The National Association of Realtors’ Clear Cooperation policy was intended to curb “pocket listings,” which agents only share privately. But some major voices in the industry say it’s time to end the practice. iStock illustration

Fractures in the residential real estate industry over a policy that’s supposed to curb so-called “pocket listings” are raising the possibility of another huge shift in how homes are bought and sold.

The National Association of Realtors’ Clear Cooperation policy states that within one business day of marketing a property to the public, the listing broker must submit the listing to their local multiple listings service for cooperation with other MLS participants.

These are sales that are marketed through real estate agents’ personal private networks or within a brokerage, without being listed on an MLS. Critics say they unfairly lock competitors out of deals and risk enabling discrimination against some buyers.

While Jason Mudd, Managing Partner at Cindy Raney & Team with Coldwell Banker Realty believes that the policy promotes competition for agents, he believes the restrictions on marketing actually inhibit competition.

“I think there’s no question, how it encourages competition,” he said. “It levels the playing field by requiring listing to take place in MLS, in that one day of public marketing, you prevent the pocket listings and exclusive off-market deals. Here’s where I think it inhibits competition. I think it restricts marketing, tailored marketing.”

NAR’s governing body avoided taking a position on changes to the policy at the association’s big annual NXT conference recently. But that may not last: Clear Cooperation, or “CCP,” has drawn the attention of the Department of Justice, concerned about antitrust issues. And Top Agent Network took matters into its own hands, filing a federal antitrust lawsuit against the National Association of Realtors earlier this year.

“NAR will continue to evaluate CCP in the broader context of the issues facing NAR and the industry,” the association said in a statement. “As a national organization that represents members across the country, NAR continues to receive a range of passionate opinions about CCP. We believe any changes to policies and practices as important as CCP has to carefully weigh feedback from a wide range of members, stakeholders, and industry experts. With respect to CCP specifically, the organization must also consider ongoing litigation and DOJ investigations. As such, NAR will work carefully and diligently to ensure that we continue to review CCP to ensure a decision is made in such a way that is in the best interest of members and consumers.”

Debate at Real Estate’s Highest Levels

The issue cuts to the heart of how homes are currently bought and sold, and that’s drawn in some of the most important names in real estate.

“Some large brokers are pushing for private listing networks – which limits listing inventory access and keeps listings behind a velvet rope,” Zillow said in a statement. “[T]his disadvantages buyers and limits their choice when selecting an agent,” they said. “Buyers rely on agents to guide them through the transaction and should work with an agent who delivers real value, not value based on access to a private listing club.”

One of the big names that is against the policy is Compass CEO Robert Reffkin. In his eyes, the seller’s rights are being infringed upon.

“We don’t think that is right. Homeowners should not be forced to do anything they don’t want to do,” he said during the company’s third-quarter earnings call.

Mudd also believes that sellers should have the choice in how their home is marketed. While he doesn’t believe it should be repealed, Mudd thinks that the policy should be refined.

“I think the big issue we just can’t ignore is that homeowners, ultimately own the asset,” he said. “It’s their property and in my opinion, therefore, they should have a significant say in how their property is marketed. Any time you standardize a policy, it ends up, I think, restricting the marketplace in some ways.”

Mudd mentioned that some sellers may value discretion or want to take a differing marketing approach and that while transparency should be preserved, the policy could be tweaked to better serve consumer choice and the rights of the buyer.

“The argument that I could make too is that some would argue that the policy limits a client’s freedom to choose a marketing strategy because everybody’s marketing strategy is essentially the same,” he said. “So especially if you don’t want exposure on the MLS we’re telling you have to do it, basically taking away a marketing option for a client.”