The multiple listing service invited Compass to discuss a policy that bans off-market listings but said it’s not afraid of a lawsuit and won’t back down.

One day after Compass threatened to take legal action against Bright MLS over a new pocket listing ban, the latter organization said it won’t back down and isn’t afraid of a lawsuit.

Brian Donnellan

Bright MLS CEO Brian Donnellan laid out his defense of the ban — which requires agents to post listings to the multiple listing service (MLS) — in a letter that he sent to Compass Thursday, and which was provided to Inman. The letter argues that pocket listings “are antithetical to the core of Bright’s mission” and that they “foment exclusion and discrimination.”

“The center of the policy is Bright’s belief that the practice of marketing properties off the MLS, known as ‘pocket listings,’ puts brokers’ own interests before consumers, while creating the appearance of (and enabling) fair housing law violations,” Donnellan argues in the letter.

The comments are a direct response to Compass’ own “pre-litigation letter,” which the brokerage sent to Bright MLS earlier this week. In that letter, Compass’ executive Cory Perkins argued that banning pocket listings is “unlawful, anti-consumer and anti-competitive.”

Cory Perkins

Significantly, Perkins also states in his letter that Compass is prepared to take legal action to fight Bright MLS’s new pocket listing ban.

Bright MLS, however, is not afraid of legal action.

In a conversation with Inman Thursday, several Bright MLS executives said that their policy was the result of a careful deliberation process and that they would not be abandoning it.

“We didn’t jump into this policy without thinking about it a lot and without doing due diligence,” Bright MLS chair Jon Coile said. “We’re not worried about any threatened lawsuits.”

Coile went on to say that Compass’ claims, which touch on anti-trust issues, are “specious arguments,” adding that “we’re not impinging somebody’s business model, if they don’t want to be a part of it we’d be sorry to see them go.”

“We’re not going to back away from this policy,” Coile added. “There’s a 100 percent commitment from our board.”

Donnellan added that the policy does the opposite of what Compass claims, and suggested the brokerage either misunderstood or misrepresented what was actually going on.

“We do feel like they’ve confused a lot of things in the letter,” he told Inman. “I don’t think they understand quite honestly what the pocket listing is and how it impacts the consumer.”

Compass did not immediately provide a comment to Inman regarding Bright MLS’s letter, and it is unclear what might happen next between the two real estate giants.

In any case, the entire conflict has its origins in early October, when the National Association of Realtors (NAR) revealed it was considering a policy that would require agents to post any listings that they publicly market to their respective MLSs. The policy would effectively ban pocket and off-market listings, and has drawn both praise and criticism from leading figures in the industry.

The NAR policy is still under consideration, but shortly after it was announced Bright MLS adopted a slightly edited version of the proposal as a rule for its roughly 95,000 Mid-Atlantic region members. Beginning in December, Bright MLS members who break the new rule will also face $5,000 fines.

In his letter Thursday, Donnellan says that Bright MLS actually reached out to Compass multiple times for feedback before debuting the policy. One Compass executive responded by saying the brokerage had no opinion on the rule, while another said he “agreed with the core tenets of the policy,” Donnellan writes.

The letter goes on to argue that requiring Bright MLS members to post their listings facilitates a market that benefits consumers, and that it thwarts potential discrimination against certain demographics of buyers.

“We believe Pocket Listings are bad for the market, bad for sellers, and bad for buyers,” Donnellan writes in the letter.

He then goes on to respond specifically to arguments raised in Compass’ letter.

Speaking with Inman, Donnellan added that while the new rule will remain in place, “our policies are always evolving” and that leaders at Bright MLS are currently working on some “changes to our policies” in response to member concerns.

The letter ultimately concludes by inviting members of Compass to meet to talk about the issue.

“We believe the requests in your letter are worthy of further discussion,” Donnellan writes, “so that we can be sure we are considering them appropriately.”

Read the full letter from Bright MLS and Donnellan below: 

Email Jim Dalrymple II

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