[EDIT: This post has been updated with responses from Compass, and my further responses to those responses.]
[EDIT: I have updated the post once again, with another round of clarifications from Compass Spokesperson.]
This week is when NAR will decide on what to do about Off-MLS and Coming Soon. I have already written thousands of words on the topic, but on the eve of the meetings of the MLS Policy Committee and the Board of Directors, I had a reader send me something that is both eye-opening and troubling.
I was sent a copy of the Compass Independent Contractor Agreement by someone who wishes to remain anonymous. It is a legitimate copy, with Robert Reffkin’s signature on it, which means it is unlikely that someone created a fake to fool me. I struggled a bit on whether to write about it, since most of the terms go right to the heart of what Compass offers its recruits. I have nothing against Compass, as I think there are some real innovations there, and there is an exciting new approach to traditional brokerage. I have zero desire to disadvantage Compass in any way.
But there is one part of this Agreement that is solidly on point about the kind of systematic Coming Soon being practiced by Compass, and copied by other brokerages. I will, therefore, duplicate as little of the actual Agreement as possible as I think this issue must be addressed, and the people attending NAR this week need to know what they are dealing with.
The Compass Agreement
I am not going to upload the document or any such thing. If I have to disclose specific terms, it is because they are incredibly relevant to the issue at hand.
The bulk of the Agreement is under the heading/title/section called “Incentives.” Even the commission split is put under “Incentives.”
Some of the more relevant Incentives are:
- 90/10 splits, going up to 95/5 splits
- A huge marketing budget split over multiple years, six figures in each year, that can be used for everything from yard signs to business cards, photo shoots and any other marketing-related expenses.
- Six figure signing bonus
- Six figure “Assistant Contribution” so that the agent can pay for administrative staff
- Equity stock option grants
- Production bonuses that can be paid out in cash or in additional stock options
And more, much much more. Looking at this document, it is easy to see how Compass is dominating high-end recruiting. Just to be on a 90/10 split for an agent who might do, let’s say, $3 million in GCI, means only $300K for the brokerage. Just the Incentives listed is more than $300K.
But the critical part of the Agreement is this:
I wanted to show that as a screenshot so I’m not accused of misquoting anything. Here’s what it says:
Agent acknowledges that Agent is not entitled to the Incentives absent Agent’s election to use, at all times, Broker’s tools titled: (a) “Collections” with all of Agent’s buyers, starting on the 45-day anniversary of the Start Date, and (b) “Coming Soon” with all of Agent’s sellers, first activating all listings for 5 days internally on Compass.com only and, subsequently, 5 additional days externally on only Compass.com, as permitted by Law (which includes MLS rules). Agent may later elect in writing, without penalty, not to use such tools accordingly but Agent shall no longer be entitled to the Incentives. [Emphasis added]
Plainly put, this means that all of the above goodies and even basic terms like agent split depend on the agent putting all his or her listings into “Coming Soon” for a minimum of 10 days: 5 days within Compass alone for marketing to other Compass agents, and then 5 days on Compass.com alone for marketing to the public.
Yes, the Agreement specifically says “Coming Soon” must be used only where permitted by law, which includes MLS rules. But that’s the heart of the issue this week: that many an MLS has no rule governing Coming Soon. As we have seen over the past few weeks, there is fairly wide disagreement among MLSs on how to deal with Coming Soon. I just wrote about Austin Board of REALTORs and its opposition to MLS Policy 8.0.
Should NAR pass Policy 8.0, just about the entire section above is rendered invalid overnight.
“All of Agent’s Sellers”
Without question, the key phrase in the entire section above is “all of Agent’s sellers.” Those four words make it clear that all of this hullabaloo about clients and fiduciary relationship is so much pretext.
In an articulate criticism of MLS Policy 8.0, Emily Chenevert, ABOR’s CEO, wondered out loud whether it is the MLS’s place to get between the agent and the client, where the client doesn’t see the value of the MLS and should be free to market his home as he sees fit. Bill Fowler of Compass in his Interview insisted that in some situations, Coming Soon is a differentiating service for sellers. And numerous agents have said all over social media, including right here on this blog, that there are clients who have valid reasons for doing a Coming Soon.
If the Governing Principles to the Compass Agreement had read something like “Agent must use “Coming Soon” with those sellers who understand the pros and cons of the program, have privacy concerns, or other extenuating circumstances, first activating those listings for 5 days internally…” then there is some basis to think that maybe the policy really is about providing flexibility to the seller.
But the way the Agreement spells things out, it is crystal clear that Compass doesn’t care about the seller in the least bit. In fact, I’m not even sure that Compass cares about the fiduciary relationship between the Agent and his or her sellers. I mean, how likely is it that every single seller of a Compass agent would benefit from “Coming Soon” that is exclusive to Compass for a minimum of 10 days?
Let’s say it is. If a 10-day exclusive were actually in the best interest of every single seller, then Compass, as a REALTOR, has a duty to push for a blanket policy mandating a 10-day exclusive Coming Soon period for every listing taken by every REALTOR. The point of Code of Ethics is to drive each other to higher and higher standards of excellence and ethical behavior.
If the Agent doesn’t want to put every single seller’s listing into “Coming Soon”? Well, kiss hundreds of thousands of dollars, and the sweet 90/10 split, and the stock options bye bye.
Why would Compass do this? Pay out enormous amounts of money — unsustainably large amounts of money in fact — to its agents but require they embrace this one-size-fits-all “Coming Soon” program under penalty of losing everything they went to Compass for?
From Mike Delprete’s series on Compass:
It would be naive to think Compass has raised over $1.1 billion in venture capital to become just another real estate brokerage. Even adding adjacent services like mortgage doesn’t change the core economics of the broker model — bigger changes are required to justify its valuation. Compass has larger ambitions, and it’s likely that its big hairy audacious goal is to become a real estate platform. The evidence suggests the following strategy:
Build market share (listings) through aggressive agent recruitment and acquisition.
Once market share is high enough, encourage sellers to list exclusively on Compass for a period of time.
Leverage exclusive content to drive consumers to the Compass portal.
Launch a Compass platform that generates and distributes leads to agents.
With platform power, transition the role of an agent (Redfin/Purplebricks/Uber), taking a larger cut.
Does that answer your question?
The MLS preventing exclusive content is a major blow to Compass’s endgame strategy, to its BHAG, that allowed it to raise over a billion dollars. In fact, it could be a fatal blow, because without the exclusive content path to becoming a platform, what does Compass have?
How About We Cut the BS?
Brokerage stalwarts like Ken Jenny like to position the issue as one in which the MLS or NAR are looking to interfere with a brokerage’s innovation. From a recent comment he posted here:
Industry participants should be free to innovate and offer the consumer whatever strategy works for the consumer and can be implemented by the listing broker. It is not the responsibility of the utility (the MLS) or the professional Association (the NAR) to intercede with regulations that hinder [the] process [of] those marketing strategies. [Emphasis added; corrections made for clarity.]
Except that “all of Agent’s sellers” makes it clear that there is no offer to the consumer of whatever strategy works for the consumer. There is only the offer to the consumer of the strategy that works for the brokerage. There is absolutely nothing about “all of Agent’s sellers” that shows even the slightest interest in what works for the consumer. In fact, there is nothing about “all of Agent’s sellers” that shows even the slightest interest in what works for the agent as a fiduciary.
If NAR doesn’t want to do something about that, then it probably should cease existing. At a minimum, it should take two-third of the Code of Ethics, the sections entitled “Duty to Clients” and “Duty to the Public” and tear it up. Just go forth bravely into the light as a labor union for brokerages and agents, and if they happen to screw over buyers and sellers, well, not our problem! Let Congress pass a law or something!
If the MLS is going to stand by and pretend that “all of Agent’s sellers” is brokerages innovating and offering something to consumers, it too should take a long hard look at whether it needs to continue to exist.
If the brokerages want to do “Coming Soon” strategies to create competitive advantages for themselves, then how about we cut the BS about how any such strategies are about the consumer, and just be honest and transparent about what it is that they want to do?
Decision Time
This week is decision time. NAR and the various MLSs have to make a decision. The numerous brokers and agents who make up both NAR and the various MLSs have to make a decision. And it is a fateful decision, but one that nobody outside the industry recognizes as a fateful decision… yet.
MLS Policy 8.0 is deeply flawed; I’m not a fan. But I am even less of a fan of doing nothing.
“All of Agent’s sellers” puts the lie to the various excuses offered up that Coming Soon is really about client service. A “Coming Soon” strategy that is about the seller would never be a blanket one-size-fits-all policy, but one that makes certain that the seller is well-informed and is voluntarily choosing the strategy fully aware of the risks and rewards involved.
Similarly, whatever the leaders gathered in San Francisco decide to do, they should do so as well-informed as possible, voluntarily choosing whatever strategy they want fully aware of the risks and rewards involved. Doing something, doing nothing, kicking the can down the road — all of these will be fateful decisions for the industry going forward.
I just hope whatever they decide is based on truth and transparency.
-rsh
UPDATE: Response from Compass
Compass reached out to me shortly after publication, and I had a phone call as well as email exchanges with a Compass Spokesperson.
Original email from Compass Spokesperson:
See below for responses to the questions we just discussed. Below are all able to be quoted as attributed to a Compass Spokesperson.
- No incentives were ever taken back from any agent and not a single agent ever performed all the actions mentioned in the excerpt you cited.
- That is not Robert’s wet signature, it’s an automated signature
- The idea to put in this in select ICAs with incentives came from our agents and only in the ICA for less than 8 months and has been voided retroactively ever since we took it out.
- Additionally, in October of 2018, we introduced language to www.compassterms.com
regarding preventing agents from using Coming Soon in any manner that would disadvantage their clients. Excerpt below.
In order to advertise a listing as a Coming Soon Listing, the listing must be: (i) eligible under the applicable Laws, (ii) your exclusive listing subject to a Compass exclusive listings agreement, and (iii) featured as a Coming Soon Listing only where such is in the owner’s best interests and only in the owner’s absolute discretion. It is strictly prohibited under Compass policy to use Coming Soon Listings as a mechanism to receive both commissions for both sides of a transaction.
I would like to point out here that I received a newer ICA from Compass as well, with clearance from Compass Legal to excerpt the relevant part, which reads as follows:
Agent acknowledges that Agent is not entitled to the Incentives absent Agent’s election to use, at all times, Broker’s tools titled: (a) “Collections” with all of Agent’s buyers, starting on the 45-day anniversary of the Start Date, and (b) “Coming Soon” with all of Agent’s sellers, so long as it is in the absolute best interest of such sellers, first activating all listings for 5 days internally on Compass.com only and, subsequently, 5 additional days externally on only Compass.com, as permitted by Law (which includes MLS rules). Agent may later elect in writing, without penalty, not to use such tools accordingly but Agent shall no longer be entitled to the Incentives. [Emphasis added to highlight difference from the ICA above.]
I should note that the newer ICA I took this language from has a Start Date of March, 2019. So we’re talking about 4 months between the two Agreements.
My questions back to Compass, and the answers back to me:
Me: Not a single agent ever put all of his listings into Coming Soon for the 10 days required?
Compass: Not a single agent ever performed both of the actions you mentioned – used Collections with all of their buyers and put their listings as Coming Soons for 10 days.
Me: You had mentioned that Compass has never enforced the clause; my question was how many agents actually violated the clause in order for enforcement to be an issue. You said you had that information; I would like to include it.
Compass: Every agent violated the clause due to what I mentioned above – no agent used Collections with all of their buyers and put listings up as Coming Soon for 10 days. Again, to be clear, every agent violated the clause.
Me: You had mentioned that this particular ICA is (a) old, and (b) only used in certain markets, and (c) only for a short time. When did this ICA language start? When did it end? What markets were this ICA used in, and from when to when?
Compass: The language was included beginning in April 2018 and removed fully from ICAs within a year. However, the language below was introduced in October 2018 that explicitly states that Compass agents should only do a Coming Soon if it’s in the best interest of their client.
Me: I have to point out here that the ICA I have has a Start Date of Nov 2018. So if you changed the language in compassterms.com, could you explain how this ICA with a start date after 10/18 has the problematic clause? By the way, it’s kind of difficult to classify an ICA with a Start Date of 11/18 and an End Date that contemplates 2020 as “old.”
Compass: See above.
I report, you decide.
Well, actually, in this case, I also need to decide a little bit. I’m not a reporter, but an opinionated blogger, after all.
Further Thoughts, After the Clarification
I appreciate Compass reaching out to me for some corrections and clarifications. However, I now have more questions that the Compass Spokesperson did not answer.
For starters, the dates do not make a ton of sense to me. As I told Compass in the email exchange above, the ICA I used originally has a Start Date of November, 2018. If compassterms.com had changed in October of 2018, how do you explain that? Compass’s answer is that the language I cited was only in effect from April of 2018 to sometime in March of 2019; I guess this old ICA was executed during that small window. Plus, the Terms were updated in October, 2018 so agents knew that they shouldn’t do Coming Soon unless it was in the client’s best interests.
All I can say to that is, Compass might want to fire some paralegals. When you fail to update something as important as an Independent Contractor Agreement worth millions with new language from official company Terms, well, that’s a resume-generating incident.
I still have trouble wrapping my head around the idea that an agreement executed a mere four months before the new ICA is “old.” I mean, yes, it is an old agreement, as in, it was executed in the past. But the implication that the ICA I cited is old is that it was from way back in the day before Compass was more enlightened. I don’t know if 4 months counts.
Finally, the Compass Spokesperson was insistent that the reason why Compass did what it did was that it truly believes that “Coming Soon” is a positive benefit for the seller. S/he said they have studies and statistics inside Compass that shows lower days on market, higher sale price, and other benefits from pre-marketing a home before it is listed in the MLS (and therefore, the open market).
My take on that is, if that is indeed true, and Compass has the stats to prove it, then why is Compass not pushing for NAR Code of Ethics to require every REALTOR to do a mandatory 10-day Coming Soon with all sellers on all listings? Why isn’t Compass pushing the MLS to not only reject MLS Policy 8.0, but to actually mandate a 10-day Coming Soon period for all agents and all sellers everywhere?
From the NAR Code of Ethics:
In recognition and appreciation of their obligations to clients, customers, the public, and each other, REALTORS® continuously strive to become and remain informed on issues affecting real estate and, as knowledgeable professionals, they willingly share the fruit of their experience and study with others.
If 10-day Coming Soon is such a benefit to sellers, is it not reasonable to expect that Compass — a REALTOR company — would willingly share the fruit of their experience and study with others?
Those are my thoughts after the clarification by Compass. Your mileage may vary.
Every Compass Agent is In Violation? (Edit: Please see below)
The more interesting revelation, I think, is that every single Compass agent is in violation of that clause and Compass has not (yet) enforced it against anybody. Two questions come to mind.
One, why have a clause/policy/term that you’re not going to enforce? Why not just remove it altogether?
Two, unless I’m very mistaken about something, Compass has the right to enforce that clause against anybody and everybody. I don’t know that their failure to enforce means that Compass waived the right to enforce. I don’t see a non-waiver clause in the ICA so it may be that Compass’s lack of enforcement will be interpreted by a court as a waiver of that right, but I wouldn’t bet on it if I were a Compass agent.
I’m not a Compass agent, but if I were, I’d be calling my lawyer right about… now. I need to make sure that Compass won’t decide to enforce the clause against me, because I am in violation, and force me to pay back hundreds of thousands of dollars in Incentives.
Just because Compass has not yet enforced does not mean that they cannot enforce it going forward. And since the Compass Spokesperson made it very clear that every single Compass agent is in violation, I’d like a good deal more certainty if it were my millions of dollars at stake.
Again, YMMV.
Update #2: Further Clarifications
I was just sent this email by a Compass Spokesperson to clarify further:
To follow up on our call:
- This language, which was initially the idea of our agents, was put in a small percentage of ICAs in April 2018.
- In October of 2018, we introduced language to www.compassterms.com regarding preventing agents from using Coming Soon in any manner that would disadvantage their clients. This was meant to clarify that Coming Soons should only be done if it’s in the best interest of the seller. The excerpt with the language is in my previous email.
- By May 2019, all of this language had been fully removed from any new ICAs.
- Only those agents who had this language in their ICA are technically not compliant with it. However, we have never enforced this provision and will not be enforcing it.
Based on this email, I must modify my conclusion.
If you are a Compass agent and you have this language about using Collections and Coming Soon in your ICA, I would contact my lawyer right about now. At a minimum, you should be seeking to update your ICA to the new one which does not have that language. But your lawyer might advise you that Compass’s email to me, which I have published here, constitutes a waiver of enforcement over that clause.
If you do not have that language, then you have nothing to worry about.
I hope that clarifies things.
28 thoughts on “Compass and Coming Soon: Not About the Client”
I can’t get past the first line:
“This week is when NAR will decide on what to do about Off-MLS and Coming Soon.”
What is on the agenda about Coming Soon? “Off-MLS” I get, i.e.: pocket listings. But that’s not “Coming Soon.”
Didn’t you just learn this fact?
Let’s cut the BS. Touche.
On the consumer side, there’s no argument to be made. Unless, perhaps, it’s something to the tune of..
Compass is a large brokerage with most of the top agents, and postings listings into the Compass platform early increase the chances their agents will actually look at them (and tell their buyer clients about them, if relevant) compared to if they are put in the MLS directly where all agents can see them.
But I still don’t buy that’s a win for every seller.
How is limiting the market a win for any seller? That literally makes no sense. Compass isn’t some special boy, limiting the marketing to their pool so they can collect fees on both sides isn’t a win for the client in any case. Hence, calling the bullshit.
ROB,
I got to the last line and it’s going to be my takeaway: “truth and transparency”.
#24/7
Thanks,
Brian
The risk of treating independent contractors as employees becomes a legal issue here. Real estate agents are independent contractors and can object to the rules & regulations imposed on them by NAR.
In the real estate industry things get tricky. It is an organization assigns duties traditionally performed by independent contractor. You are not an independent contractor if you perform services that can be controlled by an employer, what will be done and how it will be done, the IRS rule says.
Real estate agents are much more powerful than NAR or and their brokers. Without the agents NAR will sell fish in a flea market.Real estate agents should object to this communist organization named NAR, and take them to court.To be a successful real estate agent takes hard work day and night. Why should agents even listen to NAR who basically betrayed the agents in many ways.
Neither NAR nor an MLS has any interest in telling an agent how to do their business. Agents are free, within the law, to do as they please. I happen to agree with Rob that there is rarely a viable argument that keeping a property off the MLS is in the best interest of the seller. More often than not (and there are legitimate exceptions) the decision to keep the property off the MLS serves the best interest of the agent, not the best interest of the seller. I happen to believe that most of the time when an agent convinces the seller to keep a property off the MLS they are doing their seller a disservice. But it’s the agents choice, and in our democratic system, they have every right to do it. Neither NAR nor any MLS can tell them otherwise.
But it is a also a choice, and a business decision, whether that same agent chooses to belong to the MLS. They don’t have to join, but if they do, they need to follow the rules.
The Compass Coming Soon is just a much larger idea of what has been going on for a long time, we can zoom on Compass as they are a large and large vs small that gets people excited or scared. However this is much more about a rule that benefits Websites like Zillow that use the data and the Ibuyer companies that would like a more direct conversation with seller costumers without agents. It does not benefit the consumers decisively and it definitely does not benefit agents large and small.
The benefits to websites like Zillow is by providing additional and a more complete data set that agents must contractually input accurately into the MLS system, ready for resale. There is no reciprocity of the data, these websites like Zillow, have databases that are not shared with agents creating an unfair advantage for Zillow and similar sites. Zillow for example has a For Sale by Owner database and a Zillow Make Me Move database that makes their website a more complete destination for a buyer, enhanced with the MLS and even further enhanced by the proposed mandated database. It gives all agents that must follow the rule little to offer when comparing data vs data to attract consumers. This would not be a win for anybody other than Zillow and similar companies that resell the data. Although this sharing of data could seem like a win for the small agent, in reality this is a win for the Oversized Data resellers/self-appointed tax entities, like Zillow; the small agent has little to battle Zillow on data. This win for Zillow and others similar creates a traffic funnel potential; directing consumers to their websites by their larger data set and away from direct contact from the agents that dutifully input the data and away from those agent’s websites. The loss for customers is the further erosion of a direct contact with an agent, unless it is previously intersected and taxed by Zillow and similar sites.
This proposed rule also benefits the large direct buyers of properties, Ibuyers, again Zillow and others, making them the clear solution for a seller that does not want to be disturbed with a public Internet listing for whatever reason they decide. This rule would now make it an obligation for paying members to have a ‘duty to report’ any listing. The other companies like Zillow will surely make sure the seller consumer knows that agents have a ‘duty to report’ and agents will post your listing on the MLS/internet. This in effect will drive this type of consumer seller away from agents in order to avoid listing on the MLS/internet, if that is their desire. Driving seller consumers away will eventually also mean driving seller customers away from representation, this will not be a benefit to any other than the Ibuyer and direct buyer companies unless you are of the opinion that an exchange between an Ibuyer and an isolated seller consumer is not one-sided. This rule puts the seller consumer that seeks privacy potentially vulnerable and unrepresented.
The rule makes agents contractually mandated to input data for the most complete use of companies like Zillow, that will use such for their benefit while not reciprocating their data to agents; creating a funnel to Zillow and similar sites which puts the client in their hands so they can tax the contact before it reaches the agent. The rule also establishes agents as having a ‘duty to report’, repelling any seller customer that does not want their property reported for any reason, creating a potentially vulnerable position for inexperienced consumer sellers as they negotiate with a large well versed corporate entity one on one.
This is not about Compass and their ability to use Coming Soon listings or how they may want their agents to employ this but this is about agents, including Compass, being forced to work for the benefit of companies that tax the exchange of information between listings and consumers and Ibuyer companies that want to isolate the seller seeking privacy on their sale.
Santiago- That is a mic drop!
You do know that each brokerage controls whether listings go to Zillow or not, right?
Seems like your complaint is with your broker.
Also, you keep using the word “data” for advertisements of properties you have been contracted to market on behalf of the homeowner. Odd affliction, that.
Thank you for your follow up Rob; yes I am aware that my listing doesn’t have to go to Zillow. I am also aware that I could start my own brokerage if my current broker insists on sending all listings to Zillow and that my then brokerage of 1 could also not be a member of NAR and not follow any rules we are talking about, and that is good, it is a great country. However as we are in a collaborative industry at its core, this brokerage-wide organizational strength is now turned into a weakness through the brokerage’s many years of inferior access to technology, creating the current systemic failure which effects this Zillow Tax.
To the 2nd part of the affliction, if it is not data what is it?
Agreed this is a bad look for Compass as a brokerage. But, it doesn’t obligate the sellers to do anything. They don’t have to accept an offer during the “coming soon”period. They don’t have to allow showings during it either.
As long as Compass agents disclose the 10-day period and discuss the pros and cons of accepting showings and/or offers during the period, they’ve done their fiduciary duty.
It seems to me the simplest way to address this problem is to have sellers who wish to have a “coming soon” or “off-MLS” listing sign a disclosure outlining the pros and cons of pursuing that strategy.
The Code of Ethics and Duties to Clients – I have brought up this discussion in courses I’ve taught this past few years regarding all the new models that there is a concern with agents not representing clients any longer as we’ve known them for many, many years. Fiduciary? To who? There will have to be changes to the current system ….not that I agree with the idea of tearing it up. But…..it kind of is already….
…….If NAR doesn’t want to do something about that, then it probably should cease existing. At a minimum, it should take two-third of the Code of Ethics, the sections entitled “Duty to Clients” and “Duty to the Public” and tear it up. J
Wow.
I now believe that Robert Reffkin may be one of the only industry participants that has isolated and identified the historical piracy of buyer leads from a listing broker that the industry and the MLS policies and rules have been supporting for years.
Until now that is.
The pillaging begins the instant the listing is entered into to the MLS and continues down many “rat holes.” The MLS mandates cooperation and consideration with all MLS members, then it serves up the listing broker’s listing to every member fo the MLS to steal the buyer leads form the listing broker and then the MLS syndicates the listing to the portals who sell the listing brokers leads to disparate agents with a credit card.
Buyers here, buyers there but buyers cannot be found anywhere near the listing broker.
All that is left for the listing broker are the leads from the “for sale” sign, their broker web sites and their print ads.
Being able to freely and effectively sell what you list should not be a crime. It is not in any other business. In fact, I believe that it should be a requirement for those who profess to take a listing and who also pledge to the Seller “that they will get it sold.”
If you cannot sell it, then you shouldn’t list it.
Not unlike Rob I am growing very tired of stating the obvious, but it is reassuring that Reffkin gets it, is fighting for it and who is innovating ways to secure buyers for the product he knows the most about, that his company controls. And now he knows that he and the Seller can do so without the need for the help of an MLS full of non-productive members.
Last I heard, Compass and Reffkin have expressed less than zero interest in doing without the need for the help of an MLS. But maybe you talked to him more recently?
I do agree with you in one respect: the answer to this is simple. The brokerage should leave the MLS and sell the property. REX is doing that; why can’t Compass?
Thanks, Ken for the clear and concise comments.
Rob, while you are at NAR find Jeff Lasky and have him share how Midwest Real estate Data (MRED), one of the largest MLS’ in the US, handles the issue of pocket listings with their Private Listing Network (PLN).
Compass actually requires all their Coming Soon listings to be put into the PLN as the way to populate their own website.
The MLS rule change being proposed is very broad in scope and in options for working around constraints at the local level.
I think Ken Jenny and Santiago (both posted above) would say to be smart and “follow the money” to get to the real impetus behind this proposed rule change.
Well, I won’t be at NAR as San Francisco is on my Do Not Travel list, but I do look forward to seeing what happens.
I am happy to send you Jeff Lasky’s email and cell number, just ask. The PLN is a simple solution for addressing cooperation at the local MLS level, which is what this is all about.
I will tell you what I have heard 3 days ago at my office. A real estate agent took a listing and offered a measly 1.25% buyer’s agent commission. The MLS would not let him list the property for less than 3% buyer’s commission! That’s the turf NAR and the MLSs are trying to protect. You can list easily on the 3rd party portals. Pay a fee without being subject to that MLS condition. Guess what, the house sold $7,500 above the asking price in 17 days.
This agent already gave his testimony on this case to the ongoing lawsuit against the big brokerages.
Great piece Rob. Thank you for being an intelligent independent voice. So many agents drinking their company’s Kool-aid. Every time an agent or broker writes an opinion they should step into the shoes of the consumer. Rarely does anyone keep the best interest of the client in mind, including NAR. If NAR did have the best interest of the consumer in mind, they would not have forced arbitration in their “Code of Ethics”. NAR looks the other way when it comes to ethical issues regarding unlawful behavior of the broker of record/firm. Compass having a clause in an ICA means they can enforce it at any time until it expires or another agreement is signed and supersedes prior contract (as you mentioned). Yikes! And it is tied to compensation, Super Yikes! Why are agents signing this? What happens if their client wants their home on the MLS ASAP? Marketing budgets and “controlling” the way agents have to do their work and advertising just puts a company one step closer to a misclassification lawsuit for the states who follow the ABC-3 prong test. Everyone needs a lawyer now to sign an independent contractor agreement. While the agent is at it, have their lawyer read over the policies and procedures too. PS. my old office tried to exclude Zillow. They had an “opt-in” form. Half the time it didn’t feed over in time for the 1st weekend. This firm was trying to pull a “Compass” and send consumers to their website so they could sell the leads back to the agents. Darn consumers, I can’t believe they would want their listing on Zillow or more 3rd party sites for the public to view (insert sarcasm). Pretty sure the industry needs better regulation and not a self serving trade org.; like a FINRA for real estate.
The average consumer could care less for all those agents, brokerage sites.The listings on those websites look awful with lack of information compare to the 3rd party portals who give the consumer more data and options. The days of the MLS are coming to their end. Real estate agents need to make money and if they would continue posting their listing on the MLS they will not make the same amount of money compare posting the listings on the 3rd party portals. As a real estate investor myself, I found many good deals who were off market on the 3rd party portals and closing was faster.
All the tap-dancing in the Compass response is fun to read… but the ugly truth of the matter is that many “incentives” in this business (most of which are rarely formally/properly disclosed) put the agent/brokerage’s interests at odds with or above the client’s best interests, and this is a shining example.
I prefer the WA state DOL language which states (paraphrasing) – that the agent/brokerage can take no action which is detrimental to the client. This is intentionally broad, as it should be.
I’d say… having an incentive to hide a listing from the MLS/general-public is certainly detrimental to the client. Whether or not the client cares or realizes the possible ramifications of it, is irrelevant.
With the exception of those very rare sellers who honestly command extreme privacy when putting their house on the market, I’ve yet to see a compelling rationale to expose the For Sale to FEWER potential buyers. That is a fundamental violation of Econ-101 supply/demand aspect of Capitalism-101. Unless there is collusion between buyer agents and seller agents within a brokerage/company, there is no way for anyone’s supposed “proof/data” to indicate otherwise. Perhaps my understanding is lacking something fundamental, so I’m open to a contrary argument. Thanks.
More exposure may mean more money but many sellers desire privacy or Ibuyers would be a non-issue given the basic supply/demand logic that sellers also know well just being humans
I don’t get how many people want privacy. If it’s marketed “off-market” it’s still not private as I understand it…it’s just not exposed to nearly as many people. I agree with Curt Hess above.
Neither NAR nor an MLS has any interest in telling an agent how to do their business. Agents are free, within the law, to do as they please. I happen to agree with Rob that there is rarely a viable argument that keeping a property off the MLS is in the best interest of the seller. More often than not (and there are legitimate exceptions) the decision to keep the property off the MLS serves the best interest of the agent, not the best interest of the seller. I happen to believe that most of the time when an agent convinces the seller to keep a property off the MLS they are doing their seller a disservice. But it’s the agents choice, and in our democratic system, they have every right to do it. Neither NAR nor any MLS can tell them otherwise.
But it is also a choice, and a business decision, whether that same agent chooses to belong to the MLS. They don’t have to join, but if they do, they need to follow the rules.
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