Monday, July 15, 2024

NAR shuts down bid to end no-commingling rule, Zillow reveals

Must read

New markets require new approaches and tactics. Experts and industry leaders take the stage at Inman Connect New York in January to help navigate the market shift — and prepare for the next one. Meet the moment and join us. Register here.

Real estate giant Zillow has twice petitioned the National Association of Realtors to end a controversial rule that allows multiple listing services to prohibit brokers from displaying MLS listings with non-MLS listings online but to no avail, Zillow executive Matt Hendricks told Inman in a new interview.

The rule is the subject of an antitrust lawsuit brought by discount brokerage REX Real Estate against Zillow and NAR, because the NAR rule prompted Zillow to separate non-MLS listings from MLS listings on its website, including listings from REX, allegedly leading to less traffic for REX listings.

Zillow, a licensed brokerage, turned its popular portal into an Internet Data Exchange (IDX) website in January 2021. IDX sites feature pooled sets of listings from MLSs designed to allow brokers to display a comprehensive set of listings for a market, but brokers must follow NAR’s IDX rules in order to display such listings.

The no-commingling rule is one such rule and one that Zillow has said in legal filings, in an Inman op-ed and elsewhere it would prefer did not exist. The rule is optional for Realtor-affiliated MLSs and in August REcolorado became the first MLS to rescind the rule.

Matt Hendricks

In September, Inman published an op-ed authored by Hendricks, Zillow’s senior director of broker operations, applauding REcolorado’s decision and expressing the hope that other MLSs would follow suit.

At the same time, Zillow told Inman that Zillow, a broker member of NAR, had petitioned NAR’s MLS Technology and Emerging Issues Advisory Board, which is a subset of NAR’s Multiple Listing Issues and Policies Committee, to get rid of the rule.

The advisory board typically reviews proposed MLS policy changes and decides whether to send them to the full committee for consideration as policy recommendations. If the committee approves the proposed changes, they then go to NAR’s board of directors for a vote. NAR’s board typically meets twice a year and routinely votes on MLS policy changes.

Zillow’s proposal was not considered by either NAR’s full MLS committee or board of directors at its latest annual conference earlier this month, so the next opportunity would be in May at NAR’s midyear conference.

Inman asked NAR whether Zillow had petitioned the advisory board, why the advisory board hadn’t put Zillow’s proposal before the full MLS committee and whether the advisory board will take up Zillow’s request at a later date. NAR did not respond to those questions, but NAR spokesperson Mantill Williams said in a statement that “Per NAR guidelines, individual MLSs (local broker marketplaces) choose whether their listings are displayed with listings from other data sources.”

“[T]he MLS Advisory Board considers all proposals submitted to it,” Williams added.

Inman asked Zillow for an interview about the company’s efforts to rid the real estate industry of the rule. The interview was conducted by email at Zillow’s request.

Inman: What specific change to the no-commingling rule is Zillow advocating for? Why this specific change?

Matt Hendricks: Zillow wants to improve the online home shopping experience for consumers nationwide, and one of the best ways to do that is by removing the National Association of Realtors’ so-called ‘no commingling’ rule. This optional model rule has been adopted by many multiple listing services (MLSs) across the U.S., and requires specific categories of non-MLS listings — like buildable home plans, auctions, manufactured homes, and for sale by owner — to appear separately from MLS listings. For consumers, this separation of listings can add friction to a comprehensive home search where all listings appear together.

Removing this rule is a win for buyers — and the agents who represent them — who would be able to more easily find additional options, as well as sellers, who will receive better exposure to their listings. Improving the search experiences becomes even more important in an extremely tight market with limited inventory.

We’ve specifically asked that the rule be amended/removed so that commingling of any type of listings be allowed. At the same time, we would like to see attribution of source for listings obtained from other sources made a mandatory rule instead of optional, providing better transparency for all.

When did Zillow first petition NAR’s MLS Technology and Emerging Issues Advisory Board to get rid of the rule? What specific text changes did Zillow petition for?

Zillow has a long-standing history of being a champion of customer transparency and putting the power of information in consumers’ hands. Prior to making the switch to IDX feeds, we strived to show our audience the broadest spectrum of housing options available: auction, new construction plans, communities, foreclosures, for sale by owner, etc., all in a single set of search results, because we believed that having as many choices as possible is what consumers wanted. Our support for removing policies like these that limit transparency has not waivered since then and conversations continue to this day.

Zillow first proposed changes to commingling rules in early 2021 for the November legislative sessions and again in early 2022 for the May legislative session. Both times we asked that commingling of any type of listings be allowed as long as it had proper attribution of source and that source attribution be made a mandatory rule instead of optional. Although neither effort made it beyond the advisory board, we continue to work with local MLSs, associations, brokers and board members to advance, even locally, policy that would benefit the consumer on their housing journey.

What is the status of Zillow’s petition to the advisory board?

In the two years since we joined NAR, we have learned more about how best to navigate the industry landscape and its policy making procedures — in particular that changes often take time and member education.

We are continuing our efforts to find ways to streamline MLS IDX rules. We’re working with brokerages and franchisors to jointly ask for updates to the 20-year-old IDX standard, to ensure that it supports current technology and consumer needs. When the timing is right, we’ll resubmit our request to the advisory board to modernize the “no-commingling” rule.

Did Zillow petition the advisory board to change any other MLS policies? If so, which one(s)?

Alongside being a champion for the consumer, we also believe that brokerages and agents will benefit from streamlined IDX rules and greater transparency than the current rules allow.

Many of the existing policies around IDX are outdated and do not reflect current business models and consumer needs. We also applaud and support many of the recent developments coming out of the advisory board and NAR, like buyer’s agency commission disclosure, removing sorting by commission amount, and not being able to advertise agency services as “free.” All of these are benefits to the consumer and make the search experience better. Moving forward we, along with like-minded brokerages and franchisors, will continue to ask for changes that enable the innovation of business models, search experiences, and reflect what the consumer demands and deserves.

Which existing policies are you referring to (other than the no-commingling rule)? Are these addressed in the changes to IDX and VOW currently being contemplated by NAR’s Multiple Listing Issues and Policies Committee to combine the two?

The combination of IDX/Vow inherently makes moving policy forward easier, so it can adapt to future tech/consumer trends. We are also in support of policies that help participants (brokers) be dynamic and innovative – on their own brokerage sites in customer search, enable brokers to try new business models, ease of accessibility to display clear and truthful ads for things such as tools along a customer’s journey, and transparency of the process.

Email Andrea V. Brambila.

Like me on Facebook | Follow me on Twitter

More articles

Latest article