00:11 Good evening, welcome to the Deerwood Realty show.
00:14 I'm John Schink, founder and managing broker of Deerwood Realty in St. Louis, Missouri.
00:20 We're going to talk about the fight between the National Association
00:25 of Realtors, the Department of Justice, major
00:30 brokerages, franchise brokerages, and how they're trying to get rid of
00:35 a little guy like me.
00:37 They want nothing to do with small brokerages; it's a power play.
00:44 It's one of those things I watch in amazement.
00:48 I'm getting hit from all ends, not to mention the market's terrible
00:54 right now.
00:59 But let's get into it.
01:01 I want to do an overview, then
01:02 we'll go into the granular stuff.
01:05 This is from Mike Del Prete, who follows the online
01:09 brokerage model and understands the history of
01:14 real estate brokerages, how they make money, and how things go.
01:18 We're going to go through the article because it's good.
01:22 He says, while the public debate swirls
01:25 around NAR's Clear Cooperation Policy,
01:28 Compass has built up an exclusive inventory of
01:31 over 7,700 listings.
01:33 Let's talk about Clear Cooperation.
01:36 Basically, if
01:39 we list a property as a real estate agent
01:41 licensed through our association
01:44 with the National Association of Realtors and our MLS's, we have to put a
01:48 listing that we take; it has to be active
01:50 within the MLS within a certain amount
01:52 of time.
01:54 An exclusive
01:55 listing doesn't go on the MLS.
01:59 The reason for the Clear Cooperation
02:04 Policy, which is not perfect,
02:06 is they were trying to avoid blockbusting,
02:14 racial and discrimination issues – it's terrible
02:23 to exclude listings from the general public.
02:26 The Clear Cooperation Policy was designed to make
02:30 it so you couldn't do that.
02:32 Implementation is terrible, but generally, the
02:45 best chance of selling a property
02:47 is through the MLS, as far as
02:50 getting your listing to the millions
02:52 who look at online portals.
02:56 Back in my investor days,
02:59 the first thing they'd say to someone walking
03:03 in the door is, don't put your property on the MLS.
03:08 You don't want people you don't
03:09 know walking through your house; just use our number.
03:14 You avoided price discovery,
03:17 meaning it's not an arms-length transaction.
03:22 People sell
03:26 for less than they could have in the open market.
03:29 That's my
03:30 experience; others may differ.
03:33 Property should be on the
03:38 MLS.
03:39 Anything for sale should be on the
03:40 MLS.
03:41 How you do that is up to you.
03:43 I don't think pocket
03:44 listings or exclusive listings are good
03:46 for the industry.
03:49 Exclusive inventory
03:52 lets agents and
03:53 brokerages control
03:56 their listings and shift power dynamics.
04:02 It's a way
04:03 for agents to get both sides, meaning better margins
04:08 for the brokerage.
04:10 Private exclusive
04:12 listings, unlike coming soon, aren't advertised.
04:15 You need
04:16 a Compass agent for access.
04:20 So now, 7,700
04:21 listings aren't available to the
04:23 public, only to Compass agents.
04:28 Private exclusives are about
04:29 30% of Compass listings; including
04:32 coming soon, that's 35%.
04:36 I don't count coming soon
04:37 as exclusive; in our MLS,
04:43 you can put a coming soon for about
04:46 21 days, so it's in
04:50 the MLS.
04:51 I'm going to drop the coming soon
04:53 part.
04:55 This push encompasses a three-phase strategy, encouraging
04:58 homeowners to start private before the MLS.
05:02 Terrible idea.
05:03 It's resonating.
05:05 55% of new listings in February
05:08 started as a private exclusive or coming soon.
05:10 There's a way to market them:
05:13 "Your listing is so important, Mr.
05:16 Homeowner, it shouldn't go on the MLS;
05:21 it should stay within our area we control."
05:27 There are broad
05:29 implications to exclusive
05:30 inventory, reminiscent of
05:32 video streaming.
05:34 This was a great setup:
05:39 Netflix once contained nearly all streaming content
05:41 and was the only game in town.
05:42 Recently, creators like Disney and Apple launched platforms.
05:47 On one hand, it's more time-consuming
05:50 for consumers to pay multiple services.
05:52 The one-stop shop marketplace is gone.
05:54 On the other hand, consumers have a choice,
05:56 spurring innovation.
06:01 But what about
06:02 profitability and sustainability?
06:04 Can we operate
06:07 with 16 streaming services?
06:11 Video streaming isn't real estate, but it's an interesting thought experiment.
06:15 Exclusive
06:16 inventory is the norm overseas, but I don't care; I'm not overseas.
06:23 In 2021, I
06:25 wrote about exclusive content being the
06:27 top threat to real estate portals.
06:29 In 2019, I wrote about Compasses endgame.
06:31 Compass isn't alone.
06:32 Open Door experimented.
06:35 Open Door gets a free pass here.
06:41 They own the house;
06:43 they bought it and can do what they want.
06:47 That's the difference between Compass
06:51 and Open Door.
06:53 While I
06:54 don't understand Open Doors business
06:56 model—they buy high and sell low, which seems terrible—
07:03 their listings lag, at least in my market.
07:08 They own the house.
07:11 How they
07:12 buy at a lower interest rate
07:13 is another discussion.
07:17 If you own
07:20 a home, you can do what you want.
07:24 If you're a brokerage
07:26 stuck with our rules,
07:28 then I care about
07:31 exclusive listings.
07:31 They're terrible for the industry.
07:34 The bottom line:
07:37 Compass is focused
07:40 on action, building a large
07:41 supply of exclusive inventory.
07:43 This reminds me of the iBuyer craze
07:48 of 5-10 years ago.
07:51 Zillow lost their ass on iBuyers;
07:56 they lost $439 million in a quarter and shut it down.
08:03 Redfin had theirs and shut it down.
08:06 This "tech disruption"
08:11 will bite somebody.
08:13 You can do a fair housing
08:16 violation on people doing exclusive listings.
08:20 It'll be a field
08:22 day for trial lawyers.
08:23 Regardless,
08:27 the rise of exclusive content is an industry needle mover, and things
08:31 are about to get interesting.
08:33 Robert Refkin is founder and
08:41 CEO of Compass.
08:48 They were one of
08:50 the fastest-growing brokerages ever.
08:51 They're number one or
08:53 two right now in total agents.
08:56 They have trouble making money consistently, and
09:00 somebody cynical might argue
09:02 they're just out to disrupt by making profit so small
09:05 only the largest can compete.
09:10 Let's stick to this.
09:13 He wrote this morning in Inman about
09:18 questions Compass agents ask him about the
09:22 1 billion paid for NAR and MLS rules.
09:25 Agents deserve answers.
09:31 Here are the questions; this is a
09:37 fascinating discussion.
09:42 He appreciates Gary Keller's leadership.
09:48 Gary Keller says NAR sold us out.
10:00 NAR sold us out to large brokerages.
10:07 As long as you have the right to your work product, you're okay.
10:12 If an MLS decides you can't choose where your listing goes (realtor.com, Trulia, Zillow),
10:19 you've lost control.
10:21 Anything on the MLS goes to third-party portals.
10:27 Selling to portals was dumb.
10:37 My website isn't as good as Zillow; that's why people use Zillow—it works.
10:47 When you inquire, you get 17 calls in a minute.
10:55 He didn't fully
10:58 appreciate these quotes until the NAR settlement about the 1 billion for MLS rules.
11:08 Agents asked questions he can't answer.
11:13 I'll respond.
11:15 Another agent will respond from D.C.
11:25 Refkin's position is no Clear Cooperation, exclusive listings, which will kill
11:35 small brokerages like mine quickly.
11:41 That's the deal.
11:43 Question one: Why did NAR/MLSs give our listings to portals?
11:51 Why won't the MLS let me write in the listing description that I'm the listing agent (for transparency)?
11:59 On Zillow, I'm the top agent if I'm signed in; otherwise, it goes to whoever advertises in that ZIP code.
12:08 I don't know why they give it away; it seems stupid.
12:14 Why write that you're the listing agent when Zillow already shows that?
12:32 Portals get buyers to look at houses.
12:42 They don't care about the listing agent; you've got your cut.
12:46 The NAR settlement means you can go after both sides now.
13:05 Two: Why won't the MLS let agents watermark photos when the MLS watermarks them?
13:12 That's been in a lawsuit.
13:15 If I have property photos, they aren't mine; I seed them to the MLS.
13:22 I spend thousands on photos for some properties.
13:38 If a seller cancels, are the photos mine, or do the sellers get MLS access?
13:49 Three: Why am I forced to join three associations?
13:53 Good question.
13:56 Four: Are the lawsuits against NAR justified?
14:04 How could maximum exposure equal maximum price be true, or the MLS study claiming homes sell for 17.5% more be true, when
14:12 developers sold 300,000 homes off the MLS last year?
14:20 Builders sell their product through their agents to avoid commissions.
14:32 Why don't developers have to follow Clear Cooperation?
14:40 They own their properties.
14:43 How many homeowners know Clear Cooperation forces them to give the MLS their listing
14:49 after one day of marketing?
14:51 It's in the agreement.
14:53 You can opt out, but then I can't market a certain way.
15:03 Cooperation through the MLS was for agents to share listings with other agents.
15:11 Why aren't agents forced to cooperate with portals that sell leads, not homes?
15:15 Why are buyer inquiries sold
15:18 to the highest bidder instead of the agent who knows the home best?
15:21 It's never been about the listing agent.
15:24 Why is the DOJ investigating Clear Cooperation?
15:32 The DOJ believes Clear Cooperation restricts seller choices and precludes competition.
15:43 The DOJ asked NAR to allow homeowners 60 days to list off the MLS.
15:48 Why isn't NAR doing that?
15:54 I don't want to get into that.
15:59 My client asked to hide price drop history and days on market.
16:03 Why won't my MLS allow that?
16:08 Price drops mean you've overpriced the property; days on the market is the same.
16:19 You don't like the MLS; you want exclusive listings and both sides of the deal.
16:28 MLS says if you don't like our rules, don't be a member.
16:32 Agents need MLS access.
16:34 Rules like Clear Cooperation prevent competition from alternative systems.
16:45 The law says this is what the MLS has to be.
16:49 The industry will change; I have no doubt.
16:56 Khil El-Goul is an agent in
17:02 Washington D.C.
17:04 Agents deal with the public daily; brokers like Refkin don't.
17:23 People on the ground are important.
17:26 This whole settlement and Clear Cooperation suck.
17:34 NAR has a problem.
17:40 It's not a good time to be in the industry.
17:43 His answer to question one: Consumers want easy access.
17:53 Zillow and Redfin filled that demand; sellers want to be on those platforms.
18:02 Two: Why won't the MLS let agents watermark?
18:02 He says consistency.
18:09 Three: Why am I forced to join three associations?
18:13 Without it, the industry would be unethical (blockbusting, steering, discrimination).
18:21 True, but do we need three?
18:23 Four: How could maximum exposure equal maximum price be true, or the MLS study claiming homes sell for 17.5% more be true?
18:34 Builder representatives list on the MLS for exposure.
18:37 The 17% premium is real.
18:40 This is misleading; show me a builder who doesn't use the MLS.
18:48 Five: Why don't developers have to follow Clear Cooperation?
18:54 Khil's answer: Builders sell their homes and have their best interest in mind.
18:59 Agents have a conflict of interest keeping listings in-house.
19:03 That's the right answer; they own their listings.
19:07 Six: How many homeowners know Clear Cooperation forces them to give the MLS their listing after one day of marketing?
19:14 If agents do their job, sellers know upfront.
19:19 99% want maximum exposure.
19:27 Seven: Cooperation was designed for agents to share listings with agents.
19:34 He says it was answered in number one.
19:36 The system isn't perfect, but consumers want an open marketplace (portals provide that).
19:42 They need to make money.
19:44 Clear Cooperation is messed up and should

19:46 should be fixed, but it's not easy.
19:54 Why is the DOJ investigating NAR's Clear Cooperation policy?
19:56 The DOJ opposes office exclusives because they limit competition.
20:00 The DOJ wants decoupling of commission, but Compass advertises seller-paid commissions.
20:07 That was a dig.
20:13 Client asked to hide price drop history and days on market; why won't the MLS allow it?
20:19 Clients ask things we can't do; we have rules.
20:23 Sellers are also buyers and want transparency.
20:27 We get questions about things we can't do.
20:34 MLS says if you don't like our rules, don't be a member.
20:39 I thought sellers made more money off the MLS.
20:41 Only if you can't double-end a deal in-house will you put it on the MLS.
20:48 This is about double-dipping for brokerages.
20:53 It benefits Compass if their agents know about a deal.
21:01 Here's more from him:
21:03 Compass CEO Robert Refkin is pushing a blatant lie.
21:06 He claims builders sold 300,000 homes off the MLS.
21:10 That's misleading; builders list representative homes on the MLS, not every lot.
21:16 Builders maximize exposure.
21:22 He's misleading sellers, coaching agents to restrict listings to Compass agents.
21:30 This is false and unethical.
21:33 He's right.
21:39 New construction listings show a model of the home.
21:41 A company names their developments after wine.
21:53 Houses are named after wine too.
22:01 You'll see that online; you can customize it when you talk to the builder and pick the lot.
22:10 We need to acknowledge that people advance their motives
22:18 and twist information to fit their narrative.
22:23 The information can still be correct; someone just twists it to work.
22:34 Here he is again.
22:39 Refkin tweeted about ethical duties.
22:45 This agent says costs will skyrocket if Refkin gets his way with repealing Clear Cooperation.
22:52 He was recruited by Compass with a seven-figure offer but passed it up.
22:59 He may reconsider if Refkin gets his way.
23:00 This guy sells a lot of houses if Compass offered him seven figures.
23:06 He considered it but learned he couldn't lower his commission or offer buyer rebates to compete.
23:13 Commissions have always been negotiable, despite what Compus says.
23:19 Compus has almost 20% market share and encourages agents to list properties privately, restricting access to Compass agents.
23:28 This creates a shadow inventory that benefits Compass and their buyer clients.
23:33 If Clear Cooperation goes away, many agents may join Compass for this competitive advantage.
23:41 Smaller brokerages can't match that.
23:43 Compass will grow its market share, gaining pricing power and raising costs for buyers and sellers.
23:52 The pitch: sign this buyer agency contract to see off-market homes, but don't expect a lower fee.
23:57 You can't see affordable options.
24:01 They probably won't show you houses outside their network.
24:06 Lack of competition hurts buyers and sellers, creating an unscrupulous, non-transparent environment.
24:19 Someone from Compass reached out to Khil.
24:24 The future: real estate listings shared in secret agent-only circles.
24:30 Buyers forced to pledge brokerage loyalty, only approved platforms allowed to display homes.
24:35 What dystopian, anti-competitive nightmare is this?
24:41 It's absolutely anti-competitive and a nightmare; it will destroy most brokerages.
24:47 We need many brokerages to compete.
24:49 Someone from Compass says they want to explain why it isn't a false narrative.
24:55 Repeating something doesn't make it true or best for sellers.
25:01 Imagine agents sharing listing info privately for price discovery, like a focus group before launch.
25:10 Why do that?
25:12 In a hot market, properties sell in a day with multiple offers in hours.
25:19 I don't need price discovery; the market does it.
25:23 I need to get my listing out to the most people possible.
25:30 The property goes to the public, with the seller's agent listed as the contact.
25:38 The agent presents the home's nuances to colleagues and the public.
25:41 Then we syndicate to third-party aggregators that preserve the seller's narrative.
25:51 The exclusive listing agent handles this and pays their service.
25:55 This is a win-win for everyone, especially the seller.
25:59 Your narrative makes me think you're an expert on aggregator sites that hide the listing agent's info.
26:04 How is it right for the listing agent/seller to sell their home?
26:09 There's a disconnect.
26:10 Compass thinks they should run things.
26:13 They'll take all listings, keep them in-house, and sell them to Compass agents.
26:21 Everyone will want to be part of Compass.
26:27 Compass doesn't understand anything against that.
26:35 It's fascinating to be in my position.
26:38 When Compass came to St. Louis, they bought agents.
26:45 That's how they grew quickly.
26:48 I have no problem with that; that's the market.
26:53 People like to be flattered.
26:57 I understand Clear Cooperation is terrible as set up.
27:03 MLSs are heavy-handed, but they're being sued and forced to implement procedures.
27:18 They're supposed to enforce the buyer agency agreement.
27:20 It's madness.
27:24 There are problems.
27:27 How do buyers/sellers protect themselves?
27:31 It's obvious you're hurting yourself if you don't use the MLS.
27:39 After 20 years in the business, that's how it is.
27:46 If you don't get on the MLS, you're in a bad situation.
27:48 You can argue that if your property was overpriced and on the market for 200+ days...
27:56 I see houses on the market for 600-700+ days.
28:00 You've missed on the price and wasted everyone's time.
28:04 Exclusive listings won't fix that.
28:09 Let me know what you think.
28:13 This won't go away; like the NAR settlement, it'll bite at your ankles.
28:22 I'd like to know your thoughts.
28:27 I'm going to head out; this has been long.
28:31 I wanted to go over this; it was interesting.
28:34 The links are in the description, so I don't misrepresent anyone.
28:42 Thank you for watching and listening.
28:44 I'll catch you on the next one.