He is committed to changing or ending the Clear Cooperation Policy, which is a controversial stance.
The CCP makes in mandatory that every agent upload a listing onto the MLS within one business day after any public marketing of the property. Robert (and other brokerage leaders) say that nobody should have the right to dictate how a home is sold, and sellers should have the right to market their property however they choose.
Skeptics think that is a thinly-veiled excuse to hold more listings off the market, and sell them in-house instead – which would benefit the bigger brokerages, and possibly squeeze out the little guys.
But Robert said that the real problem is that we are sitting ducks waiting for another class-action lawsuit.
The last lawsuit was about the mandatory requirement that the listing agent include a buyer-agent’s commission rate in every MLS listing. NAR tried to hide behind the fact that the rate was negotiable, but got their clocks cleaned when the jury found otherwise. Even though Compass had never sold a home in Missouri, the forced NAR settlement cost Robert and Compass $52 million.
Because the submission of a listing to the MLS within 24 hours is also a mandatory requirement, it’s only a matter of time before the class-action attorneys start lining up for another big pay day. He is literally hoping to change the CCP before we get sued again!
NAR doesn’t get it. Their chief legal counsel quit last week after 17 years, which leaves them adrift, and they are sure to bungle the next wave of lawsuits which should be arriving any day now.
Robert is taking the high road and trying to negotiate a peaceful change, but I don’t get the feeling that the people in power are listening. This is where the biggest brokerages will probably have to sue NAR to get their attention before another class-action lawsuit is filed.
Why doesn’t NAR stand up for realtors? The main reason is because they have $750 million in the bank, and they are very comfortable. They had two presidents quit, the executive director retire just in the nick of time to avoid responsibility for the last lawsuit, and now the chief legal counsel quit too. They aren’t equipped to handle any controversy, let alone one that could put them out of business.
But that day is coming, it’s just a matter of when.
Abolishing the CCP is just the start.
Eventually, the biggest brokerages will quit NAR and the MLS, and go it alone, just like the commercial brokers. Zillow and Homes.com will scramble to make deals with us to keep our listings coming, because if they don’t, they will be out of business too.
I guarantee that this is the future of home sales.
Last week I received a call from the Compass Chief of Staff to President of Growth & Communications. His job was to notify all of the Compass agents who published something about our new program that took the same name as the now-defunct program at Zillow. Does Zillow recognize the powerhouse that Compass has become and try to parlay the opportunity into something positive for both companies? Of course not. Instead, they threatened to sue Compass for using their old slogan that they don’t use any more.
While Jacob and I were chatting it up, I had to ask, “Of the 30,000 Compass agents, how many calls do you have to make on this topic?” His answer? Six. Only six Compass agents in the country are doing some sort of website/blog! He was shocked when I told him that we get 1/3 of our business from blog readers.
Here is the same blog post I ran when the MMM program was first announced – now with Make Me Sell as the new name:
In what might be the biggest news of the year for us, daughter Kayla has joined the Compass family in New York City! Because she still has her California real estate license, she has also joined us at the Klinge Realty Group, making KRG bi-coastal!
A few other agents from her previous brokerage also went to Compass, making the transition a little easier, plus Robert Reffkin called her personally to welcome her and spent 3-4 minutes discussing her future!
The succession plan is for Kayla to run the NYC operation, and for Natalie to take over here.
We are thrilled to have Kayla back working with us!
If you or someone you know is thinking about buying or selling in Manhattan, let Kayla know!
In the week BEFORE the new rules went into effect, there were 29 NSDCC listings that were marked pending. In the first week AFTER the new rules went into effect, there were 38 new pendings.
Homes keep selling. Buyers and sellers keep moving, and Realtors keep helping.
It’s the other jokers who got in the way.
Somehow, the National Association of Realtors conspired with ambulance-chasing attorneys to levy big fines against brokerages for crimes they didn’t commit. The alleged offenses were committed by independent contractors who had home sellers pay a bounty to buyer-agents for causing their home to sell. The seller only paid the bounty if the agents involved were able to make both the sellers and buyers happy enough that they found a way to close escrow. If the sellers weren’t happy enough, they paid nothing.
We called it a ‘buyer-agent’s commission’.
Now we call them ‘compensation paid from seller concessions’.
We put different words on it, and added a load of new paperwork. That’s it – and homes keep selling.
But the brokerages are tired of being pushed around, and the really big changes are still to come.
1. The Clear Cooperation Policy is going to go away.
In the coming months, all the big brokerages will be suing NAR to rescind the policy that requires an agent to input their new listing into the MLS within one business day after they promote it publicly. The policy was a continuance of the NAR paranoia about protecting smaller brokerages, but that ignores giving the seller a choice on how they want to market their property.
2. Brokerages are going to leave the MLS.
I’ll call it a rumor because I didn’t hear from Reffkin’s mouth myself, but it makes sense. Why be a member of a club that sells us out and fines us $50 million? The commercial brokerages get along just fine without an MLS, as does the residential brokerage business in NYC.
Zillow provides the same benefit, without the lawsuits. Let’s cut a deal with them to upload our listings there and we won’t need the MLS.
What about cooperating with agents in other brokerages?
The NAR Settlement has effectively cut off that benefit already. The main benefit of the MLS was publishing and guaranteeing the buyer-agent fees, but that’s gone now. Every buyer-agent has to call around to find out what the “seller concessions” might be, if any. Sounds just like the commercial brokers, doesn’t it? And they have never had an MLS.
Is defecting from the MLS what is best for buyers and sellers?
We will sell you on that, don’t worry. Besides, you will still have Zillow, and their manipulated zestimates!
Zillow will become the defacto MLS, just like they do it in New York City!
A newly built bluff-top home in Southern California has come along to claim the title of Encinitas‘s most expensive listing. The residence, perched on a bluff overlooking the ocean at 1230 Neptune Avenue, is on the market for just shy of $25 million with Khaki Wennstrom of Compass; the San Diego County abode could set a new sales record for the area if it sells at or near the asking price. The 7,089-square-foot home, with four bedrooms and seven-and-a-half baths, sits above a secluded beach. The coastal gem is being offered up by seller and real estate developer Peter Kerserovich.
“I was particularly drawn to this lot due to its exceptional sandstone bluff on the oceanfront,” Keserovich said in a statement. “Unlike other locations, such as Malibu where the water flows beneath the homes, San Clemente with its sandy beaches, or Del Mar with its sand and seawalls, Encinitas offers a unique vantage point. Situated approximately 65 feet above the water, the view from this property is superior compared to properties directly on the water.”
According to the listing, Kerserovich snapped up the parcel in 1997, before sea level rise regulations were put into effect in 2012, which limit a home’s size and proximity to the water. He began building the stately spread in 2014 and finished only recently, making it a project that was a whopping 10 years in the making.
“Our bluff features robust sandstone, which we meticulously hand irrigate to maintain stability and prevent erosion,” Kerserovich explained. “This location benefits from excellent geotechnical strata and is conveniently located just six blocks from public access. Additionally, the property includes a viewing deck equipped with WiFi and electrical outlets, offering privacy and seclusion.”
Designed with no expenses spared, the sprawling estate is kitted out with three Tesla Powerwalls in the garage, a state-of-the-art theater with a $200,000 microLED video wall, and a commercial-grade elevator. You’ll also find a slew of swanky amenities such as a gym, a sauna, and a wine cellar. Other highlights include a dramatic 18-foot entryway fronted by a massive 800-pound pivot door and a custom planar metal gate that retracts underground. None of that’s to mention the upper-floor primary suite, which sports a deck that’s inspired by the bow of a yacht with polished Burmese teak wood.
We were on a call yesterday with our referral network of Compass agents around the country, and Gregg in the DMV (D.C., Maryland, and Virginia) said they have been required to use the buyer-broker agreements for the last twenty years.
Great – a test case. How has it gone?
He said that 98% of all DMV sales include seller concessions for the buyer-agent fee, and it’s been like that since the beginning! Wow! If we can do that here, then the whole commission-lawsuit debacle will fade away, and just be about more paperwork. The buyer-broker agreement I sent out yesterday was 14 pages!
The clip below is good news for buyers too. The new form was changed to give buyers a chance to cancel an exclusive buyer-broker agreement. Everyone has a chance to choose when signing whether the agreement is exclusive or non-exclusive. The non-exclusive can be cancelled at any time, but on the previous version the exclusive could not be cancelled. Now this is included:
Starting today, Compass agents can include the amount of the buyer-agent compensation that their sellers are willing to pay. The amount is added manually to each listing, so it might take a while before every agent gets fully immersed. If you’re curious, check out Compass listings at compass.com:
I got an update on the group of brokerages who have hired the same law firm to go after the National Association of Realtors. If they intend to disrupt the August 17th changes, they better get on it! But they are going let that go, and instead they will be pursuing the legal alternatives to end the Clear Cooperation Policy.
Regardless how you feel about the CCP, the sellers should have the right to choose in or out. Will getting rid of the CCP create more off-market deals and help eliminate the buyer-agent? Absolutely, but that’s the trend any way.
Compass held its Q2 earnings call on Wednesday, July 31, 2024. During the investor Q&A portion, CEO and Founder Robert Reffkin claimed that NAR’s “clear cooperation” rule is on borrowed time.
Clear cooperation requires that REALTORS® list a property on an MLS affiliated with the National Association of REALTORS® (NAR), within 24 hours of marketing the listing elsewhere. The rule is one of several that has been described as violating antitrust statutes, allegations that have brought the real estate industry under scrutiny over the last year.
In court filings for the case Top Agent Network, Inc. v. NAR, et al (where the plaintiff alleges clear cooperation is a tool of monopoly), NAR appeared “amenable” to revising the rule. Reffkin claimed such a change–and more–are inevitable.
“I think clear cooperation will end,” he said, and called the rule “anti-homeowner.”
“I believe that too much of the way the system works today isn’t for the homeowner. And so what–I’ll give you a couple examples. Days on market is the killer of value. Price drop history is the killer of value. The reason why private exclusives at Compass are so popular is because they do not have days on market when they go up, they do not have price drop history. When you go to a Mercedes-Benz lot or any other luxury goods, you don’t see on every Mercedes-Benz the price drop or the days on market,” said Reffkin.
He continued:
“Clear cooperation, the problem with it is, it’s forcing homeowners into negative insights. It’s saying anyone who has an agent, after one day of public marketing where it was no negative insights on a place like Compass or through your agents, you have to put it in the MLS, and then it goes to the system which the homeowner doesn’t have a choice on.”
This is the #1 reason I went to Compass, and I didn’t really feel like I had a choice.
When realtors get disrupted, this is the way the big brokerages can survive while the little guys die.
Hoard the listings in-house as ‘private exclusives’, like they do in the commercial real estate. The practice is legal (per the Clear Cooperation Policy) and is a choice for home sellers to make.
The big benefit for sellers is that they don’t get penalized by the days-on-market statistic, which buyers normally consider as the best way to know if the price is wrong after the first week on the market.
Compass has this option available for sellers, as do all the other brokerages, but nobody in management is pushing it around here. It’s used more like a Coming-Soon feature while homes are being prepared for open-market exposure. But there are deals being made.
If there was an organized, committed effort to use it as a survival tool, then I could see 30% of our sales happening off-market. But we’re not there yet.
Nobody was overcharged, but the media will feed the hysteria for another week or two with baseless claims and lies just to attract more eyeballs! Meanwhile, buyers are hurrying up their quest to buy a home before they have to pay their agent’s commission!
I haven’t seen any evidence that paying 3% or higher commission to the buyer’s agent would result in a higher sales price. But those homes offering 2% or less commission usually sell for less, though that is mostly due to an overall weak listing agent, not solely because of the rate.
The general market conditions have appeared relatively healthy over the last few years, but the above demonstrate why brokerages – especially those operating on thin margins – have been feeling the pain.
Volume has dropped considerably between 2021 and 2023:
Top Five Brokerages
The 2-year stats for the whole county were even worse. Sales were down 44%, and volume was off 36%. Even the 2019 county stats were better than in 2023. Sales last year were 37% lower than in 2019, and volume was 3% lower.
