Michael Wurzer Just what everyone needs, another opinion piece about Clear Cooperation. I’m hoping my take is different enough to be of value, but I do realize it’s just my opinion, and so feel free take that for what it’s worth. Of course, since I was a practicing lawyer at one time, I want to give you the normal caveat that I’m no longer practicing and not giving any legal advice; this is just my opinion as a deeply interested industry observer for the last 25 years.
I’ll start by going back about a month or so ago to the RISMedia conference, during which I moderated a panel of MLS executives (Art Carter from CRMLS, Merri Jo Cowen from Stellar MLS, Brian Donnellan from Bright MLS, Richard Haggerty from Onekey MLS, and Dionna Hall from Beaches MLS). The primary topic of the panel was the experience of these executives implementing the NAR settlement of the commission litigation, including removal of the compensation fields, use (or not) of concession fields, and compliance. Toward the end of the panel, however, I asked a question about whether the executives foresee any changes coming for how their MLSs will set policy going forward, especially in terms of following policies from the NAR. The responses these executives provided is the basis for my unsolicited advice in this post, namely that the executives expected to have fewer national requirements and more local or regional options.
Though this response was not directly related to the controversy over Clear Cooperation, I believe the answer is the right one, namely that each MLS should craft their own policy for their specific market. Further, I’d love to see MLSs consciously try different approaches and measure the results. If the NAR wants to provide guidance or help to MLSs, it should be with resources to help measure the different results that undoubtedly will come rather than presuming a national policy can or should exist. Instead, let’s try to figure out what really “works,” recognizing that different stakeholders have different goals (i.e., what works for some may not work for others) and not all markets are the same. If any of you want to geek out on why I think this approach can be a benefit to the industry in dealing with regulators (and litigators), I discuss it at length in this episode of the Industry Relations podcast with Greg and Rob from a few years ago (in which I get to say cool things like Neo-Brandeisian antitrust, which should be friendly to MLS cooperatives, because Brandeis advocated for cooperatives in a variety of contexts to balance power).
Some may read this suggestion for a local or regional policy as me saying that I don’t think the goals of the Clear Cooperation policy are important, and that would be a mistake. There is no question that consumers (buyers and sellers) and their brokers and agents benefit by having a comprehensive source of market data like the MLSs across the country. In fact, I wrote a blog post recently outlining how MLSs in North America Are the Envy of the World because of the accuracy and depth of the data. There’s also plenty of data to support this proposition and calls by smart folks like James Dwiggins to develop even more data so the value of MLSs can be clearly disclosed to sellers so they can make an informed decision about whether to use a private listing network versus the MLS. Theses kinds of seller-informed exceptions are exactly the type of experiment I’d like to see different MLSs try. Do disclosures to sellers make a difference? Let’s try different disclosures and measure the results to find out. Anything less than such an evidentiary based approach is just opinion-based policy making, which is not productive, because everyone has an opinion and they’re all different.
The good news is this kind of experimentation is already happening with many MLSs trying a variety of policies that address concerns of brokers (and, presumably, their sellers) such as privacy needs, pre-marketing needs (e.g., Coming Soon or Delayed statuses to allow sellers time to get the property ready), and others. These different approaches are all based on MLSs listening to their broker customers and finding a compromise. I wrote a post a long time ago called MLS Is More Than Technology that posited that the success of MLSs is based on trust and representative decision-making, which is critical to establishing broad-based cooperation. This is where local and regional MLSs shine, because they can listen to their local participants and understand their concerns, try different policies, and figure out which ones work best for their market. As best practices are found through trying different approaches and finding what works best, those best practice very well should spread to other MLSs with similar market needs.
I think this kind of localized approach not only is the most practical from a business perspective, but also from a legal perspective. The reality is that the Ninth Circuit Court of Appeals in the The PLS.COM, LLM v NAR, et al case has already given plaintiffs in Clear Cooperation cases a massive leg up by ruling that plaintiff “adequately alleged a per se group boycott.” Though the Ninth Circuit left the trial court open to determine whether to apply a per se rule or not (and the case subsequently settled), the reality is this precedent is not good for the fate of the Clear Cooperation rule. If the NAR could bring or litigate a Clear Cooperation case in another Circuit or if, as James Dwiggins hints, the DOJ would support getting rid of office exclusives and keeping clear cooperation, the concerns about the Ninth Circuit precedent on Clear Cooperation might be different. As a general matter, I think a great goal for the NAR would be, sooner than later, to get one of these cases to the Supreme Court to decide once and for all that MLSs have many pro-competitive results for consumers. For now, though, battling every case as a per se case is a fight that’s going to be difficult to win. One bright light on this front is the recent dismissal with prejudice of West Penn MLS from a compensation case, because the MLS policy differed from the NAR policy by not requiring an offer of compensation (not even $.01). In light of these two cases, local and regional MLSs crafting their own policy rather than following a national policy that may or may not reflect local market needs could be beneficial both from a legal as well as a business perspective.
I have at least one more post on this topic that I’ll try to put out later this week, but I definitely want to address what I see are some of the tired arguments on these topics like whether “big” brokers will just wipe out the smaller competitors without Clear Cooperation and whether sellers really don’t want their listings to show on consumer portals like Zillow or whether that’s just a competitive wish of CEOs like Robert Reffkin of Compass and Andy Florance of CoStar, who provided a 1-2 punch speaking in separate sessions at the RISMedia event against Clear Cooperation (Reffkin) and anti-commingling (Florance). In anticipation of my next post, check out the links to the articles about their respective sessions and the arguments they made and then look for my next post later this week.