At Tuesday’s CMLS Brings It To The Table event, held just before the National Association of Realtors’ midyear conference, real estate leaders sounded the alarm.

WASHINGTON — Before the U.S. Department of Justice and the Federal Trade Commission held a workshop on real estate competition last year, Council of Multiple Listing Services CEO Denee Evans participated in seven prep calls in which DOJ officials repeatedly asked one question: “What does this do for the consumer?”

At Tuesday’s CMLS Brings It To The Table event, held just before the National Association of Realtors’ midyear conference officially kicked off, Evans and other real estate leaders sounded the alarm: the business models of some real estate brokerages are putting profits first, not consumers, and that risks upending the cooperation that has been a mainstay in the U.S. real estate industry for decades.

Denee Evans

“Cooperation is the heart and soul of our industry, but today I believe it’s at risk,” Evans told hundreds of MLS executives attending the event.

The way broker and agent competitors cooperate — listing agents offering part of the sales commission in the MLS if a buyer’s agent brings a buyer — ensures that every consumer has access to an efficient market where sellers get maximum exposure and buyers can see every home for sale, according to Evans.

“Over the last few months I’ve been concerned with our environment of competition, not from outsiders, but actually from within and specifically the brokerage community,” Evans said.

“Their drive for a competitive advantage, for a market differentiator, for market share, I really believe it’s sort of going after the heart of our industry and I’m a little concerned. I believe it’s shortsighted and not necessarily in the best interest of the consumer.

“I think that also sets us up for a perfect opportunity for a heavy hand to come in and possibly tell us how we have to operate in our industry, not allowing us to help shape what it looks like.”

Even as the real estate industry changes, the goal of MLSs must remain the same: to help consumers — friends, family, neighbors — achieve the American Dream of homeownership, she added.

But there are cracks in the MLS system — some longstanding, some brand new — that are opening up into yawning chasms.

Brian Boero of marketing and design agency 1000watt, which created CMLS’ “Making the Market Work” campaign, pointed to iBuyers that purchase homes outside of the MLS, lawsuits challenging buyer broker commissions, listings such as Compass Exclusives that appear on the brokerage site before the MLS, private pocket listing groups such as Top Agent Network, and Redfin’s new option to cut out buyer’s agents.

“The very fabric that binds this industry together is starting to show a little bit of strain. I haven’t seen this before and I’ve been around this industry since 1997,” Boero told attendees, pointing to an April article by Inman publisher Brad Inman about unraveling cooperation between brokers.

Brian Boero

He compared the atmosphere in the industry today to 3 a.m. on a Black Friday after someone has just smashed a window at the local Walmart.

“It’s sort of a free-for-all. We have people just coming in and looting in the industry, whether they’re outsiders, whether they’re lawyers, whether they’re people who are saying ‘It all needs to be torn down and rebuilt,’ there’s sort of this feeling of it just being open season on everything that you value and we value in the industry,” Boero said.

In an open letter to CMLS members, Evans urged MLSs to improve by articulating the value of the MLS to their customers, partners and consumers.

“Raise awareness that off-MLS, coming soon, pocket-listing, pre-MLS, and other delayed inventory access nomenclatures are not in the best interest of the consumer,” Evans wrote last week.

“The thing to think about here is fair housing can be an issue [with pocket listings], how are we going to address that?” Evans told attendees.

“I think the question is how can we better serve our brokers — there’s something they’re looking for in this, how can we better support them? But I just don’t necessarily believe that it’s this [pocket listings] because that’s not in the best interest of [someone like] my mom if she can’t actually get access to what’s the available inventory without having to know the 20 different places to go to get it.”

Got story?

Evans, Boero and other MLS leaders urged attendees to tell their story — before someone else does.

Chris Carrillo

“This is a pivotal time in our industry. We have to continue to talk about our value,” Metro MLS CEO Chris Carrillo told attendees.

“The fact that we facilitate competition amongst a group of large professionals is so vitally important to talk about our value proposition because if you’re not going to tell it, somebody else is going to tell you your value. They’re going to tell you our collective work and that’s a scary proposition.”

An MLS’s story will draw and bind people to that MLS, according to Boero.

“What is the thing that is going to illuminate your value while others are questioning it? It’s going to be your story,” Boero said.

“It’s going to be you expressing in your markets why the MLS is worth protecting, why the MLS is worth valuing, and why others should fight with you.”

He specified that he was not talking about innovations such as data standards, “front end of choice,” consolidation, data sharing or artificial intelligence.

“These are tactics. These are strategies. These things are not going to preserve the efficient real estate market that we value,” Boero said.

The real estate industry knows the power of good stories because it is surrounded by them, according to Boero.

Keller Williams is not a technology play, it’s a story, Boero said, showing a picture of Gary Keller.

“It is a wonderful story told really, really well. This is a story of peril and rescue, of redemption, of salvation. Keller Williams today is a great story,” Boero said.

Similarly, “Compass is a story of confidence in uncertain times,” he said. “Agents don’t go to Compass mostly for the money. They go because Compass is telling them it’s all going to be OK. When people are telling them commissions are going down, Robert Reffkin is telling them,  ‘Commissions should be 10 percent. Come with me.'”

And Zillow’s story has been the same from its beginning 15 years ago: “Power to the people. That’s the story that’s at the heart of Zillow,” Boero said.

“We don’t have to agree with any of these stories, but they work,” he added.

He encouraged MLS execs to take the language that CMLS has provided in its “Making the Market Work” campaign and make it their own.

Right now, many MLSs are just their software, he said, noting that his wife in the San Francisco Bay Area technically belongs to bridgeMLS but refers to her MLS by the name of the third-party provided system, Paragon.

“Tell [your subscribers] why they should care. Tell them you are more than something they should take for granted,” he said.

“It starts with clear language. Sit down with your board and staff and write it out,” he added.

While some may consider the stories told by some of the aforementioned real estate firms to be “a crock of crap,” MLSs have the advantage of being able to tell the truth, according to Boero.

“You have value. You’re not selling BS. I don’t think any of us here think we’re selling something that isn’t true,” he said.

Email Andrea V. Brambila.

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