If you’ve been paying attention to recent industry news then you’ll be familiar with the latest kerfuffle in the real estate world: Clear Cooperation. In 2020 the National Association of Realtors® (NAR) adopted a national policy known as Clear Cooperation. On its surface, it was a response to further answer the call for fair housing. But it also came with a number of strings attached, most notably the mandate to put all new listings on the MLS or face stiff fines and penalties. Now that NAR has inextricably landed in the high beams of the DOJ, it’s not surprising that the policy of Clear Cooperation has come under its scrutiny. And more notable still is the amount of disagreement–both for and against the policy–among industry professionals. So if you’re scratching your head and wondering what all the fuss is about, following is a quick explanation of Clear Cooperation:
Clear Cooperation came about as a way to make sure that all new listings were put on MLS within the timeframe of a day. It’s mission was, ostensibly, market transparency. By requiring all publicly marketed listings to be put on MLS, all parties in the industry–Sellers, Buyers, Agents and listing portals like Zillow–would have immediate access to new properties on the market.
WHO MUST COMPLY
All NAR affiliated MLS databases are mandated to comply with the Clear Cooperation policy.
WHO CAN OPT-OUT
No seller of a broker that is a NAR member may opt-out if the listing in question is being “publicly marketed.”
DEFINITION OF “PUBLICLY MARKETED”
As per NAR: “Public marketing includes, but is not limited to, flyers displayed in windows, yard signs, digital marketing on public facing websites, brokerage website displays (including IDX and VOW), digital communications marketing (email blasts), multi-brokerage listing sharing networks, and applications available to the general public.”
TIMEFRAME
Any listing that is “publicly marketed” must be filed with MLS within (1) one business day. (Excludes Saturdays, Sundays and holidays.)
COMING SOONS AND DELAYED SHOWINGS
According to NAR: “The concept of “Coming Soon” and “Delayed Showing” can be achieved within the local MLS. Listings which are truly not yet ready to be shown can be shared with the MLS’s brokers and agents to create exposure while the property is being prepared for showing. MLSs can also add clarity to the coming soon and delayed showing process by defining specific statuses and showing requirements if these listings are to be included in the MLS. The most common implementations do not allow for showings of the listing until its status is changed to active, and any showings of the listing would immediately trigger that status change. (Learn more about effective ways to leverage the new rules on your next listing.)
EXCLUSIONS & POCKET LISTINGS
Often referred to as a “pocket listing”, an “office exclusive”, or an “exclusive” or off-market listing is a listing that is kept off the MLS. NAR states that “office exclusives” are permitted because they are not considered to be “publicly marketed.” (Click here for that info.) According to Bankrate: “Pocket listings are legal, but they fall into a bit of a gray area. The National Association of Realtors is not a fan of them, and has actually adopted a specific policy that requires Realtors to share listings on the MLS. (Of course, not all real estate agents are Realtors.)”
PROS & CONS OF CLEAR COOPERATION
Listing portals like Zillow, Realtor.com and Redfin are fighting to keep the Clear Cooperation Policy alive and also do away with office exclusives altogether. They maintain that full market transparency is what’s best for the consumer. They also insist that doing away with the CCP would lead to an explosion of private listing portals which would create fragmented databases. This would make it hard for agents and consumers alike to be aware of what’s on the market and what their options might be. Another disadvantage of a pocket listing is that it can severely limit competition for a home by reducing the audience size and thereby lead to a lower sale price.
But there are several reasons a pocket listing might be just what the doctor ordered. One, a pocket listing can ensure privacy to the seller. Celebrities and other public figures typically appreciate the privacy that a pocket listing will afford. Secondly, a pocket listing is handy and saves time when there is already a willing buyer waiting in the wings. Third, a pocket listing can test the waters of what price a seller should set. This helps keep the property from gathering “days on market” in MLS, which can be a red flag to potential buyers.
Meanwhile, critics of the CCP, like Robert Reffkin of Compass and founders of American REA, argue that the policy is “forced cooperation,” and that it eliminates choice for both consumers and agents by mandating MLS participation. (Click here to read that article.)
It remains to be seen where the chips will fall when it comes to the Clear Cooperation Policy, but it’s possible it will end up at the doors of the Supreme Court. Currently there are a number of lawsuits already in the works challenging the legality of the policy. At this point, only time, and perhaps an upper court’s ruling– will tell.