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The past year has whipped the real estate industry into a perfect storm — wily mortgage rates and worsening affordability have slowed existing home sales to the slowest pace in 30 years, and changes to buyer-broker compensation rules and agreements have stirred fear and confusion among agents and consumers.
While some headwinds are starting to soften, the storm is far from over as the industry reignites a fierce battle over the National Association of Realtors’ Clear Cooperation Rule, which requires brokers to submit a listing to their multiple listing services within one business day of marketing a property to the public.
Proponents of the rule say it creates the best outcome for consumers when they can see all available listings in the market, and acts as a buffer against potential fair housing violations. However, opponents say the rule is the antithesis of consumer choice, forcing brokers to list on the MLS, even when their clients want otherwise.
Susan Daimler | Credit: Zillow
Residential portal behemoth Zillow has been one of the biggest champions of keeping Clear Cooperation, minus a provision that allows brokerages to keep listings off the market as an office exclusive.
“Transparency and equitable access to real estate listings are at risk, threatening to push the industry backward,” Zillow President Susan Daimler wrote in an Oct. 7 blog post. “… Sellers deserve to have their listing seen by the widest audience. Buyers deserve access to all listings. Private listing networks create disparity across the country.
“Sellers should be able to maximize their outcomes by marketing to all — broadening competition to get the best offers. Buyers should have the same opportunity to see what’s for sale, operating from the same starting point as everyone else,” she added. “To allow anything else is to move us back in history. It’s not fair, it’s not equal and it’s not what consumers want.”
Daimler sat down with Inman to dive into Zillow’s viewpoint on Clear Cooperation, what an industry without the rule could mean for consumers and portals, and why agents who focus on consumer rights always win.
This interview has been edited for length and clarity.
Inman: Clear Cooperation has become the hot topic, with many industry stakeholders taking their sides for and against the rule. You published a blog post about the rule on Tuesday, stating that Zillow believes Clear Cooperation is in the best interest of consumers. Would you mind diving deeper into that viewpoint?
Daimler: Zillow was founded on transparency and access. That’s our ethos. That’s our DNA. And we’re really thrilled that a lot of that conversation and our DNA has been thrust into the limelight. So, on Clear Cooperation, there are maybe two pieces to the conversation right? The rule in spirit was created to increase transparency and protect homebuyers. We think that’s great, and we really like and advocate for the mandatory putting listings on the MLS.
The piece of CCP that we think can be strengthened is the office exclusive loophole, and that’s kind of the only imperfection we see in it. And while that exception was created to really be for a small number of listings where people required a different level of privacy than maybe the average homeseller, the loophole is a little bit what’s created these private listing networks, which we are vehemently against. They’re terrible for the consumer and the agent.
The office exclusive exemption has been a big point of contention, so you’re certainly not the only one who wants to see that part of the rule go away. However, on the other side of the debate are people who believe Clear Cooperation, as it exists now, actually restricts consumer choice.
One point that I found interesting is that the rule has the potential to curb homesellers’ ability to get the best return on their investment because potentially negative information on the MLS — such as days on market and price cut data — can unfairly skew a buyers’ sentiment on a property. What’s your thought on that viewpoint? Does the risk outweigh the value?
You know, when these folks talk about that, there’s no data supporting these arguments. And as you saw in my blog post, we have a bunch to support what we’re saying. A multi-state study by BrightMLS and Drexel University, authored by three PhDs, found that homes listed on the MLS sold for 17.5 percent more than off-MLS listings, representing more than $53,000 for the typical seller. And on-MLS homes usually sold faster.
But again, you need to listen to your agent, you need to look at comps, you need to understand the market to price your home appropriately. Right? If homesellers are not getting great advice, or they’re not listening to that great advice, and they price their home incorrectly, that is an opportunity for there to be longer days on market and price cuts. But we believe if you have a good agent, you understand the market, you’re listening, and you’re educated as to what’s going on out there, you will price your home well.
The idea that we would take away transparency and potentially hide things from buyers is against our ethos on access and transparency. Logic and data say the broader the audience that sees your home, the more dollars you get for it, and the shorter amount of time it will be on the market. So the key to avoiding those negative insights is price your home well, listen to your agent, understand the market, and put it in the MLS.
I’d like to shift the conversation from consumers to another stakeholder: portals.
Redfin CEO Glenn Kelman wrote a spirited op-ed on why Clear Cooperation must be protected. Realtor.com CEO Damian Eales also championed Clear Cooperation and potential updates to it; however, he saw the potential for portals to benefit in a market without it.
From my viewpoint, it seems there’s more risk for portals to suffer in an industry without the rule, but I could be wrong. What are your thoughts? What might Zillow look like if the rule is done away with?
Zillow has hundreds of millions of consumers who come to us every month, right? We are the real estate destination for buyers and sellers. No matter which way the industry goes, like, we will have a great business. and I think that’s why what we’re saying about private listing networks and CCP is so critical because we can succeed in either world.
But all we care about is what is best for the consumer — and that’s with CCP staying.
I have no doubt Zillow would still succeed, but I imagine the path to success would need to change if Clear Cooperation was repealed and a greater share of homesellers and their agents decided to bypass the MLS. One of the main value propositions of Zillow and similar sites is the ability to access a wide range of listing information. What happens if that proposition is weakened?
Yeah, I mean, I think the biggest impact is really on the brokerages.
And the reason for that is, if private listing networks become the way in which the industry goes, you will have a whole bunch of fragmented databases where listings live, and agents will not have full access to all of those listings. They’ll only have access to the ones within their brokerages [and] consumers will only have access to the listings where their agent hangs their license.
That could also lead a consumer to say, ‘Well, hey, you’re telling me I need to sign this definitive agreement to work with an agent, but my agent doesn’t have access to everything. So, I actually need to be working with multiple agents.’ That goes completely against what the NAR settlement just said, and would be highly problematic.
So what would likely happen is you’d start seeing brokerages make deals with each other to share listings with each other, and then you’d also see sellers and buyers saying, ‘Hey, we’re on Zillow, we’re on Realtor.com. Where are all the listings?’ And you’d see sellers and buyers demand that their listings be in front of the biggest audience.
If we go towards these private networks and this fragmented industry, what’s going to happen is longer days on market, less visibility and lower prices. And sellers will say, ‘This is unacceptable, I need to be in front of the biggest audience.’ And what would happen is the listings all come to the places with the biggest audiences, which is not these fragmented places, but platforms like Zillow and Realtor.com.
Gotcha. And how might Zillow’s value proposition to agents change without Clear Cooperation? Much of consumers’ loyalty to Zillow is based on the sheer amount of listing information the platform provides, and the strength of that consumer loyalty is why agents invest in the Zillow platform. What happens to the buyer lead generation model without this rule? Can it survive?
We have Listing Showcase for listing agents, and we have tons of other business opportunities. So there’s not a concern about lead generation, in the sense that you’re asking. But the concern becomes dual agency, right? We have consumers on our site who want to be represented by their own agent, but they want to talk to a buyer’s agent. They understand that going to the selling agent is not in their best interest, and they’re not actually represented in that situation.
So these private listing networks can lend themselves to dual agency, which we think is not good for consumers. You need your own representation in these situations. So to us, that’s the bigger issue.
Our time is winding down, and there’s so much more to consider in the debate over Clear Cooperation. Many of our Inman Connect Austin sessions touched on this topic and revealed the breadth of views and depth of frustration about all the changes happening in the industry. What would be your final message to agents who want to see Clear Cooperation undone? Why should they rally to keep it?
We’re just really encouraging agents to deeply understand and educate themselves on what these rules mean, why they were created, how they work in practice, and why they will impact that agent’s business. We’re seeing some agents who work at these bigger brokerages, who are pro private listing network, right? And they’re like, ‘Private listing networks are great!’
And what we say to those agents is you need to understand that you think it’s great, because you work at one of the brokerages that’s really pro private listing network [and] have the best of both worlds because you have access to what’s in your brokerages private listing network, and you have access to what’s in the MLS.
But if this rule goes away, every brokerage is going to be a pro-private listing network. And the agents who maybe now feel advantaged to work at a brokerage that has a private listing network will all of a sudden be disadvantaged, or just like every other agent when all this data becomes fragmented.
When you’re on the side of the consumer, you always win. Right? Agents who are on the side of the consumer [and] brokerages who are on the side of the consumer, those are the ones who ultimately win. Consumers know and understand that.
English (US) · 