complaint about Clear Cooperation and how it’s impacted them. The next step, the action step, that’s to be determined.
We’re reformers. We want to make the industry better. We think that the legacy systems have been with us for far too long. If you’ve gone through the last year and think that the status quo of this industry does not need to change, I don’t know what rock you’re under, but stay there if you want. But most people have taken a clear-eyed view of the industry over the last year and believe that it’s time to reform the industry. That’s what we’re a part of.
Is the petition still up? Any plans to do something with that?
The petition has been very helpful in putting this idea out there and to see how many agents, just organically, who would sign it and who is interested in this. The petition has been viewed 110,193 times, and it’s been shared about 1,600 times. So it really is circulated out there in the brokerage community.
But are you planning to, I don’t know, contact NAR with it? What do you plan to do with it exactly?
We’re hoping that the petition will help as NAR considers what to do with the future of the policy, that they’ll listen to the voices who have signed the petition and in how they look to reform the policy, whether it’s a removal or the other ways to reform the policy that could be considered. Maybe it’s 120 days before, or maybe 60 days or 90 days before something goes into the MLS. There are lots of different ways that compromise could be reached. It’s all open for discussion.
We wanted the real estate industry to know that there were a lot of people who are against it. There’s a host of agents out there whose businesses depend on data and data flow — where you put a listing, how you put a listing up, when you put a listing up. That’s the bread and butter of their business. They really care about this, and they’re passionate about it, and I think that’s why so many people have shared the petition, why it’s gotten over 110,000 views, because there’s a real interest in this topic.
Have you contacted NAR about the petition?
No. This is not done yet. Maybe we’ll send it over once we close it. Pretty sure they know about it. It’s been on our social profile. Then again, the goal is to be instructive for them so they can modify their position to make the industry better, which is at the core of what the American Real Estate Association is all about.
When do you think you’ll close the petition?
I don’t know. We’ll let it go for a while longer, and we’ll see what the state of the debate is. Probably around the time that they’re going to make their decision. We’re trying to get clarity on the decision date … probably wouldn’t close it until we approach the date, whenever that is.
What do you say to those criticisms from people who are supporting the policy, saying, ‘This is just big brokers trying to make their private listing networks bigger, recruit agents, double-end more deals, boost their profits’, essentially? And that this is going to kill the MLS if everybody just pockets a significant chunk of their listings.
A couple things: 1. I think year 2024, we have to really innovate on the MLS front. I don’t know if you’ve looked at any MLS, like the interface of them. The one that I am in, I won’t even send it to a client because it’s so dated. It’s like 1997 all over again. It just speaks to the need to innovate in the industry. The industry has been starving of this kind of innovation. One of those reasons is we have these status quo legacy systems.
Regarding [Glenn Kelman’s] point: In the world we live in today, where privacy is, I think, the most important thing, a client should have the right to dictate where they list, when they list and how they list. I just think at the end of the day that that’s what’s most important. That privacy trumps all the other issues that are raised.
The client should have that ability. It shouldn’t be dictated by a trade association in Chicago how I, as a seller, decide to list my home. Particularly today, there are so many cases, whether it’s divorce or privacy issues, people who have been cyber-stalked, people who have had their lives turned upside down for a whole host of reasons, they may want to be more private. As an agent, I should be able to respect that and to respond to it, but in the current system, I can’t.
Right now, and as far as I know, this has been the case forever, you can opt out of putting your listing in the MLS if you don’t want your home publicly marketed.
Yes. Once you have any marketing, that’s where you get subject to fines, though. The way it’s written right now, it’s basically the MLS or the highway. What we’re saying is it should be not ‘the MLS or the highway,’ but ‘my way.’ The seller should have the right to determine the way in which they want their home marketed. That doesn’t exist under this current set of rules.
But if the issue is privacy, then doesn’t that take care of that issue? Because if you don’t want it publicly marketed, OK, don’t publicly market it, and keep it off the MLS.
But the problem is, if you list it somewhere else, you can be subject to a fine.
But then you’re not concerned about your privacy if you’re marketing it somewhere else, right?
It’s not going on an aggregator site.
But you can put it in the MLS, and the MLS allows you to opt out of sending it to an aggregator site, doesn’t it?
That’s the problem. They don’t all do that. The problem is not everyone wants to be so public. If you have a private listing network … or other ways an agent can market it, that may preserve your privacy.
[Also,] days on market are so important right now. After 100 days, 180 days, listings start to get stale. At least for price discovery purposes, it could be better for a seller to test privately first and then understand, ‘Oh, wait, I was wrong. I’m a million dollars over-priced,’ and then go to market at not a crazy price. There’s just so many reasons why sellers should at least have the opportunity — for price discovery and/or privacy — to use these other tools. But they’re sidelined from doing them now.
But for the price discovery thing, isn’t it the listing broker’s job to accurately price the listing?
Oh, you better believe it. Sometimes, a lot of times, selling a home is like dentistry. You actually have to go through it and do it to learn. Everything else is just hypothetical. Good agents will get the pricing down, but some sellers will insist on a certain price, and then it ends up costing them money because they burn days on market. So instead of selling in 37 days, they sell in 322 days, and probably at a lower price. They just had to be convinced.
But you as the listing broker, don’t you tell them that? ‘We could try this price if you want, but —’
I just don’t take the listing.
Well, there you go. You also can do that, right?
Yeah, yeah. But unfortunately, I have that luxury too. A lot of agents, it’s hard out there, and you want to get the listing, and you want to try to sell it. Oftentimes it’s ‘OK, we’ll try it, and then we’ll lower it after a few weeks.’ You would technically be better off trying that privately, getting buyers in the door, and then everyone’s like, ‘Hey, your price is a joke.’ And then the seller learns it that way, and it preserves their days on market. Just as an example. I’ve seen that play out many times.
A one-size-fits-all policy is just dated. People don’t think that way now. People don’t work that way. It’s just not the way of the world in 2024 to have a one-size-fits-all policy for how every listing should be conducted. A little flexibility goes a long way.
So what would you like to see done?
At the very least, you should look at reforming the policy that allows for a window of time for sellers to have choice. That would be a game-changer for a lot of sellers. I think it’d be better for the market, and I think it’d be better for the industry.
Did you happen to see James Dwiggins’ solution?
I read the piece quickly, but what was his solution?
That sellers would have to fill out some sort of disclosure form, telling them exactly how much money they could be leaving on the table if they don’t put their listing in the MLS, and that the MLS should call the seller and make sure they understood that, and if they did and still didn’t want to put it in the MLS, then they would allow that.
I’m trying to think of how that would work practically. I’d have to review that rather than give you an off-the-cuff answer, but I don’t know how you would even quantify how much money they’re leaving on the table.
He basically said that every MLS would have to do a study to quantify that.
Oh gosh. I think there are practical problems with that, but good for James for injecting an idea into the debate. We should look at all solutions.
But what do you think of the idea of just making absolutely sure that the seller knows that they could be leaving money on the table if they don’t put it in the MLS?
Do we know that that’s a given? I sold something off-market before. Did the seller leave anything on the table by doing it? I don’t know about that. I would have to see some data on that. I understand the theory, but how do you prove it out?
There have been some studies that MLSs have conducted.
I’m sure they all show the benefits.
Yeah. But do you think there’s anything wrong with them methodologically?
I’d have to read the studies. The best way to do it is look at a third party and [have] an impartial way to have someone do an analysis. Practically and programmatically, that sounds complicated to me. It may work in the abstract, but I don’t know if it works practically. I don’t know how you even have 800 MLSs do their own analyses. Seems like it’s like asking for trouble, too.
I think there’s like 550 or something now.
That’s right. That’s fair. All ideas should be welcome and talked through. I don’t know how that one would work though.
That’s all I’ve got for you right now. Anything you’d like to add?
I got appointed to the advisory board of Delos Living. They’re a very, very, very, very cool company. Leonardo DiCaprio is on the board [and] Deepak Chopra. The technology and wellness company. They’re behind WELL-certified spaces, like 5.5 billion square feet around the world of WELL-certified spaces. They’re growing like crazy.
I’ve been involved with them for a number of years, helping them understand the built environment and how in residential real estate, there’s a need for better awareness of health and wellness inside. We spend all day inside our spaces and health outcomes are determined by the spaces we live in. I just joined the board there, and my face is up on the website now. I’m very honored. The people who are also on the advisory board are quite amazing. It’s a real nice roster of people to be with. It just happened maybe two days ago, so I’m super excited.
By Andrea V. Brambila.
Source: https://www.inman.com/
Image: https://www.freepik.com/
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