Clear Cooperation takes center stage, faces pressure to change
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At long last, the commission lawsuits saga appears to be entering a new chapter. The big names have settled, new rules have rolled out, and while unknowns remain, the big question of yesteryear — Will the industry bend? — has been answered (the answer was yes).
But that doesn’t mean the fight over real estate rules is over. Enter Clear Cooperation.
Clear Cooperation is a National Association of Realtors policy that requires agents to put their listings into their NAR-affiliated multiple listing service. The policy’s goal was to crack down on “pocket listings,” which are properties that get marketed privately, but it has been polarizing from the get-go. Some heralded it as a way to improve equal access to housing, but others have criticized it as legally dubious or an example of micromanaging.
The policy was somewhat eclipsed as a headline-grabber during the height of commission lawsuit litigation. But later this week, an NAR committee will return to the policy to begin considering whether it needs to change — or even end entirely.
It remains to be seen what may come of this meeting. But Clear Cooperation remains a central focus of federal regulators, it’s still polarizing in the industry, and with other antitrust litigation moving into the rearview mirror, it may represent the next and biggest frontier in the fight over the future of real estate. In other words, it is quickly becoming an issue du jour when it comes to questions over how agents live, work and get paid.
What exactly is happening now?
The upcoming NAR meeting will take place in Chicago on Thursday and Friday and will include the organization’s Emerging Issues Advisory Board, which is a subgroup of NAR’s MLS Committee. The board includes 23 members who work as brokers, MLS executives and in technology, among other things. The meeting is closed to the public, but the board can invite interested parties to submit comment.
The meeting could lead to a variety of outcomes. The board could, for example, opt to send the issue to the MLS Committee to take some sort of action or to another governing body within NAR. It could also choose to continue gathering information, including but not exclusively during its upcoming NAR NXT conference, which will take place in Boston.
The board meeting consequently does not guarantee any particular outcome but is effectively a first step if change of some sort were to eventually take place.
In anticipation of the meeting, the WAV Group conducted a survey on Clear Cooperation in recent days. The survey elicited 670 responses from members of brokerages, MLS leadership and MLS staff. According to a statement on the survey, 28 percent of respondents recommended keeping the rule as-is, while “the majority want to change or remove the policy.”
“Interest in removing the policy completely or making it optional and reworking it differed between MLSs and brokerages,” the WAV Group further reported. “Fifty-one percent of brokerage respondents recommended removing the policy. Forty percent of MLS respondents suggested making the policy optional and/or reworking the policy, the predominant answer for MLS leaders and staff.”
A history of polarization
This week’s meeting comes nearly five years after NAR adopted Clear Cooperation via overwhelming support from the organization’s board. The rule specifically states that “within one (1) business day of marketing a property to the public, the listing broker must submit the listing to the MLS for cooperation with other MLS participants.”
However, despite the broad support from NAR’s board, Clear Cooperation has been polarizing. Some industry heavyweights, such as Chicago area-based MLS Midwest Real Estate Data (MRED) and Bright MLS, publicly backed the policy in 2019. Redfin CEO Glenn Kelman was also a prominent voice in favor of cracking down on pocket listings and passing Clear Cooperation.
But other industry figures did not support the rule. They included the Austin Board of Realtors (ABoR) MLS, as well as prominent brokers such as Mauricio Umansky and Gary Gold — the latter of whom argued against a pocket listing ban by saying agents should not be “treated like children.”
Much of the debate in 2019 centered on issues of privacy versus equitable access to housing. On the one hand, agents such as Gold argued that homesellers were entitled to keep their homes and identities out of the public eye. They also argued that agents should be allowed to market properties as they see fit.
However, others argued that by keeping listings private, some consumers — especially minorities and those without powerful social networks — were effectively blocked from considering certain homes or neighborhoods. Proponents also argued that consumers generally benefit from having all listings available to them in one place.
One of the other lingering questions surrounding clear cooperation is whether or not the policy is actually effective. So far, the results appear mixed.
Two years after NAR approved Clear Cooperation, for instance, Inman reported that pocket listings remained common despite Clear Cooperation. Redfin found similar results, revealing in December 2021 that 43 percent of agents felt pocket listings had actually become more common in the wake of Clear Cooperation’s adoption. Nearly two years later, in 2023, Redfin Senior Director of Operation Joe Rath told Inman Clear Cooperation could be backfiring.
Last week, Inman reached out to Jonathan Miller — president and CEO of Miller Samuel, Inc. — who tracks pocket listings in Los Angeles. Miller has found that such listings do appear to be trending downward as a share of overall listings.
Credit: Jonathan Miller
A key part of the industry’s ongoing legal saga
Clear Cooperation was somewhat overshadowed recently by NAR’s now-defunct Participation Rule, which required sellers’ agents to offer compensation to buyers’ agents. That rule was a centerpiece of numerous commission lawsuits. That litigation and the subsequent settlements led to new NAR policies and the end of the Participation Rule.
However, one of the looming unknowns in the broader commission saga has been the U.S. Department of Justice — and the DOJ is very much interested in Clear Cooperation.
The DOJ is currently locked in a legal battle with NAR that began in 2020 with a lawsuit and simultaneously announced settlement. The DOJ later backed out of the settlement and resumed its investigation, focusing on both the Participation Rule and Clear Cooperation. This legal battle is now potentially headed for the U.S. Supreme Court. Critically, the Participation Rule is now gone but Clear Cooperation is not, setting the stage for further wrangling over the issue.
Clear Cooperation is also the subject of other legal action. Private listing networks The PLS.com and Top Agent Network (TAN) have both sued over the policy. Last month, a court set a Nov. 3 trial date in TAN’s case. Clear Cooperation is additionally a part of Homie’s lawsuit against NAR.
Battle lines are drawn
A number of key players have weighed in on the issue recently.
Last week at a RISMedia event, Reffkin reiterated criticism of Clear Cooperation, describing the policy as “forced cooperation” and urging NAR to repeal it.
Compass additionally told Inman that it is one of “nearly 70 brokerages” that are calling for the repeal of Clear Cooperation.
Inman reached out to a sampling of companies and individuals that may oppose Clear Cooperation, but those that responded declined to comment on the record. However, part of the argument against the rule appears to be that it hampers innovation and that it opens up the industry to further major and disruptive litigation.
The WAV Group survey identified similar issues, noting in a statement that “brokers interested in removing the policy were most concerned about getting named in another round of litigation.” The survey also found that support for removing Clear Cooperation was higher among larger brokerages.
But not everyone wants to jettison Clear Cooperation. For instance, eXp Realty CEO Leo Pareja also appeared at the RISMedia event and said he disagrees with Reffkin.
“I fundamentally believe in organized real estate and how it functions in North America,” Pareja said. “We have a complete, accurate, liquid marketplace, which is the beauty of the MLSs.”
When Inman reached out to eXp about the comments, the company provided a statement from Holly Mabery, senior vice president of broker operations, who said “a centralized platform like the MLS” will ensure “a comprehensive and robust marketplace.”
In an email to Inman last week, Consumer Federation of America Senior Fellow Stephen Brobeck spoke out in favor of Clear Cooperation.
“In most instances, it does not benefit sellers or buyers for a broker to only promote listings within their own agency,” Brobeck said. “Sellers are likely to receive a lower sale price, and buyer choice is restricted to a limited group of properties.”
Brian Boero, CEO of real estate branding and strategy company 1000Watt, also weighed in via a blog post on Friday. Boero expressed support for the policy, arguing that Clear Cooperation “should stand, and be fought for.” But his commentary was also notable for breaking down battle lines in the debate. Companies such as Zillow, he argued for example, “have created big consumer audiences around MLS data and earn significant parts of their revenue by referring leads to buyer agents.” According to Boero, they have an incentive to preserve Clear Cooperation.
On the other hand, whether brokerages benefit or suffer from the rule depends on their structure, Boero said.
Boero also wrote that MLSs may support Clear Cooperation because “they do not want yet another piece pulled from their Jenga tower.”
Time will tell if pressure to change Clear Cooperation ends up amounting to anything. But Boero’s analysis highlights the way the issue intersects with different parts of the industry in different ways. And that means pressure to change is unlikely to abate any time soon.