Everything You Never Knew About Clear Cooperation - But NEED To!

Ok, you and I both know that most of the “inside baseball” that happens within the Real Estate industry is both incredibly boring and ultimately inconsequential to the average person, so I don’t share industry updates often. Hopefully, that means that when I do, you understand that it’s a big deal. This is one of those times where changes in the industry could have a huge impact on you, so I want to let you know what’s happening.

First, gather ‘round for a story about “the olden days” as Miles likes to call the 1990s:

Before the days of real estate portals like Zillow, Redfin, Homes.com, Realtor.com, etc, ALL of the information about homes for sale could be found ONLY in MLS databases that ONLY Real Estate professionals had access to. You would tell your Realtor what you wanted, and they would find a handful of homes to show you that met their interpretation of that criteria. If you were really ambitious, you could drive around your desired neighborhoods looking for For Sale signs and ask your Realtor about those homes and see if they thought they were good candidates as well. Ultimately, you’d see 3-5 homes and then make a purchase. 

Now, of course, prospective buyers, curious neighbors, and real estate enthusiasts alike can all see 95% of all homes that are for sale, create detailed searches to focus in on just your wants and needs in your areas of interest, flip through dozens of pictures, read robust descriptions, and get information about open houses directly from one of a half dozen portals that all feed directly from the MLS. I call this the democratization of information, and it’s one of the best, most pro-consumer changes to the Real Estate Industry since the Civil Rights era. Giving consumers direct access to information empowers you to self-start your home search at your own pace, on your own terms, and focus on homes that speak to your idiosyncratic wants and needs and get you truly excited. It also provides confidence that you’ve “left no stone unturned” in your search. And while I always recommend that folks connect with me when home ownership or upsizing is just a twinkle in your eye, that’s because I want to help set you up for success and provide even more information and education, NOT because I’m hoarding all of the data you need to even get started. 

Now, imagine that these portals suddenly have only 50%, or 25%, of the available homes, because Realtors are no longer required to enter their data into the MLS databases that feed those portals. Instead, each Brokerage has their own proprietary database that it does not share with any of today’s portals. So instead of seeing all of the homes across all Brokerages in one place, you have to go to each Brokerage’s website to see their homes for sale. Worse, I also only have access to data this way as well, because no one is required to enter data into the MLS, and the largest Brokerages have decided to hoard their data and have only “exclusive” listings only available to their own agents, forcing you to use one of their agents to buy a home that they’ve listed, ensuring that they profit from both sides of the transaction. Gross, right? I agree. 

This is what’s behind the largest Real Estate Brokerages pushing to eliminate the “Clear Cooperation” rule. Clear Cooperation currently requires that all Realtors enter their listing on the MLS within 24 hours of publicly marketing the property (putting up a sign, posting on social media, etc). The largest Brokerages claim that the Clear Cooperation rule eliminates the ability to sell properties “off market,” but that’s 100% false. Anyone is currently able to sell their home “off market” if they choose. We just don’t publicly market the property, and are only able to tell folks within our own Brokerage about the listing. About 5% of homes are sold this way, often in cases where the sellers need to sell immediately, don’t want to do any market prep, and aren’t concerned about getting the best price. (Because just as you’d expect, letting only a fraction of the market know that your home is for sale doesn’t result in the robust competition that results in the best possible sales price).

In truth, the push to eliminate Clear Cooperation is simply about hoarding information, power, and wealth within the mega Brokerages. If they no longer are required to enter their data in the MLS, they can stop immediately and force consumers to go to each Broker’s site individually to look for homes, and your centralized Real Estate feeds - and mine - will contain a fraction of the inventory that’s actually available. That’s bad for buyers who can no longer see all homes for sale, and who will be pushed to work with a mega Brokerage in order to have access to more homes, AND it’s bad for sellers who can no longer market their home across all Brokerages. But the big Brokerages have been pushing hard on the idea that Brokerage “exclusives” are the best way to sell your home. They are NOT, but with no comprehensive MLS, it will be difficult to disprove them, as even their SOLD data will no longer be available for us to view and analyze. 

As always, Red Oak is actively working on contingency plans to try to reduce the negative impact to our clients (and consumers as a whole) if the mega Brokerages succeed and the Clear Cooperation rule is eliminated, but we are ALL far better served with the rule in place.

A handful of individuals at NAR will soon decide if the Clear Cooperation rule should continue, or if it should be eliminated. And a number of those individuals are associated with those mega-Brokerages. But if consumers make enough noise and apply enough pressure, we can turn the tide and keep the Clear Cooperation rule in place. If you want more information, please reach out. 

- Suzy