Decoded: The legal risks of ending Clear Cooperation 

Editor's note: This is the second of a two-part series in which Art Carter, CEO of CRMLS, explains why the nation's largest MLS is embracing the controversial Clear Cooperation Policy despite significant pressure from some brokerages. Read part one here.

The views expressed in this column are solely those of the author.

Some brokers have threatened to sue CRMLS and other entities that do not capitulate to their demands to remove mandatory cooperation so that they can profit from hidden inventory. This raises numerous antitrust concerns:

Buyers: A buyer who wishes to hire their own representative is denied that opportunity when exclusively listed properties are not subject to mandatory cooperation. For instance, if a buyer's agent attempts to contact the listing agent to schedule a showing or submit an offer and the listing agent refuses to cooperate or respond, the buyer is left with no choice but to abandon their chosen agent and approach the exclusive listing agent directly instead —even if that is not the buyer's preference.

Agents: If CRMLS were to agree to these market-influencing broker demands, agents at firms that ensure all buyers have access to all properties would be denied the opportunity to represent buyers who might be interested in and capable of purchasing exclusively listed off-MLS properties. These buyer agents would have strong grounds to pursue legal claims against the brokerage firms conspiring to implement these anti-consumer practices, accusing them of collusion and forming agreements to pressure CRMLS and NAR into removing policies and rules related to mandatory cooperation.

Sellers: Sellers harmed by the off-MLS practices demanded by these few firms would also have a strong basis for legal claims. Extensive evidence demonstrates wide exposure through a multiple listing service results in the highest price and quickest sale for sellers. If mandatory cooperation is eliminated, self-serving brokerage firms could use exclusive listing agreements to prevent other buyer agents from approaching the seller. This practice effectively turns the property into a marketing tool or "billboard" to attract additional buyers to the firm, rather than getting the property sold.

Consumers pay the price with off-MLS listings 

This issue is not simply about double-ending transactions, as CRMLS data make clear. It is about redirecting buyers away from their chosen agents and forcing them to work with the exclusive listing agent, who controls all information and access to the property. Once engaged, the exclusive listing agent often converts these buyers into their own clients, showing them to properties — ironically, properties listing in the MLS that are available for cooperation. The notion that these large, market-impacting firms would leverage their market position to divert buyer customers from competing brokerage firms by withholding available properties and then representing those same buyers to purchase MLS-listed properties is both unethical and unacceptable. It is fundamentally unfair for these firms to benefit from MLS cooperation while openly refusing to cooperate themselves.

For sellers who end up in this exclusive off-MLS strategy, the consequence is often a longer time on market than if their property had just been listed in the MLS from the beginning. CRMLS data indicates that the vast majority of properties initially kept off the MLS at the insistence of a listing agent are eventually input into CRMLS in order to secure a sale. The time spent off-MLS is simply used as an advertising tool for the listing firm, exploiting the seller's property as a "billboard" to generate more money for the firm. Sellers who later realize they were misled into a marketing program that prioritized the listing firm's interests over their own, to their disadvantage and financial detriment, are likely to pursue legal action.

Now that I've addressed the requests made to CRMLS and explained why we cannot comply, I'd like to shift focus to why we fully support the Clear Cooperation Policy.

Limiting data access limits competition

Some have also argued that displaying listing data, such as days on market (DOM) or price drops, can harm a listing. At CRMLS, we believe in transparency of every data point, full stop. We believe that hiding data goes against everything we stand for and that providing as complete a picture of a property as possible benefits buyers, sellers, and agents alike. 

Let's unpack DOM and price drops to show how that information is still vital to share.

Days on Market (DOM)

• For Buyers: DOM helps buyers assess the property's appeal and negotiate pricing. If a property has been on the market for an extended period, it might suggest the seller's list price is too high and may be more willing to lower the asking price. Additionally, long DOM can indicate that the property may need updating or repairs.

• For Sellers: DOM helps with pricing strategy and positioning in the market. If a property has been on the market for a long time, it may be priced too high or not marketed effectively. If many properties have high DOM, it could be an indication to wait for market conditions to improve.

In short, DOM transparency helps both buyers and sellers make informed decisions, whether it's related to pricing, negotiations, or market trends.

Price Drops

• For Buyers: Price drops indicate flexibility and can enhance value perception. A reduced price might make buyers feel more comfortable submitting offers, especially if they were initially hesitant due to the listing's original price.

• For Sellers: Price drops increase visibility and signal market realism. They help re-engage buyers who may have been previously turned off by the price. A drop in price also indicates that the seller is motivated and willing to negotiate, showing flexibility and responsiveness to market conditions.

Maintaining transparency regarding price drops can revitalize the listing, generate urgency, and signal the seller's motivation, all of which ultimately lead to more competitive offers. Accurately depicting the days on market and price adjustments is also the right thing to do! Hiding relevant information from decision makers is antithetical to professionalism and a shameful practice that the industry as a whole is responsible to stop.

Clear Cooperation isn't perfect, but it builds trust

While CRMLS fully supports the CCP, we recognize that no policy is perfect down to every possible detail.

Let me be clear that while I fully support the CCP, I also advocate for continuous improvements and amendments to address any limitations that may arise.

Trust is the backbone of every successful real estate transaction and professional relationship. Despite any potential downsides, the CCP remains critical to industry cooperation. Without it, the industry risks becoming fragmented. If select brokers have privileged access to critical data, the market would fragment, eroding trust, reducing consumer choice, and exposing the industry to unnecessary regulatory scrutiny.

As the industry evolves, we must stay focused on the core principles of cooperation, transparency, and fairness. Mandatory cooperation rules, like the CCP, reflect these principles and provide a strong foundation for the future. CRMLS will continue to align our rules, policies and practices with these values through our unwavering support.

Art Carter is the CEO of California Regional MLS (CRMLS), the nation's most recognized multiple listing service, and is committed to creating and maintaining a more equitable real estate industry. You can read the full text of his commentary here.