Commissions aren’t the NAR’s only problem. MLS access is a problem too.

The recent Sitzer lawsuit finally called out the National Association of Realtors’ anti-competitive behavior.

The NAR structures agent commissions by making home sellers pay for both the seller’s agent and also the buyer’s agent.

The suit alleges that home sellers who don’t agree to pay for the buyer’s agent, or who offer a lower buyer agent commission, are penalized. I know first-hand that it’s true some agents may or may not show properties with lower commissions or they may steer clients away from those properties.

Additionally, both home sellers and buyers claimed they didn’t really understand the way the commissions were structured. Sellers also claimed that they didn’t understand why they should pay for the buyer’s agent, who actively works against the sellers’ favor (I wrote a little bit about this in my post on re-framing the agent. OMG FINALLY this is recognized by more than just me).

I’ve wondered when these lawsuits would start to facilitate broad industry change. On the consumer side, it’s finally happening.

But what about the agent side?

When will suits roll in from the actual real estate agents or brokers?

The NAR is anti-competitive to agents too.

When you become a real estate agent, you have to take a pre-licensing course, log some additional ethics hours and pass a test (the requirements vary state-t0-state, but in a nutshell, that’s how it works).

Several years ago, I took the course. At the end, the instructor quizzed us, “How many of you plan to become a REALTOR?” I thought to myself, well, of course they’re asking that… they’re tracking how many of us will pay their dues…

For the uninitiated, there is a distinction between being a real estate agent and being a REALTOR. To be a Realtor, you must pay dues to the NAR and in exchange, you have access to their MLS system (Multiple Listing Service).

When I was taking the course, the instructors never explicitly stated that real estate agents wouldn’t have access to the MLS. I was under the false belief that any licensed real estate agent could still access the MLS by paying a fee. In my state, this was inaccurate. Only NAR agents, “Realtors”, can use the MLS. If you don’t join, you can’t do your job.

Well, I’d consider that to be anti-competitive.

But is it also an illegal tie-in arrangement? I’m not a lawyer but could this be so?

My state’s NAR is selling me a course and setting me up with a license. But without joining them, I can’t use it?

In order to do my job as a licensed real estate agent, I must join a trade association and abide by their requirements and pay their fees. Otherwise I will be unable to perform for my clients11.

You cannot be a successful real estate agent without accessing the MLS. The MLS is the system that notifies other agents and consumers a home has been listed for sale. The MLS is also where agents access the seller disclosure documents and the listed commission fees. Without access to this system, how does a real estate agent list their client’s home to the masses? How do they tell their buyer what commission the seller’s agent is demanding (see what I did there?) or what the seller is disclosing about the property? They cannot… The real estate agent is legally allowed to help clients buy and sell homes, but, if they don’t pay the NAR, they’re unable to perform their duties.

What About Zillow?

For a while, Zillow allowed agents and homeowners to list on their platform. This was good.

But then, Zillow joined the NAR. After this merge, Zillow started to separate listings on their platform. When buyers search for homes, they no longer saw all of the listings. They only saw the listings “by agent”, which was the default MLS Realtor listings.

There was a big lawsuit over the separation of listing tabs, which so far, hasn’t changed anything. This is wild!

First, Zillow’s default tab/filter is called “By agent”. The other semi-hidden tab (or filter) is called “By owner & other”. Under those current titles, the brokrage that filed the lawsuit, Rex, is absolutely correct that Zillow gives low-visibility to non-NAR/Realtor listings. Rex agents are licensed real estate agents. Their listings should fall under the “By agent” tab. But they do not! Since they are not members of the NAR (not paying dues to the trade association), they fall under the “By owner & other” tab. To buyers, this signals that they are not licensed agents! WTF?!

Essentially, under the current set-up, non-NAR agents are unable to access the real estate platforms home buyers use to search for homes. In my opinion, Zillow made a big mistake joining the NAR and subsequently, making that change to their platform.

I hope the lawsuits keep coming. I don’t think the Rex lawsuit explicitly stated that the current NAR/Zillow system is an illegal tie-in agreement which forces real estate agents to join the NAR. Could they?

I don’t know. Maybe I misunderstand tie-ins…

What do you think about how the real estate industry is set up, looking at it from a real estate agent/broker perspective?

To me, it fails on all fronts… MLS should be able to be accessed by all licensed agents; not just NAR members.

Okay, thanks for reading,

HouseRat Zero

  1. I’m posing this as a hypothetical situation. I am not a real estate agent although I went through the steps of becoming licensed a while back. ↩︎

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