In a recent Inman article, Robert Refkin made several claims about how the Clear Cooperation Rule violates the National Association of REALTORS Code of Ethics and state laws. He almost hit a home run by misstating the Code of Ethics requirements and using logical fallacies to support his arguments.
I get that Mr. Refkin is inconvenienced by the Clear Cooperation rule and is using the industry’s confusion, given the recent litigation, to make his arguments. Still, the rule encourages competition in the real estate marketplace and is incredibly pro-consumer.
When is the Public Not the Public?
‘When representing a buyer, seller, landlord, tenant, or other client as an agent, Realtors pledge themselves to protect and promote the interests of their client.”
Mr. Refkin – quoting the first Article of the Code of ethics tries to make the argument that it is somehow not in the best interests of the client to market their home to the broadest market possible. He argues that there is a conflict without actually stating one. Instead he posits that a client might somehow want to “market their homes publicly for more than one day without placing them on the MLS”. I frankly don’t understand what he means. Is he suggesting that marketing a property without exposing it to the public is somehow public marketing? Or is he implying that marketing the property publicly to a smaller segment of the public, excluding competitors and some members of the public, is beneficial? I argue that such an action is more likely a violation of this article than Mr. Refkin’s suggestion.
When Less is More (Is it really?)
He then doubles down on his lack of logic by stating ‘Many clients don’t believe that more exposure equals a higher price.“. There are many people who believe that the earth is flat (10% of a group surveyed according to the University of New Hampshire). That belief doesn’t make them right, nor does it relieve a real estate agent from protecting and promoting their interests by explaining the demonstrated fact that exposure through the MLS brings a significantly higher price to the seller.
Mr. Refkin then uses a logical fallacy called a false equivalency when he asks “If more exposure equals a higher price, why do home builders sell hundreds of thousands of homes off-MLS each year? f more exposure equals a higher price, why do hundreds of thousands of companies not sell their products on Amazon, where there is the most exposure?” ( A false equivalency is a logical fallacy in which one assumes or asserts that two things are the same or equal when, while alike in some ways, they are not sufficiently similar)
In both of these examples, the seller has a fixed product and fixed marketing outlets, unlike the residential resale market, where each property differs from the next. In the case of builders, there are as many (or more, depending on the market) builders who list their properties on the MLS as do not. The argument about retailers fails because Amazon is a platform different from the MLS, which has nothing in common other than a search feature and being a digital platform. These vendors determine their need to use Amazon based on their individual marketing metrics, such as the cost of customer acquisition, the cost of goods and services, and the cost of sale, factors that home sellers don’t need to consider.
The Non-Sequiturs
“Realtors shall cooperate with other brokers except when cooperation is not in the client’s best interest.”
Again, Mr. Refkin makes a statement and backs it up with supposed but unfounded and unsupported belief. In high school, my teacher would have called that a non sequitur (a conclusion or reply that doesn’t follow logically from the previous statement). However, he suggests a conflict (there is not) and lists things that have no connection with cooperation between real estate agents.
Let’s take them one at a time;
Point One– The sale involves sensitive family legal arrangements, This is so vague its almost non-existent. If their legal arrangement is unrelated to the property, that arrangement doesn’t need to be discussed at any point in the transaction. If it impacts the title, usage, or the purchaser’s ability to finance the property, it needs to be disclosed, and the sellers need to overcome their sensitivity. In any event, this has nothing to do with whether the agent showing the property is employed by the listing company and thus has nothing to do with cooperation.
Point Two– An estate sale involves parties not ready to acknowledge the sale publicly. Once again his objection is vague and has nothing to do with cooperation. If the property is an estate sale, the seller’s death and their estate’s existence are publicly acknowledged in most places. There are obituaries, probate offices, etc. Again, this has nothing to do with whether the agent showing the property is employed by the listing company and thus has nothing to do with cooperation.
Point Three–High-profile clients and law enforcement officials need discretion due to privacy concerns related to security or public image. This is my favorite Red Herring -(something intended to divert attention from the matter at hand). The owners of real property are listed in public records. Anyone wishing to conceal their identity can easily use a straw party or an LLC to conceal their true names, and celebrity homes for sale are news articles, not confidential matters. But most importantly, this has nothing to do with whether the agent showing the property is employed by the listing company and thus has nothing to do with cooperation.
Do you want to know a Secret?
“Realtors shall not knowingly… use confidential information of clients to the disadvantage of clients; or use confidential information of clients for the REALTOR®’s advantage or the advantage of third parties unless clients consent after full disclosure”
This one was a real head-scratcher. Mr. Refkin leaves the realm failed agency relationships or loose lips sinking ships of family secrets and goes full conspiracy theory, giving the following rationale: “It can be easily argued by homeowners under state laws that information they deem confidential is being used to advantage the MLS, a third party that sells their data, and that the Clear Cooperation Policy limits the homeowners’ ability to provide explicit and informed consent to use such information.”
Actually, no, it can’t! First, the Code of Ethics is a voluntary obligation of the National Association of REALTORS members, not businesses like the various MLS organizations in the US. Secondly, not all MLSs sell data. Thirdly, Mr. Refkin is not privy to all of the listing contracts in the country and has no idea what permissions, explicit or implicit, sellers give their agents. What information is he concerned about, and who is he worried about deeming that data confidential? The seller? The examples he uses include exterior photos of the property and the addresses of the property – the first you can find on Google Maps, and the second is public information found on tax maps municipal records, and is anything but confidential information
Clear Cooperation and Competition
Mr. Refkin and his arguments are victims of confirmation bias in his reading of the Code. His preconception that, somehow, there is logic in the concept that a seller can have a better experience and a more successful outcome (as he defines it) by limiting the ability of some consumers to buy their home. It just isn’t, so. It is not by accident that exclusive and excludes find their roots in the same Latin verb, “excludere,” which means “to shut out” or “to close off.” And with the exception of ill-reasoned arguments like the ones he makes in his Inman Article, no one has ever articulated a benefit to the seller as clearly as one can articulate the benefit to the agent or company that wants to shut out or close off a share of the market from their competitors. I can’t imagine a more anti-competitive structure than a private listing network, whether it is internal to a company or a club designed to exclude competitors (unlike the MLS, which welcomes competitors and provides an arena for each competitor to test their business against each other to the eventual benefit of the consumer.
Clear Competition is a pro-consumer and pro-competition rule that increases the ability of the buyer to locate properties to purchase and the seller to find the largest pool of buyers for their property. It assures that the most significant amount of inventory is made available to the greatest number of business models and generates reliable data to be used by new startups and existing businesses in not only the resale business but also every related business or business model/ Competition is enabled and encouraged to test a variety of competitive business models.