What's really going on in the real estate market in the U.S

[UNITED STATES] In the ever-evolving landscape of American real estate, a fierce battle is brewing that could fundamentally alter how homes are bought and sold. At the heart of this conflict lies the "clear-cooperation policy," a rule implemented by the National Association of Realtors (NAR) in 2020 that mandates real estate agents to list properties on Multiple Listing Services (MLSes) within one business day of public marketing. This policy, designed to promote transparency and equal access to property information, has become a flashpoint for industry titans and has far-reaching implications for homebuyers, sellers, and agents alike.

The Clear-Cooperation Policy: A Double-Edged Sword

The clear-cooperation policy was introduced with noble intentions. It aimed to create a more transparent real estate market by ensuring that all available properties were visible to potential buyers through centralized databases. This approach theoretically levels the playing field, giving all homebuyers equal access to information and preventing the practice of "pocket listings," where agents keep certain properties off the MLS for various reasons.

Brian Boero, CEO of 1000Watt, a brand and marketing agency for real estate companies, encapsulates the sentiment behind the policy: "If you were to ask people, 'Should houses be hidden?' most people would say no. If you asked people, 'Should everybody be able to see the houses that are for sale on the market at any time and have, at least, access to them?' I think most people would say absolutely".

However, the policy has its critics. Opponents argue that it infringes on sellers' rights to market their homes as they see fit and may not always serve the best interests of all parties involved.

The Rise of Pocket Listings and Office Exclusives

Before the clear-cooperation policy, pocket listings were on the rise. These are properties that agents keep off the MLS, often marketing them privately or within exclusive networks. While pocket listings can offer benefits such as privacy for high-profile sellers or a way to test the market before a full launch, they also raise concerns about fair access to property information.

The clear-cooperation policy aimed to curb this practice, but it included a significant loophole: "office exclusives." This exception allows agents to market properties within their own brokerage without listing them on the MLS. Large brokerages have capitalized on this, offering services that promise sellers more control over their listing process.

Howard Hanna's "Find It First" program, for instance, allows sellers to "benefit from broad exposure without compromising on control," according to CEO Howard Hanna IV. This approach has led to accusations that the policy favors large brokerages at the expense of smaller firms and alternative listing services.

The Battle Lines: Industry Giants at Odds

The debate over clear cooperation has divided the real estate industry. On one side, executives from major brokerages like Compass and Anywhere Real Estate are pushing for the NAR to loosen or eliminate the rule. They argue that it restricts sellers' options and stifles innovation in property marketing.

Robert Reffkin, CEO of Compass, has been vocal in his opposition to the policy. Mauricio Umansky, a celebrity agent and CEO known for his appearances on reality TV shows, has even sued the NAR over his attempts to start an MLS alternative called the Property Listing Service (PLS).

On the other side, companies like Zillow and Redfin staunchly defend the policy. Glenn Kelman, Redfin's CEO, warns of the potential consequences of weakening clear cooperation: "The goal in weakening Clear Cooperation is to make being bigger matter — more than being better. That is the law of the jungle, masquerading as freedom".

The Impact on Consumers and the Market

The outcome of this debate will have significant implications for homebuyers and sellers. Proponents of clear cooperation argue that a centralized listing system benefits consumers by providing comprehensive access to available properties. They contend that fragmenting the market could lead to missed opportunities and potentially discriminatory practices.

Saul Klein, CEO of the San Diego Multiple Listing Service, emphasizes the collective benefit of the current system: "Everybody benefits when we all pool our listings, and we do so in a timely manner. And people are hurt, potentially, when we don't do that".

However, critics of the policy argue that it limits sellers' options and may not always result in the best outcomes. They point out that there are legitimate reasons why a seller might prefer a more private sales process, such as during a divorce or when selling a high-profile property.

Legal and Ethical Considerations

The clear-cooperation debate also intersects with legal and ethical concerns. The Department of Justice has signaled that the NAR's control over MLSes could be anticompetitive, potentially stifling the development of alternative listing platforms. This raises questions about whether the current system truly serves the best interests of consumers.

Conversely, supporters of clear cooperation argue that unrestricted off-MLS marketing could violate fair housing laws. Victor Lund of Wav Group asserts, "The fact that every listing is contributed to the MLS and that every consumer has access to that information is an enormous and overwhelming benefit to support fair housing. There is too much opportunity for housing discrimination without it".

The Future of Home Buying: A Fragmented Landscape?

As the NAR prepares to review the clear-cooperation policy, the real estate industry stands at a crossroads. The decision could reshape the home buying process for years to come. If the policy is loosened or eliminated, we may see a more fragmented market where buyers need to search multiple platforms and broker websites to find available properties.

Glenn Kelman of Redfin paints a vivid picture of this potential future: "If you haven't bought a home yet, there is nothing more unsettling than seeing a moving van outside a house that never showed up in any of your searches".

On the other hand, a revised policy could lead to more innovative marketing strategies and potentially give sellers greater control over how their properties are presented to the market.

The battle over America's hidden homes is more than just an industry squabble. It represents a fundamental question about the nature of the real estate market and how it should function in the digital age. As the NAR deliberates on the future of the clear-cooperation policy, stakeholders across the industry are watching closely.

The outcome of this debate will have far-reaching consequences for homebuyers, sellers, agents, and brokerages alike. It will determine whether we move towards a more open and transparent housing market or one that allows for more flexibility and privacy at the potential cost of equal access.

As the real estate landscape continues to evolve, one thing is certain: the way we buy and sell homes is changing. Whether that change will benefit the many or the few remains to be seen. For now, all eyes are on the NAR as they prepare to make a decision that could reshape the American dream of homeownership for generations to come.