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In over 30 years in the real estate industry, I have held a variety of roles, from agent and manager to speaker, trainer and coach. During this time, I have witnessed many significant shifts and changes within the industry.
Among the many ups and downs, both large and small, none compare to the potential impact of the recent Commission case, its subsequent judgment, and the inevitable series of appeals that will follow.
The most notable changes are: NAR’s Clear Cooperation Policy (CCP). The policy, which went into effect just three years ago, is now at the forefront of legal scrutiny across the industry.
From my point of view, this is a focal point that contributes to the current legal challenges. Let’s take a look at its continued relevance and whether, like me, you feel it’s time to embrace the concept of abandoning this policy.
Background to a clear cooperation policy
CCP was introduced in November 2019 by the National Association of Realtors (NAR). The CCP requires residential listings to be submitted to a broker’s Multiple Listing Service (MLS) within one business day after the broker publicly sells the residential property to a buyer.
This policy was introduced to promote more equitable access to property information across the industry and increase transparency in the search process for homebuyers, as well as to align with NAR’s leadership vision. They believed that by making property information widely available to all members, they could serve homeowners more effectively and ensure that homeowners received widespread attention.
Additionally, this approach is designed to discourage the practice of “pocket listings,” where agents limit the visibility of listings to their personal offices and can harm the best interests of homeowners.
Pre-Communist China: Almost no litigation
Remarkably, in the decades before the introduction of the Chinese Communist Party, the real estate industry did not face this level of antitrust litigation or scrutiny over fee structures and listing strategies. Litigation involving the Commission is extremely rare, indicating that common practices are not considered to be inherently anticompetitive.
This is in stark contrast to the lawsuits that have occurred since the Chinese Communist Party. Despite its positive intentions, this policy may currently have unintended legal implications for the industry.
Growing legal challenges directly linked to the Chinese Communist Party
Most important is a recent lawsuit filed by the United States. Department of Justice Antitrust Division (DOJ) China’s Communist Party claims it allows housing agents to collude in commission fees Billed to home sellers and buyers. The lawsuit also questions MLS’s role in exacerbating these anti-competitive dynamics.
The first Justice Department lawsuit surfaced within a year of the Chinese Communist Party’s November 2019 implementation. This represents a swift legal response and suggests a direct correlation with this policy change.
In addition to the high-profile Justice Department case, individual class action complaints alleging price fixing and antitrust violations related to fees and MLS listing practices are also accumulating nationwide. As more and more of these cases emerge, evidence is mounting that could be used as ammunition for further legal action that puts the Chinese Communist Party directly in the spotlight as a matter of vital importance.
Industry Impact and Evolving Market Dynamics
There is no doubt that the introduction of clear cooperation policies has changed the dynamics of the industry. Currently, the vast majority of properties for sale are first and foremost accessible to buyer agents, as the Chinese Communist Party mandates that a property must be listed on the MLS within one business day of public marketing. Now you can.
However, a significant shortcoming became apparent. The implementation of this policy imposed restrictions on home sellers. Previously, homeowners had the flexibility to choose exclusive listing arrangements, tailoring the sales process to their specific needs and preferences. However, CCPs limit this discretion, which can reduce the personalization of the selling experience. There is no “opt-out” option.
It is important to realize that most real estate agents aim to provide a comprehensive and customer-focused service. Although well-intentioned, the CCP’s limitations have led to frustration and limitations among agents seeking to meet their clients’ unique requirements. While this policy increases transparency and fairness, it also raises questions about the balance between open access and individual seller autonomy.
Will CCP expiration have a negative impact on buyer agents?
famous research company Keefe, Bruyette, and Woods suggest that letting the Chinese Communist Party lapse could have the following consequences: More than 50% of real estate agents leave the industry completely. In an interview with Real Estate News earlier this year, a KBW analyst said: “We estimate that more than half of U.S. real estate agents could be forced out of the industry…”
This is the opinion of one analyst firm, but the theory is that under the Chinese Communist Party, the market may have become oversaturated with agents who would struggle to remain competitive without broad access to listings. is supported. Essentially, this policy environment suggests that by locking down and concentrating listings through the MLS, we are protecting excess agents, including underperforming agents.
Plaintiffs in several class action lawsuits have taken up this practice and labeled it anticompetitive.a Recently filed lawsuits in Georgia The Chinese Communist Party and its corresponding fee structure serve to protect inferior real estate agents who “may not be competitive in more challenging market conditions,” it argues. The suit says:.
Essentially, the plaintiffs allege that the Chinese Communist Party perpetuates unproductive agency through forced listing practices, ultimately limiting consumer choice and industry liability. The report found that home sellers have lost the flexibility to choose a listing strategy that fits their needs, high-performing agents have missed opportunities to prove their worth, and substandard agents continue to be shielded from the pressures of the free market. It is proposed that
Obviously, this case has not yet been tried, so it remains to be seen whether the final judgment will clarify the merits of the claims. What I mean by this is that this is an urgent and important call to all those representing our industry to raise standards of professionalism, transparency, communication and training.
Our Duty: Progress Through Change
Our industry’s duty should be to embrace change through continuous improvement and evolution, rather than avoid scrutiny. Given the accumulation of legal responses in the years following the CCP’s rollout and criticism over its limited listing options for homeowners and barriers to broker competitiveness, industry leaders are reevaluating their current stance. It seems like the time has come.
Although this policy was created to promote fairness and transparency, certain aspects of this policy currently directly conflict with the Department of Justice’s standards for fair market competition.
As an industry, it is time to re-evaluate what insurance really helps homeowners and empower agents to deliver value in an ethical yet dynamic marketplace. Getting this delicate balance right is not easy, but strict protectionism will not move us forward.
Seeking Alternatives: Navigating Real Estate Practice Beyond the Communist Party of China
Given the possibility of clear cooperation policies being removed, the question arises: “How will we do business in the future?” One possible answer is actually the simplest. The National Association of Realtors, along with its network of collaborating real estate agents and brokers, was thriving long before the Chinese Communist Party took office just three years ago. One solution, therefore, lies in returning to the practices we upheld not too long ago.
A key aspect of this approach is to provide homeowners with the choice of whether to keep their property as an exclusive property or list it on the Multiple Listing Service (MLS), and to fully understand the potential benefits and consequences. The aim is to provide reliable information.
As industry experts, it is also essential that we advocate for MLS and clearly explain its substantial benefits. This includes notifying homeowners that opting out of the MLS may result in fewer buyers, fewer showings, and possibly lower sales prices.
By explicitly communicating these outcomes in writing and obtaining homeowner approval, we still respect choice and retain each homeowner’s right to determine the best path for their unique situation. .
Darryl Davis is CEO Darryl Davis Seminar.Connect with him at Facebook or YouTube.
