During a recent panel at Inman Connect Las Vegas, two notable figures in the real estate world, Joe Rath, Redfin’s Senior Director of Brokerage Operations, and James Dwiggins, CEO of NextHome, delved into the implications of the National Association of Realtors’ 2019 Clear Cooperation policy. Both leaders expressed concerns over the policy’s efficacy, highlighting that pocket listings have seemingly increased since its enactment. Rath further revealed Redfin’s contemplation of adopting exclusive listings, in response to the industry’s apparent disregard of NAR’s mandate. Meanwhile, Dwiggins associated the rise of pocket listings with the controversial dual agency transactions, advocating for its broader prohibition.
Moderated by Vendor Alley’s Greg Robertson, the discussion further encompassed the challenges of uniformly implementing the Clear Cooperation policy across different MLSs. Dwiggins pointed out that exclusive listings, though beneficial to brokerages, may not always serve the best interests of consumers. Rath echoed this sentiment, suggesting that if the real estate industry doesn’t refocus on the needs of homebuyers and sellers, regulatory entities might intervene. The conversation culminated with Robertson probing Rath about Redfin’s future strategies, to which Rath hinted that any adoption of exclusive in-house listings would distinctly reflect Redfin’s ethos.
What are Pocket Listings?
Pocket listings refer to real estate listings that aren’t publicly advertised on the Multiple Listing Service (MLS). Instead, these listings are kept “in the pocket” of the listing agent, who might share them privately with a select group of buyers or agents. This means the general public isn’t immediately privy to them.
What is Clear Cooperation?
Initiated by the National Association of REALTORS® (NAR), the Clear Cooperation policy mandates that brokers share listings with other brokers in their MLS within one business day of marketing the property to the public. This policy was designed to foster fairness and transparency, ensuring that all potential buyers and their agents have equal access to available listings.
What is Dual Agency?
Dual agency occurs when one real estate agent or company represents both the buyer and the seller in a single transaction. While this can speed up the process and sometimes reduce commission fees, it’s a practice fraught with potential conflicts of interest. An agent might struggle to negotiate the best price and terms for both parties simultaneously. In many areas, it’s highly regulated or even illegal due to these inherent challenges and potential for unethical behavior. To put it in practical terms, “Would you have your defense attorney also prosecute you?”
The Ethical Concerns Surrounding Exclusive In-House Listings
Transparency and Equal Access
At the heart of real estate’s ethical framework is the idea of transparency. By keeping listings exclusive to one platform, it inherently prevents a wide range of potential buyers from viewing or even knowing about a property. This not only limits the seller’s potential market but also denies buyers the opportunity to make an informed choice from a full range of available properties.
Potential for Price Manipulation
Exclusive listings can lead to reduced competition. When competition diminishes, there’s a potential for price manipulation, as the listing company may control the narrative around the property’s value without external checks and balances.
Increased Occurrences of Dual Agency
An increase in exclusive listings can lead to a rise in dual agency scenarios. The blurred lines of representation can compromise the agent’s ability to serve either party wholly, leading to deals that might not reflect the best possible outcomes for both buyer and seller.
Undermining Industry Standards with Clear Cooperation
The Clear Cooperation policy was instituted to bring about a sense of fairness and collaboration in the industry. Exclusive listings, especially when not shared with a wider broker community, inherently go against this principle. This could set a precedent where other agencies follow suit, leading to an increasingly fragmented and less cooperative industry.
Compromised Consumer Autonomy
Consumers should have the autonomy to choose properties based on a comprehensive understanding of the market. Exclusive listings limit this autonomy, potentially funneling them towards properties they might not have chosen if given full market visibility.
Trustworthiness and Reputation
Trust is a cornerstone in real estate. By limiting property listings to one platform, companies risk eroding this trust. Consumers, aware of the restricted access to properties, may doubt the integrity of such platforms and question whether they’re truly seeing the best options.
Unintended Market Distortions
In a scenario where more firms adopt an exclusive listing approach, the market could become significantly distorted. Different platforms might have entirely different property portfolios, making it challenging for consumers to get a holistic market view. This fragmentation might lead to ill-informed decisions, affecting both property prices and consumer satisfaction.
The Ethical Alternative – Represent Only One Party in a Transaction
As the conversation around pocket listings, dual agency, and exclusive in-house listings intensifies, brokerages like Arrivva remind us of the core values that the real estate sector should always champion: transparency, integrity, and consumer trust.