Should lockboxes be mandatory?

NAR revisiting rule governing 'optional' MLS, association services

Editor’s note: This story has been updated to correct that while some Realtor associations and MLSs want all of their members to pay for lockbox services, those members would not be required to use the devices. The subhead of the story as originally published stated that the NAR policy under review prohibits MLSs and associations from requiring the use of lockboxes. The policy only prohibits MLSs and associations from requiring that members pay for lockbox services.   

ORLANDO, Fla. — The National Association of Realtors is considering whether multiple listing services and Realtor associations will be allowed to require that their members pay for some services that are now considered optional, such as lockboxes.

At least three MLSs have notified NAR of their desire to require all of their subscribers to pay for lockbox services, citing security issues when members don’t use the devices, and potential cost savings from universal member participation.

A policy adopted by NAR in 1996 to curb potential abuses of authority by MLSs and local Realtor associations limits the services that can be included in member dues. Products and services are defined as either "core," "basic" or "optional."

Dan Coffey, broker-owner of RE/MAX Harbor Country and Shore Realty Inc., said many MLSs already require members to pay for lockbox services.

"The train has left the station," Coffey told members of NAR’s Multiple Listing Issues and Policies Committee. "Just about every MLS is already doing this — I don’t think they read the (rule) book."

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Coffey — a former president of the Michigan Association of Realtors — belongs to the Southwestern Michigan Association of Realtors, the first to raise the issue with NAR.

Although only three MLSs have officially weighed in with NAR in favor of such a change, "there are many more than three associations that support this move to make lockboxes a basic service," said Dale Zahn, CEO of the West Michigan Lakeshore Association of Realtors..

Categorizing lockboxes as a "basic" service and requiring that all MLS subscribers pay for them facilitates cooperation between members and provides better security for home sellers, proponents say.

House keys kept in real estate offices can be copied, and combinations shared. Electronic lockboxes can be used only by MLS and association members, reducing the likelihood of unauthorized entries.

"It’s the local association’s choice to do what it wants to do — to provide the package that it thinks members like," Zahn added. If members don’t like it, "they can find another association … it’s board of choice."

But Jim Haisler, CEO of the Crystal Lake, Ill.-based Heartland Realtor Organization, worried that large regional MLSs might adopt policies that not all of the associations they serve would agree with.

"I’m part of a large regional (MLS) serving 11 associations," Haisler said, referring to Lisle, Ill.-based Midwest Real Estate Data LLC (MRED), one of the nation’s largest MLSs. "I’m worried our MLS might be dictating to the 11 associations, (and) have some sort of governance over the associations."

Cathy Libby, operations manager of Maine’s statewide MLS, Maine Real Estate Information System Inc., suggested that if NAR is considering whether to allow MLSs and associations to classify lockboxes as required services, it should also review whether other recent innovations like transaction management software, e-signatures and agent websites could also be classified as basic, required services.

Rather than recommend policy changes on lockboxes alone to NAR’s board of directors, the committee adopted a motion Saturday to review whether more sweeping changes to the 1996 policy statement are warranted.

The committee informed the board of directors that MLS Policy Statement 7.57, "Categorization of MLS Services, Information and Products," will be "reviewed and revised, taking into account changes in technology and the real estate business" since the policy was adopted in 1996.

"Integral to this process will be consideration of whether, and how, the costs of providing lockbox equipment to MLS participants and subscribers (where lockboxes are an activity of MLSs) or to association members (where lockboxes are an activity of associations of Realtors) can be included in whole or in part in MLS dues and fees, or in Realtor dues," the committee said in a report to the board Monday. "This analysis will also take into account the existing prohibition in the NAR bylaws on including the costs of property optional services in association dues."

Last year, NAR boosted its majority stake in SentriLock LLC, a lockbox company that had about a 20 percent share of the market at the time, becoming sole owner of the company.  

NAR’s staff liaison to the Multiple Listing Issues and Policies Committee, Cliff Niersbach, said that the lockbox issue presents a good opportunity to take a look at other services, and find "the best way to balance MLSs’ financial well-being with the rights of participants to decide what they really need to best serve their customers."


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