On NAR’s MLS Policy Statement 8.0: A Step Forward… Into Confusion

Coming Soon and all of the off-MLS shenanigans have become an increasing problem within the industry, especially for the MLS. I’ve written about this here, here, and here (this post is VIP only). My position on MLS and systematic Coming Soon programs ought to be crystal clear by now, as I wrote in the Peace Be Upon You post:

At this point, let me limit myself to this observation: The MLS and systematic Coming Soon are incompatible. Only one or the other can survive, ultimately.

If we as an industry are going to have the MLS structure, then Coming Soon and off-MLS marketing must be relegated to what it once was: rare occurrences for the truly unique client situation. MLS leaders need to stop wringing their hands as if they are powerless to stop the destruction of the system from within and start taking action.

It appears that the MLS leaders have ceased wringing their hands and have have taken a major step forward to stop the destruction of the MLS system.

NAR has just published the current draft of the language for MLS Policy 8.0 from the MLS Technology and Emerging Issues Advisory Board. This language will now be forwarded to the MLS Policy Committee, and then from there to the Board of Directors for approval.

Policy 8.0 is a big step forward, and understanding the negotiations that were necessary to get to this point, I’d like to congratulate the Advisory Board for getting this far. I know a lot of people put a lot of thought and work into this.

Having said that, this is not an issue where negotiation and compromise can work. This is a rare situation where the issue is black or white, pregnant or not-pregnant, and halfway measures simply do not serve.

Furthermore, this issue is the hill for the MLS to fight on and die on, if it must be.

As my thoughts cannot be contained in a submission form that NAR put up for the purpose of soliciting feedback, and as I am not a member of NAR, I thought I would share my feedback publicly.

Let’s get into it.

MLS Policy Statement 8.0, Proposed

Here is the actual PDF of the language, along with some Q&A, showing just how much work has already gone into it.

MLS Coop Proposal 92019 by Robert Hahn on Scribd

In the announcement, Sam DeBord, who is not only a member of the MLS Technology and Emerging Issues Advisory Board but is also the CEO of RESO and an extremely intelligent and thoughtful observer of MLS issue, writes:

The “Clear Cooperation Policy“ proposal is straightforward: Brokers who are MLS participants must share listings with other brokers in the MLS if those listings are being publicly marketed. [Emphasis added]

The proposed language requires that the listing broker submit the listing to the MLS within 24 hours of “marketing a property to the public.” And the rationale is about bolstering cooperation:

Distribution of listing information and cooperation among MLS participants is pro-competitive and pro-consumer. By joining an MLS, participants agree to cooperate with other MLS participants except when such cooperation is not in their client’s interests. The public marketing of a listing indicates that the MLS Participant has concluded that cooperation with other MLS participants is in their client’s interests. This policy is intended to bolster cooperation and advance the positive, pro-competitive impacts that cooperation fosters for consumers.

However, the announcement makes clear that Policy Statement 8.0 is not intended to stop systematic and programmatic “Coming Soon” as long as such “teasers” are not advertised publicly. Indeed, under the FAQ section, we find this:

Does Policy Statement 8.0 apply to non-active listings?

Yes. Policy Statement 8.0 applies to any listing that is or will be available for cooperation. Pursuant to Policy Statement 8.0, “coming soon” listings displayed or advertised to the public by a listing broker must be submitted to the MLS for cooperation with other participants. MLSs may enact “coming soon” rules providing for delays and restrictions on showings during a “coming soon” status period, ensuring flexibility in participants’ listing and marketing abilities, while still meting the participant’s obligations for cooperation. [Emphasis added]

Furthermore, we find language exempting “Office Exclusives” from Policy Statement 8.0:

Does Policy Statement 8.0 prohibit office exclusives?

No. “Office exclusive” listings are an important option for sellers concerned about privacy and wide exposure of their property being for sale. In an office exclusive listing, direct promotion of the listing between the brokers and licensees affiliated with the listing brokerage, and one-to-one promotion between these licensees and their clients, is not considered public advertising. Common examples include divorce situations and celebrity clients. It allows the listing broker to market a property among the brokers and licensees affiliated with the listing brokerage. If office exclusive listings are displayed or advertised to the general public, however, those listings must also be submitted to the MLS for cooperation. [Emphasis added]

And finally, we find that Policy Statement 8.0 does not mean that these private listings or Coming Soon listings must be included in IDX or VOW.

Problems, Issues and Questions

As I wrote above, I know that this proposal is the result of hours of work, debate, discussion, negotiation and compromise by the many individuals who gave their time and energy to the MLS Technology and Emerging Issues Advisory Board. I have the utmost respect for many of the individuals who were involved. This is a great big step forward, of that there is little doubt. And the Emerging Issues Advisory Board is to be congratulated and thanked for their hard work.

Any criticism I have is not about their hard work or their earnest efforts, and is meant in the spirit of providing feedback for further consideration.

I also acknowledge that Policy Statement 8.0 take a big step forward in dealing with the issue of off-MLS marketing and abuse of Coming Soon listings. It’s a damn sight better than what we have today.

However, there are real problems with 8.0 and it seems to me that it is fatally weakened by the various exclusions and exemptions. More fundamentally, those exclusions and exemptions are premised upon an assumption about the MLS that is actually at the heart of the problem.

First, let us note the very important “includes, but is not limited to” language, which opens the door to local determination as to what does and does not constitute “public marketing.” What is unclear from that “not limited to” language is whether the local MLS might decide that a single email sent by an agent to her client does in fact constitute “public marketing” despite the section of the FAQ that plainly states that “one-to-one promotion” is not public advertising.

After all, the FAQ is not the language of the policy and the language of the policy clearly says “is not limited to.”

That’s a drafting error, perhaps, and one that could be addressed before the proposal gets out of the MLS Policy Committee in November.

The real problem, however, is that the combination of the office exclusives exemption and the Coming Soon exemption creates a giant hole in the policy that swallows the rule. It makes the rule more or less useless in terms of tackling the real problem here.

Why? Because programmatic and systematic Coming Soon isn’t actually about properties coming soon. It’s not about “generating excitement” and it isn’t about “consumer benefit.” It’s certainly not about cooperation.

It’s about one thing and one thing only: unique inventory, to be used as competitive leverage.

We know this because the large brokerages who practice programmatic Coming Soon tell us.

Exclusive Inventory is the Point

Take this report from the recent RISMedia 2019 Real Estate CEO Exchange about a panel discussion that included Rory Golod, Compass’s Regional President (and widely considered Reffkin’s right-hand man):

According to Golod, the best bet for brokers [to compete] is supply—creating it, and creatively marketing it.

“What I would encourage everyone to do is find a way to make your inventory unique to you,” he urged. “The only way we’re going to get our agents and consumers working on our companies’ platforms, and not the companies’ that are trying to replace us, is via inventory.”

Compass is accomplishing that through Compass Coming Soon listings, along with Compass Bridge Loans and Compass Concierge, which enhance the firm’s overall value, Golod said. [Emphasis added]

Hoby Hanna of the powerhouse Howard Hanna agrees:

In a similar vein, Howard Hanna Real Estate Services is differentiating inventory with “Find It First,” a coming-soon feature on its website.

“The MLS doesn’t love it,” Hanna joked.

I don’t know how you read phrases like “make your inventory unique to you” and “differentiating inventory” but I read those as meaning that the true goal is to make sure that Compass and Howard Hanna respectively have unique inventory that is unavailable anywhere else.

I have already written about this problem in my post about RealScout, who admittedly was not talking about Coming Soon and office exclusives, but about leveraging buyer data to create market share. But the same concept applies. The point is to use exclusive inventory to create a FOMO (Fear of Missing Out) effect in consumers and agents. This is from Andrew Flachner’s LinkedIn article on leveraging market share:

To know when you’ve achieved the Minimum Viable Liquidity that unlocks the market making superpower, two key things have to happen:

  1. Clients/agents feel you have enough in-house buyers and exclusive listings to switch to your brokerage.
  2. Sold prices for proprietary listings are comparable to those sold on the open market. [Emphasis added]

Does Policy 8.0 Stop Exclusive Inventory Shenanigans?

With that background, let us ask whether Policy 8.0 stops these strategies based on exclusive inventory.

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 them to every agent in the company. Because “office exclusives” actually means brokerage exclusive: “direct promotion of the listing between the brokers and licensees affiliated with the listing brokerage… is not considered public marketing.”

The 24-hour grace period between “public marketing” and submission to the MLS means that the brokerage and all of its thousands of agents can use those 24 hours to promote, market, advertise and do whatever they need to to generate as many leads as possible… and then submit it to the MLS.

Merely the promise of “know about exclusive properties 24 hours before anyone else does!” creates the FOMO effect that the exclusive inventory strategies aim for. In inventory-constrained markets, every buyer would have an incentive to make sure they sign up with all of the largest brokerages around to make sure they get in on the hot sheet action.

Perhaps the thinking is that not much can be done in 24 hours, so this is not a major advantage. Except that “one-to-one promotion” is specifically exempted.

So, to take just one example, Compass can take a listing, tell its 8,000+ agents about it, have them spend two months making phone calls to their sphere (surely a phone call is the very definition of “one-to-one promotion”), do a big push for 24 hours, and then submit the listing to the MLS. The fact that by that time, buyers have already been lined up ready to go means that the MLS is not the marketplace for dealmaking, but merely the filing cabinet for records.

If Compass’s 8,000+ agents do not impress you, then how about NRT’s 50,000 agents? Or HomeServices of America and its 44,000 agents? eXp at last count in June had over 20,000 agents. In fact, if you take the Top 20 largest brokerages by agent count from the Swanepoel Mega 1000 list, we’re talking about over 198,000 agents, or 15% of the total NAR membership.

That’s a lot of office exclusives and a lot of agents who will have access to them, while shutting everyone else out.

I don’t know that this policy stops the exclusive inventory issue. If anything, it seems to provide safe harbor for brokerages to conduct exclusive inventory strategies with the full blessing of NAR, so that the local MLS has no choice but the allow them.

To me, this creates an incentive for every brokerage of every size to engage in exactly the same strategy. It goes without saying that every large brokerage in every market would (and should for competitive purposes) pursue the same strategy as Compass and Howard Hanna have. But why would such a strategy be limited only to the large brokerages?

Why would a small brokerage happily submit their listings for big brokers to use without at least trying to see if they can generate the same benefits by holding them off the MLS, doing the office exclusives thing with one-to-one promotion, and the 24-hour hard push, before submitting them?

The assumption of the Board appears to be that brokerages will comply and meekly submit their inventory. I think differently. I think they would engage in an arms race instead to see who can build the best exclusive inventory system that still stays in the safe harbor provisions of Policy 8.0.

The end result of such an arms race is that the MLS becomes either (a) the repository for records of deals which were all done somewhere else, or (b) the dumping grounds for properties that couldn’t find a buyer during the pre-MLS one-to-one marketing period.

As far as I know, that is not a future that the MLS community is eagerly looking forward to embracing.

A Note about VOW and Digital Communications Marketing

Now seems as good a place as any to say that I am nervous about this. While I am certain that NAR Legal has looked into the issue, and given that the NAR-DOJ consent decree expired last year there may be greater latitude here, I am nonetheless a bit worried about including VOW in the definition of public marketing.

The reason is that the original rationale behind the DOJ lawsuit and the resulting consent decree is that VOW (which stands for Virtual Office Website) was a way to deliver brokerage services online. The understanding that we have lived with for 10 years is that anything you can share with a client in person sitting in your physical office may be shared with that client over a VOW.

When there is a specific exemption for “one-to-one promotion between licensees and their clients,” it seems to me that classifying delivery of such one-to-one promotion via a VOW (which received DOJ blessing) as public marketing strikes me as dangerously thin ice. Perhaps litigation will solve that issue. Or perhaps the DOJ will re-open an investigation… oh wait, they’re already looking into the real estate industry, especially the MLS! Wonderful.

Thing is, the same logic applies to things like email blasts. The Policy language specifically names “digital communications marketing (email blasts)” in its definition of public marketing. But emails are fundamentally one-to-one.

What is the rationale for preventing “email blasts” but allowing emails to 3 clients? What about 30? 300? Where and how do we draw the line between mere email and email blast?

If an agent has a branded mobile search app that has been downloaded by 5,000 prospects and clients, and this pocket listing gets pushed out, isn’t that “one-to-one”? Or is it “digital communications marketing”?

Feels like a series of lawsuits to settle the question to me. But perhaps lawyers can chime in and tell me how I’m wrong….

Flawed Premise

Fundamentally, I think Policy 8.0 is based on a bad premise, resulting from an effort to keep the old understanding of the MLS as based on cooperation and compensation.

It is trying to solve 21st century problems while preserving mid-20th century framework of the MLS.

That bad premise is this: the policy itself makes a key assumption that a property can be marketed to the public outside the MLS. There is no other way to read “Within 24 hours of marketing a property to the public, the listing broker must submit the listing to the MLS for cooperation with other MLS participants.”

This is an implicit admission that the MLS is no longer the marketplace for residential properties; it is merely the vehicle for cooperation amongst brokerages. The true marketplace is somewhere else. What Policy 8.0 says logically is, “Once you’ve put the property in the real marketplace, may the MLS have it as well so your competitors can know about it?”

This is a concession that the MLS simply cannot make without a fight. Because that’s the whole point of this conflict: is the MLS the marketplace for residential property, or is it not? Should the MLS be the marketplace, or should it not?

Back in the early days of the syndication wars, brokerages used to claim that the portals did not affect their businesses much because they were mere advertising vehicles, not the marketplace. They would say things like, “If Zillow went away tomorrow, I would sell the same number of homes, because Zillow is not where deals get done — the MLS is.” Now, we have NAR policy straight out stating that the MLS is not the marketplace, but just a vehicle for broker cooperation.

Land of Confusion

The result is the confusion I have already listed, as well as some I have not. We have all kinds of confusion around what constitutes public marketing vs. one-to-one promotion. We have a policy that seems to be all about making sure that other Participants in the MLS know about listings, but then we have specific blessing of company-wide office exclusives which do not have to be shared with no time limit.

You can still tease properties that are not ready to be shown… but if you tease them, you have to put it into the MLS… which means it is or is not Coming Soon? I suppose that depends on whether the local MLS has policies to deal with that or not.

The Policy even makes a giant assumption that marketing a property to the public is a sign that cooperation is in the client’s best interests. Meanwhile, brokers themselves are saying how public marketing of exclusive inventory is wonderful for their clients and making it very clear indeed that they have very little interest in cooperating. No, what they want is exclusive inventory as a way of competitive differentiation, to force agents and consumers on to “their platforms.”

Meanwhile, on the key core question of whether the MLS is or is not the marketplace for properties, we have NAR clearly stating that it is not. That’s not a concession that the MLS can make without a fight, not if self-preservation is an instinct they possess… which they surely do.

Clarify the Question to Clarify the Answer

If Policy Statement 8.0 is the answer, then what is the question? I suppose we’d have to say that the question is something like, “How do we prevent further loss of cooperation amongst brokerages?” since the policy itself is billed as the Clear Cooperation Policy.

I’d like to propose a different approach to this issue. By clarifying the question, I think we might clarify the answer.

The question to be answered is not what to do about declining cooperation. That’s the old vision of the MLS as the enabler of cooperation and compensation. I would like to suggest that in 2019, the question is: Is the MLS the marketplace for buying and selling properties, or is it not?

If the answer is Yes, that dictates a certain set of clear answers centered around the MLS as the marketplace.

If the answer is No, then that dictates a different set of clear answers centered around the MLS no longer being the marketplace.

Cooperation and compensation, while important to being the marketplace, is not the sole factor to be considered.

When you phrase the question this way, it is a black-and-white issue. There is no compromise possible here, because either the MLS is the marketplace or it is not. It can’t be kinda sorta be a marketplace that coexists with a hundred other marketplaces.

Because the Yes answer to the above is fairly extensive and detailed, I’ll leave that for a followup post. 3,000 words is long enough already. There’s another few thousand words coming on the answer.

In the meantime, thanks for your attention on such an arcane little issue having to do with the MLS. If you would comment, please provide your answer to my question. In 2019, is the MLS still the marketplace for buying and selling properties, or is it not? Should it be, or not?


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Rob Hahn

Rob Hahn

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

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12 thoughts on “On NAR’s MLS Policy Statement 8.0: A Step Forward… Into Confusion”

  1. Rob, We as MLS’s surely agree and promote ourselves as helping to make the market work. I would hate to see such a valuable resource done away with in that capacity and just become a storage facility. While storing, managing and distributing broker owned content and helping to facilitate an ‘orderly’ and vibrant marketplace describes some of what we ‘do’, we are the underlying vehicle that provides services to each local community through the participation of our cooperating brokers and agents that makes this whole concept work. If the MLS is NOT this marketplace, then I certainly look forward to what CAN allow many different competitors to work together in an orderly and multi-governed environment where ethical behavior should prevail.

  2. ROB,

    “In 2019, is the MLS still the marketplace for buying and selling properties, or is it not?”

    IMO, the MLS is a great marketplace and still serves a valuable service to those who want or need to use it. I have trouble with “the marketplace”. I prefer to think of the MLS as “a marketplace”.

    Should it be, or not?

    “Should” is a tough one, especially in context with “the marketplace”. I look at any strategy that satisfies the consumer’s needs and want’s as “the marketplace that should be used for buying and selling properties.”



  3. All these MLSs are one big joke.They do not care to service the consumer. All they care is to get the fees from the agents.It is clear to many consumers that the leaders of the residential real estate industry, DO NOT want to make any changes and love to operate in the current status quo.

  4. One day, the MLS will fully understand that it exists only because it serves the needs of those brokers in its membership. Or not. Not all of the broker’s needs as one unified body, but each one individually as a unique and competitive entity.

    The days of policies that promote and support the historical MLS “level playing field” are over. Well actually they were over years ago it is just that the MLS has never recognized it.

    I can recall the day many years ago that Chip Roach stood up at a CMLS meeting in Seattle and stated that the reason he did not participate in MLS governance was because although he had 2500 plus agent members of the MLS in his company then, he himself had only one vote on any MLS committee. Insanity back then and even more insane now..

    Mandated policies and rules for all need to be replaced now by a plethora of individual broker choices.

    The MLS serves the brokerage industry and not the other way around. When the MLS refuses to change to enhance of expand the competitive nature of the brokerage industry it essentially ceases to be of value to the brokers. It is no longer viable as an entity that creates and lives by “one size fits all” policies and rules.

    Cooperation should never have been an intended strategic mandate for this industry. It was a choice. And when the choice of any participant was to not require cooperation to get the job done, so be it. And the same is true for compensation. If the listing broker and the Seller agree that they only wish to extend the invitation of others to participate or be compensated to assist in selling a property, they should be able to set the rate of compensation for that party and all others freely.

    So when it is all said and done, it really all comes down to this.

    Choice is the name of the game in real estate brokerage and lots of it is way better than none at all. All of this NAR / MLS mumbo jumbo is just that but it is crystal clear to me now that the brokers that control the majority of the business are in a state of general disagreement with organized real estate and the MLS industry now.

    They find “the one size fits all” offer made by the MLS industry to be unacceptable. And most importantly, as the pressure to comply is increased of them by the MLS industry, they are the precise parties that will welcome with open arms a viable alternative that will one day soon be “knocking on their door.”

    • Ken – was expecting you 🙂

      I have some questions. You write:

      “The MLS serves the brokerage industry and not the other way around. When the MLS refuses to change to enhance of expand the competitive nature of the brokerage industry it essentially ceases to be of value to the brokers. It is no longer viable as an entity that creates and lives by “one size fits all” policies and rules.”

      I happen to agree with that. But here’s the thing. What is this “brokerage industry” you speak of? Let me give you an example from a large regional MLS I happen to know pretty intimately.

      The largest brokerage, with triple the number of agents of the second largest brokerage, has 8% of total membership, 7.2% of total listings, 13% of total volume and 10.7% of total transactions. Is that broker representative of the “brokerage industry” you speak of?

      What if we took the top 20 largest brokerages in that MLS? Now the numbers are: 35% of total membership, 29% of total listings, 45% of total volume, and 38% of total transactions. Significant numbers, but you know what those are not? THE MAJORITY. Are they representative?

      Conversely, out of the roughly 2,400 brokerages in this MLS, about 2,200 of them have 10 or fewer agents. They are many many times smaller than Mr. Big Broker. Individually, each is a blip on the radar, a footnote. Collectively, however, they have about 28% of the total membership, 31% of total listings, 18% of the total volume, and 22% of total transactions.

      Which represents the “brokerage industry”?

      If the 2,200 small brokerages with 10 or fewer agents decide that they want the MLS, they want cooperation, they want unilateral offer of compensation, etc. etc. — all the things you are railing against — then who is the “brokerage industry” and who is not? Because on a Participant count basis, 2,200 is over 91% of the Participants. Is that not the “brokerage industry”? What in your mind makes large brokers representative of the “brokerage industry” while the many, many more small brokerages do not?

      In terms of the options and choices, those exist today! The top 20 brokerages of this MLS can LEAVE. They can offer whatever compensation they want, not have to deal with the “NAR/MLS mumbo jumbo” and all that you say.

      Why are they not doing the honest thing and leaving this horrible MLS situation they’re in? What is stopping them? They do the majority of the business, as you say, right? Choice is the name of the game, you say. Well, these large brokerages have the choice to leave the MLS behind and do their own thing. Why wait for this knock on the door? What’s holding them back?

      Inquiring minds want to know.

  5. Leave it to NAR to take the cheap and easy way out and just try to regulate agents into complying – which will only mean that we will find new ways around the rules, or keep ignoring them altogether.

    It would be far more effective if NAR went on a full-blown advertising campaign to prove to agents and the public alike on why broker cooperation is good for everyone, and the best solution of all. There are many if not most agents who have never considered the concept – they just see others breaking the rules and figure it must be ok to double-end deals off-market when no one is looking.

  6. Rob –
    I think the industry is overlooking the importance of the MLS’s as an accurate listing data and information repository. I would claim this could be the most important reason for requiring submission of listings. If the industry is going to serve the consumer and themselves in the future we need to secure as much data and information on every listing in one place. Our business is based on one simple thing, the value of the property. Without the dta and information we can not help consumers continue to transact real estate. Being without the data and information to support accurate values, lenders and appraisers cannot function either. Is the MLS the marketing giant it once was? No, is it the most important data base and most important tool to manintain a functioning marketplace, Yes! We have to take control of the data and information now or our business and our value proposition will erode.

    • Thanks Todd.

      Here’s the thing. If what you’re saying is that the MLS is no longer the marketplace, but is an important data repository… then I would submit to you that the MLS is probably not the best fit to be the data repository. Who in the world needs 650 separate tiny data repositories with very little money?

      I would actually submit that if the industry really wants just a data repository, Zillow or Realtor.com or perhaps the new Remine.com make for a far better candidate.

      My take is that real estate is local. Dealmaking is local. There are customs and traditions that prevail in local marketplaces, and different business cultures across the United States. This is a BIG reason why I never believed in a “National MLS.” However, data is NOT local. Data is global. We don’t have 300 different VIN (Vehicle Identification Number) systems, as an example, or ten different ISBN systems.

      So I would simply caution everyone to be careful of what you wish for. If the industry really just wants a data repository… well, that can happen. But I’m not sure that you’re going to like the result.

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