On today’s show we’re talking about a major change in the way realtors market properties. In particular, the National Association of Realtors are the defendants of a lawsuit brought by a consortium of agents called Top Agent Network in U.S. District Court for Northern California. Top Agent Network, a San Francisco-based, members-only platform for real-estate agents. The California Association of Realtors and the San Francisco Association of Realtors are also co-defendants in the lawsuit.
At issue is a new policy called Clear Cooperation. The suit seeks unspecified damages and to reverse NAR’s newly enacted “Clear Cooperation Policy,” which went into effect May 1. The new policy requires NAR members to share their listings through the local multiple listings service rather than shopping them privately to a few contacts, a practice increasingly preferred by wealthy and high-profile sellers. Members who violate the policy face punishment, including fines.
The problem with clear cooperation is that in many cases sellers want to maintain privacy. Contrary to the NAR policy which mandates that its always in the sellers best interests to make the property available to the widest number of buyers.
Privacy is sometimes a hallmark a concept called exclusivity. If a property is a sought-after property, like a waterfront property, the seller wants to attract a qualified buyer. The seller doesn’t want to be inundated with showings. They want a small number of fully qualified buyers to come and view the property.
What NAR is saying is that the seller doesn’t have the intelligence, in fact they don’t even have the right to choose how their property is marketed. Last month they had the choice, now NAR says that they don’t.
As I’m recording this episode, I have a gold coin on my desk. Part of what gives the gold coin its value is the scarcity of gold. If gold was as abundant as water, there’s no way it would maintain its value. It’s that exclusivity that gives it value.
When you take something that is rare and commoditize it, you actually lower its value in the eyes of the buyer.
It’s surprising to me that a sales organization like the National Association of Realtors would fail to understand such a basic concept.
The idea of value seems paradoxical. We know that if there are multiple bidders on a property, the value will be higher than if there is just a single offer. Casting the net wider using the public MLS makes it possible for more potential buyers to become aware of the property.
The fact is, realtors have multiple tools in their toolbox. It’s not a one size fits all. Clearly an exclusive listing for a commodity 1BR condo in a building that has hundreds of units might be inappropriate and not in the best interests of the seller. But to outlaw a tool, because it might be possible to abuse a tool seems highly unreasonable.
At the end of the day, the seller should have the choice of which method to market the property.