Scott Peterson: MLS Changes and the Clear Cooperation Policy: What REALTORS® Need to Know
New Year, new you, Colorado REALTORS®! With the changing of the decades, we have some exciting new changes “coming soon to an MLS near you” (I couldn’t resist)! As most of you know, 2020 is going to be the first year of the mandatory adoption of NAR’s new “Clear Cooperation” Policy. While some of you will be blissfully unaffected in your marketing strategies, others will need to contemplate significant changes to their marketing plans.
First, what is the Clear Cooperation Policy? As adopted, NAR’s new mandatory MLS policy says the following:
“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.”
Well, isn’t that nice and easy? A one-sentence policy from NAR? The only issue is that the definition of “marketing a property to the public” is very, very broad. According to 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. (Adopted 11/19)”
So… what does it all mean? Effectively, it will end the increasingly common practice of “coming soon” and/or “pocket listings” among MLS participants across the country. For some REALTORS®, this will be a significant shift in marketing practices. In other cases, it will force REALTORS® to have a broader discussion with sellers who request a little time, but want a little early exposure.
At its core, the new policy is intended to provide full exposure of listing availabilities to consumers and MLS participants. As many of you know, with the evolution of social media, syndicators, and other digital marketing platforms, a broker’s ability to market a property “off the MLS” has significantly increased. In addition, within “hot” markets or neighborhoods, a simple “Coming Soon” sign in front of a property can elicit sign calls and other consumer interest in a property. All of this marketing activity largely occurs outside of the purview of other MLS participants. As a practical matter, this can denigrate the quality of the information and accuracy of the data in the MLS
The reasons that a broker may choose to market a property off the MLS can vary greatly. Sometimes there is a potential benefit to the seller, sometimes there is a potential benefit to the broker, sometimes it is both. Occasionally, brokers take advantage of “Coming Soon” listings to solicit unrepresented buyers either for “direct deals” on the sale of the property, or other brokerage opportunities. In these cases, the broker is likely not acting in the best interest of the seller and certainly not in the best interest of the larger brokerage community. The new MLS policy will mitigate these instances of broker motivated “Coming Soon” listings going forward.
In some cases, a seller may legitimately request that a broker market a property as “Coming Soon” so that the seller can finalize repairs or staging on the property and “prepare it for market.” In these cases, the seller may be looking to get a little early exposure and “buzz” going on the listing. From my perspective, this is a perfectly legitimate request from the seller and is, candidly, difficult for the broker to deny or disregard. Unfortunately, if the broker is an MLS participant, the new rule will require the broker to deny the seller’s request…or deal with MLS fines and/or other penalties.
For obvious reasons, the second scenario (seller requested Coming Soon) may become difficult for a REALTOR® to address with their client(s). In the case of an agency relationship, the tension between MLS rules and a REALTORS® fiduciary obligation to their seller client can present an interesting conflict. For this reason, it will be important for the REALTOR® to be prepared for a robust conversation with their seller regarding the new MLS policy and the benefits to the seller of a listing’s full exposure to the marketplace. It is difficult for me to believe that most sellers won’t understand and accept a REALTORS® need to comply with the rules and policies of the MLS.
As various MLSs across the state of Colorado move forward with adopting the new policy, it will be interesting to see how market participants respond to the rule. As the May 1, 2020 mandatory adoption date is just around the corner, we will not have to wait long to see the impact. Stay tuned!