The National Association of Realtors’ landmark settlement is changing the way homes are bought and sold. Now, another industry dispute threatens to shake up how homes are listed for sale.
A rule implemented in 2020 requires most real-estate agents to add listings into local databases known as multiple-listing services within one business day of publicly advertising the listing.
Advocates say the rule, known as the clear cooperation policy, makes the housing market more transparent by putting available homes in one place. The goal of the rule was to reduce the number of home listings that are shared privately with a select group of buyers or agents, known as pocket listings.
But opponents say the rule limits sellers’ options for how they can market their homes and puts brokerages at risk of lawsuits. The Justice Department’s antitrust division is investigating the policy, and a lawsuit against NAR regarding the rule is scheduled to go to trial in late 2025.
A NAR advisory board considered proposals regarding the clear cooperation policy at meetings in September and October. Compass proposed to repeal it, Zillow Group proposed making the rule stricter and Anywhere Real Estate proposed making it more lenient.
The advisory board decided not to take any formal action. The organization will continue to evaluate the policy while considering ongoing litigation and Justice Department investigations, a spokeswoman said.
Most home sellers want to market their homes for sale as widely as possible in hopes of getting the highest price. The rule—and the debate—are focused on what options should be available to sellers who don’t want to widely advertise their homes because of privacy or safety concerns.
Some industry executives say that if those sellers had more options to privately list their homes, it would be harder for buyers to find all the homes for sale.
The dispute reflects a broader disagreement within the industry about what role NAR should play in setting rules for the housing market.
The powerful trade group has been the main voice of the residential real-estate industry for decades, and it sets rules for most multiple-listing services. But NAR has suffered through a scandal in its leadership ranks, declining membership and legal turmoil over its commission system.
A jury found NAR and large brokerages liable for about $1.8 billion in damages last year after determining that a NAR rule kept payments to real-estate agents artificially high.
NAR settled that lawsuit and other similar ones for more than $400 million in March and agreed to sweeping changes. Large real-estate brokerages also paid tens of millions of dollars in settlements. Now, some brokerages are worried that other NAR rules, such as the clear cooperation policy, could pose similar risks.
“It is reckless to keep clear cooperation, which is subject to an active government investigation,” said Robert Reffkin, Compass’s chief executive.
The industry is divided. A recent survey by consulting firm WAV Group found that half of brokers and about one-third of MLS leaders wanted to repeal the policy, while the rest were split between leaving it in place and modifying it.
“When private listing networks exist because listings don’t have to be in the MLS, then those buyers lose access to a whole bunch of listings,” said Susan Daimler, Zillow’s president.
The NAR rule currently allows listings to be kept off the MLS if they are only marketed within one brokerage, known as an “office exclusive.” That exception can benefit big brokerages, which have more potential buyers for those in-office listings.
“The reason that people want to withhold the listings is so they can get more market power,” said Glenn Kelman, chief executive of real-estate brokerage Redfin.
Homes sold on the MLS in five states and Washington, D.C., from the first quarter of 2019 to the first quarter of 2023 sold for 17.5 percent more than similar homes that sold off-MLS, according to a study released last year by Bright MLS, a Maryland-based multiple-listing service.
About 1.8 percent of homes were sold as pocket listings in the second quarter of this year, and the proportion has ranged between about 1 percent and 3 percent for the past decade, according to Redfin. Redfin’s analysis likely doesn’t capture all off-market listings, the company said.
In some markets, most Compass listings start out as office exclusives, Reffkin said in an August earnings call.
“Those homeowners, they want to be able to test the market” before listing their homes more widely, he said. “The reason why private exclusives at Compass are so popular is because they do not have days on market [or] price drop history.”
Top Agent Network, a San Francisco-based, members-only platform for real-estate agents, sued NAR in 2020, alleging that the clear cooperation policy hurt its business. The case is scheduled to go to trial next year.
The Justice Department started an investigation into NAR in 2018. The Justice Department resumed its investigation, which includes the clear cooperation policy, this spring after a federal appeals court ruled that the department wasn’t bound by a 2020 settlement. NAR asked the Supreme Court last month to review that ruling.
Jan. 13, 2025 Update: Supreme Court denies NAR request
