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It’s not every day that industry veterans go head-to-head on a controversial issue, but that’s what James Dwiggins has signed up for.
Dwiggins, co-founder and CEO of real estate franchisor NextHome, which has more than 6,000 agent affiliates, will join Mauricio Umansky, co-founder and CEO of brokerage The Agency, on stage at Inman Connect New York, an event to be held Jan. 22-24 at the Hilton New York Midtown.
They will be debating the National Association of Realtors’ Clear Cooperation Policy, which requires listing brokers to submit listings to a Realtor-affiliated multiple listing service within one business day of publicly marketing them. The CCP has been hotly disputed for months and Dwiggins has been a vocal champion of the policy, which has attracted antitrust scrutiny in the courts and from the Department of Justice.
Inman interviewed Dwiggins, a Realtor whose parents and grandparents were also in the business, ahead of the “Clear Cooperation Showdown” to talk about his thoughts on the upcoming debate, the motives of CCP opponents, the policy’s office exclusives carve-out, and his predictions for the future of the policy.
This interview has been edited for length and clarity.
Inman: What are your thoughts going into the showdown?
James Dwiggins: This is a fight for what’s in the best interest of the consumer. While I have the utmost respect for Mauricio, we are definitely on opposite sides of what is in the best interest of the consumer. Companies that are wanting to get rid of CCP are putting profits and their own business interests ahead of what’s best for buyers and sellers. Every study’s shown that.
I’m going to talk about what the world was before Mauricio was in real estate because I’ve been in the business longer than he has. What it was like, how long we’ve taken to get this incredible marketplace to what it is today. I remember when the MLS didn’t exist. My family’s been in real estate since 1967. My goal is to help people who have not been in this business that long understand what this business will look like in a world where you have a fractured marketplace, where some listings are available and some are not.
I’m very strong and passionate about this because I have a viewpoint of the world that Mauricio doesn’t because he hasn’t been in the business long enough to understand some of those things from a historical perspective, as my family did.
Whenever I talk to someone who is against the CCP, I ask them, “What about pocket listings and fair housing and value to the seller of getting their maximum price?” They push back that not every seller’s first priority is the maximum price and sometimes they’re worried about other things, like convenience or privacy. I’m sure you’ve heard all of these arguments yourself. What do you think of them?
I have run a franchise that I’m at today for 10 years. We’ve sold hundreds of thousands of houses. Never have I ever heard a complaint of a seller saying, “I’m upset that you put my property in the multiple listing service.” Not one.
These arguments are all about how you position the conversation with the seller. If you say to a seller that “I have a way of doing this so that there’s less people walking through your home. We can get you the same price that you want. We don’t have to worry about anybody stealing anything. We don’t have to worry about having you leave your property for open houses,” and I position it so that it sounds all like it’s a really horrible process and then I close it with, “We can do this off-market or we can do it internally. I’ll do it so that we’re not having all these people. I’ll bring all my agents in my company to come look at it first and see if we can find a buyer and get you the price you want. And even if I have the buyer and double-end the deal, I’ll reduce my commission,” it sounds amazing to the seller.
If you reverse that and say, “We have the ability to do all of those things, but statistically speaking, the property will sell from somewhere between 5 [percent] to 17 percent less when it’s not on the open market,” … almost all of those people who were thinking that off-market was a great idea will go, “Oh, yeah, I don’t want to do that because I don’t want to lose that much money in the process.”
The sheer concept of using the word “pocket listing” sounds like a fair housing violation. When you say “pocket listing,” that’s exclusionary in practice. You are excluding people from seeing things.
I am not opposed to having a process for a seller to be fully and accurately educated on what this process is: that they are not going to have their property marketed publicly, that it will be done internally, that they will not be represented to the most number of buyers in the marketplace. Very clearly explaining to a seller what decision that they are making. I’m open to making some changes to CCP so that there’s a better process, one of them being that it can’t be loading a document up into DocuSign, sending it to them, where they hit Start and they sign and they don’t read it.
One of the recommendations I have is that if you want a property to not be in the MLS and to still publicly market it, that the seller must talk to an MLS representative first, so that the MLS representative can verify and make sure the seller understood the decision that they were making — just like the Northwest MLS does, by the way.
All of this is people not speaking the truth: That it is 100 percent about profit and not putting the seller and buyers first. If we go back this way, of what we’re proposing, this is going to end up in a world where large brokerages hoard listings. It won’t just be The Agency or Compass. It will be eXp and Berkshire Hathaway and everyone else.
It will be a world that is so fragmented that buyers have no idea what’s for sale. They’ll have to go to all these different websites to do it.
Sellers will be harmed because people won’t see [their listing], they won’t have access to it. They’ll look at the industry as the reason for this occurring. They’re going to end up suing people because of it, because “My agent told me to do X, Y and Z, and I thought it was in my best interest, but it wasn’t.”
This is a short-sighted idea that is being disguised as in the best interest of sellers, and it is not. This argument that days on market hurts sellers, and that we’re the only industry that does it? Nonsense. Go to car websites for selling a cars; days on market exists. Go to boat websites; days on market exists. Go to eBay; days on market exists.
The whole point of it is to help people understand what they’re looking at and giving transparency. What we’re talking about doing is moving to a world away from transparency. It’s the exact opposite of what the consumer wants in the world we live in today, and it’s driven by profits. That’s the whole motive and goal behind this entire thing.
We’ve only had the CCP since 2020, so it didn’t exist before then. We didn’t experience this breakdown where everything’s fragmented, and you can’t go to one site to see most of the listings before CCP was enacted.
Yes, we did. MLSListings was the first MLS to publish this data back in 2013 and they were looking at on-market and off-market listings. At one point, 30 percent of listings … in one city was off-market. Thirty percent. Was never on market, was being sold internally or done through a pocket listing network where the public never saw any of this information, and it ranged anywhere from 15 [percent] to 30 percent, or it was like seven or eight different cities in the [San Francisco] Bay Area. I have that study, I have that data, and it was a massive problem that was growing for a long period of time.
The reason why this is being brought up again is because we have low inventory. There’s not a lot of inventory to sell and companies have to show profits. So the more you can double-end deals — double-end a deal or double-end a deal meaning somebody else, another agent in the same company, selling it to one of their buyers — it props up compensation. That’s it. That’s all. That’s the motive behind it.
I’m not against profits, to be clear. But this was a problem. Agents were holding inventory back. They were putting properties on different portals. They were taking all of those leads trying to double-end the deal if they could, and only if they couldn’t, they’d put it back on the MLS.
That’s how this whole thing originated. It was designed to make it so that you couldn’t pick and choose what properties were being done in your own interest. If you’re going to be a member of a broker cooperative, of an MLS, then you put your inventory in. That’s the point of it.
You can still leave properties off-MLS, and you can market them if you want, as long as it’s a non-exclusive listing.
What is a non-exclusive listing?
A non-exclusive listing means I don’t have the exclusive right to sell the property. Basically, it means that I have an arrangement with the seller that if I bring the buyer, I’ll sell the property, but the seller can work with any other agent, too. If Agency or Compass or anyone wants to not put a property in the MLS and publicly market it, they just need to do a non-exclusive listing agreement. Doesn’t violate CCP, doesn’t violate MLS rules.
And they wouldn’t want to do that because…?
You don’t have the exclusive right to the listing. You wouldn’t want to market the property and not have exclusive right to sell it.
It’s picking and choosing. That’s the point. If everyone’s following the same rules, and we’re doing it to benefit the seller and buyer, you don’t get to pick and choose. You don’t get to go, “Well, I couldn’t sell this one off-market, so now I’m going to stick it in the MLS and hope that everybody else will sell my property.” That’s not the point of it. The point of it is we’re working together in the best interest of buyer and seller. You’re part of a marketplace. Every listing you get, if you want to publicly market it, it goes into the MLS. That’s how it works.
What people want is they go, “We’re going to give our sellers choice.” That’s a code word for “I want to sell it to my own company first, and if I can’t, then I’ll allow everybody else to sell my listing.” That’s literally all that means.
It’s the same reason why builders do it. They go, “We’re only going to put one listing in the MLS, even though we have 500 of them. We’ll try to sell all of our own inventory, and if we can’t, then we’ll stick them in the MLS and hopefully people will bring us stuff” because they don’t want to pay commission out and they want to try and make as much money as possible.
This is what builders do. Builders are all about their own profit. It’s the same thing. This is all logical. It’s just everyone’s disguising the conversation. How about we just be honest and say, “Yeah, we want to do as many deals as possible internally to increase profits for the business.” Cool, I respect that. I may not agree with it, but let’s just call a spade spade.
Given the office exclusives carve-out of CCP, do you think pocket listings have actually gone down at all since it was enacted?
I know they have. I can’t speak for each individual company. There’s certainly one out there that loves to do it and is certainly pushing that. But I’m also of the opinion that office exclusives needs to go away. It’s saying, “We’re going to try to exclusively sell it within our office before we put it on the MLS.” It’s kind of like stating, “It’s all about profit before we put it in the best interest of the consumer.”
Then the problem with office exclusives is, if you have enough inventory, then it becomes a tool that you can weaponize. Then you’re using it to recruit people, or you’re saying, “You can’t have access to this inventory unless you work at our company. If you want to have access to inventory, then you should come work at our company.”
Then all of a sudden everyone else is like, “Well, if they’re going to do that, then we should do that.” So then brokerages follow suit. The whole point of office exclusives is to sell it internally, and none of that benefits the consumer, unless the consumer is saying, “I don’t want this thing publicly marketed. I want to receive arguably less money.”
But most of the time, they don’t understand what it is they’re doing. I believe we have a fiduciary responsibility to tell the seller and buyer everything that they need to know. I believe firmly that that information is being withheld. Based upon all the studies that show the fact that a seller, majority of the time, like 95 percent of the time, would like the highest price possible for their house. This idea that there’s lots of sellers that don’t, and high-end sellers […]
I lived in San Francisco until 2019. I’m acutely aware of how expensive real estate is in San Francisco. If everybody was keeping their properties off-market or exclusive, there’d be no inventory. So this idea, it’s just nonsense. Elton John sold his house online and had it on Zillow.
This is all about how you position it to the seller, and then they obviously will make decisions based upon that influence that you had. Office exclusives should go away.
Right now NAR has their leadership team evaluating CCP. What do you think is going to happen? Are they going to change it? Are they going to repeal it? Are they going to keep it as-is?
I don’t think they’ll make a change to it. There are some changes that can be made to CCP that keep the idea of what it is designed to do in place but allow some flexibility. If there is a seller that does not want their home on the MLS and wants to market it publicly, I’m okay with that, but … if we want to have the seller have the right to make a decision on their home, there needs to be a very clear disclaimer that states what you’re likely going to lose by doing so, in value.
Right now, you’re not going to get your house marketed on Zillow or Homes.com or others because they don’t take individual listings. They only take listings from the MLS. There’s no way for you to manually put a property up there. It’s not how it works. Only as a FSBO. So you’re going to lose exposure on Realtor[.com], Zillow and Homes.com. Ninety-nine percent of all buyers are not going to see that property for sale. So they’re understanding that.
My view is if we’re very clear with it, and then there’s a conversation with a representative of the MLS to make sure they understood what they signed, then I don’t have a problem with a seller saying, “Yes, I agree. That’s what I want. I acknowledge what I’m doing. I know the risks that I’m taking, and it’s my choice.” It’s America. Freedom. Great.
Do you think they’ll make that change? Have the seller sign a disclosure? Or do you think they’ll get rid of office exclusives?
I don’t think they’ll make a change to any of it, but I’m just throwing a dart at a wall. I’m not part of NAR. I have no idea what they’ll make those decisions on. My gut says that they won’t make any decisions to it at this point in time. They’ll watch and see what the DOJ does, or what happens to the DOJ. There would need to be a good reason to do it.
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