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The National Association of Realtors (NAR) appears to be risking the membership once again based on their comments at this year’s NAR NXT Conference. We discussed this in another article, but let’s revisit two potential lawsuits facing members.
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Potential class action lawsuit No. 1
Five years ago, the NAR implemented the Clear Cooperation Policy (CCP) to “level the playing field,” mandating that listings be shared with the multiple listing service (MLS) within 24 to 48 hours. While the intent was to ensure fair access for all members, this policy forces homeowners into a one-size-fits-all approach, except for office exclusives.
Last year, I predicted the end of the CCP, and change is already happening. NAR needs to pay attention to avoid potential class action lawsuits in 2025.
Why the Clear Cooperation Policy needs to go
The CCP has faced criticism for potentially infringing on sellers’ rights and violating antitrust laws. By compelling some homeowners to share listings with other members regardless of their preferences, the policy goes too far, limiting options for sellers who value privacy or exclusivity.
The Department of Justice (DOJ) has raised antitrust concerns about the CCP, and major real estate players like Anywhere Real Estate and Compass have called for its repeal or significant changes.
NAR avoided discussing this topic at the recent NXT Conference, indicating a lack of action that could lead to another class-action lawsuit. It’s not just about industry practices but about empowering homeowners.
While there’s a chance the new presidential administration and DOJ may drop pursuing NAR, the CCP remains vulnerable to a class action lawsuit as class action attorneys focus on lining up plaintiffs, potentially costing NAR and its members more in dollars and headaches than before.
The removal of the CCP in some local markets has already started. For example, the Park City Board of Realtors in Utah announced in October that it would no longer enforce the CCP, allowing the local MLS to operate without certain national association mandates.
Sellers should have the freedom to choose how their property is marketed, whether through the MLS, an exclusive brokerage, or another method. Upholding their rights is crucial for compliance with antitrust laws and industry trust.
Agents need to pivot
The repeal of the CCP will change how agents work, particularly for buyer’s agents who rely on the rule for easy access to listings. When the rule disappears, access may decrease.
I predict that 20% of listings will remain exclusive, not appearing on the MLS. Agents should focus on mastering the listing side of the business for long-term stability and control.
Potential class action lawsuit No. 2
Decoupling MLSs from NAR is becoming a reality, potentially leading to the next class action suit.
Forcing agents to join NAR to access MLS services violates antitrust laws by creating a tying arrangement, bundling NAR membership and MLS access. Such practices restrict competition and limit choice, violating laws like the Sherman and Clayton Acts.
Several MLSs have announced differing policies from NAR, potentially leading to further legal implications.
Notable examples of MLSs making changes in response to legal challenges include:
– Bright MLS: Added the option to indicate on listings if sellers were willing to consider concessions.
– California Regional MLS (CRMLS): Allowed listings to indicate if sellers were willing to consider concessions and specify what they were offering.
– Northwest MLS (NWMLS): Opted out of the NAR settlement, citing concerns about transparency and sellers’ choice in making offers.
The increasing number of lawsuits, including a recent three-way membership agreement suit in California, is causing MLSs to reconsider their relationship with NAR. These legal challenges question the necessity and legality of requiring Realtors to join multiple associations to access the MLS. Similar lawsuits have been filed in Michigan, Illinois, Pennsylvania, and the Alabama Association of Realtors has also raised concerns.
To stay ahead in this evolving landscape, agents should focus on strengthening their listing business, staying informed about legal developments, and investing in training. Adapting quickly to these shifts will be crucial for success in the changing industry.
A call to action is issued for agents to adapt and position themselves as leaders in these transformative times, as those who adapt are the ones who will succeed in the real estate business. Will you join their ranks?