This is the second in a two-part interview with Howard Hanna Real Estate Services CEO Howard “Hoby” Hanna IV. The interview was conducted in the weeks leading up to the independent brokerage’s settlement on May 2 in the Gibson antitrust commission lawsuit. Read the first part HERE.
Howard Hanna was one of more than 90 large brokerages that were not covered under the National Association of Realtors’ $418 million settlement of multiple commission-related antitrust lawsuits nationwide last year, and its CEO is not about to forget it.
Because Howard Hanna was left out of the deal, its company, Hanna Holdings, was left to fight one of those suits. On Friday, after a year of legal feuds, the company announced it had finally reached an agreement to settle the Gibson commission lawsuit, leaving only an antitrust suit brought by homebuyers to resolve.
“They sold the industry down the river on the lawsuits and didn’t protect all their members,” Howard W. “Hoby” Hanna IV told Inman in a phone interview in April before the settlement was made public.
Inman initially reached out to Hanna after NAR decided to keep its controversial Clear Cooperation Policy and added a new Delayed Marketing Exempt Listings category. The CCP requires listing brokers to submit listings to Realtor-affiliated multiple listing services within one business day of publicly marketing them.
But Hanna had much more to say about how he believes NAR’s MLS rules have harmed brokerages that are trying to innovate during a tough housing market and compete against consolidating rivals with public money behind them.
He mentioned not just CCP, but also Internet Data Exchange (IDX), which allow agents and brokers to display each other’s listings on their websites so that consumers have access to a comprehensive set of listings in a market, and Virtual Office Websites (VOW), which allow agents and brokers to display certain listing information if consumers register on their websites.
Hanna told Inman he’s considering leaving NAR and its MLSs, and Inman drilled down on why.
This interview has been edited for length and clarity.
Inman: You’ve obviously been a part of NAR for a long time, so what is it that is now making you rethink that?
Hoby Hanna: Because they sold the industry down the river on the lawsuits and didn’t protect all their members. We, as an individual broker, are tied up in a lawsuit based upon NAR saying here’s how MLSs had to work and putting dictates and even creating Clear Cooperation to begin with and other items which we voted against as a company and as a member.
Do you know of any other big brokerages like yourself that are thinking this way?
I couldn’t believe that a big broker anywhere isn’t thinking this way or feeling this way today. And I think NAR knows that. I’m a believer that there should be a shared database and that in different markets, the brokers should share and know what’s for sale. But putting rules like IDX and VOW rules in place across the country wasn’t necessary, and coming back and putting Clear Cooperation in place when most MLSs, they worked well. There might have been some bad apples, but they took care of themselves.
Clear Cooperation has obviously been very controversial, and it sounds like you’re very against it. Is there a particular reason why?
I think it limited creativity on how somebody markets the home. Clear Cooperation came out of people’s fear that different brokers were doing unique things with their properties [and] with the technology.
IDX opens a role where the MLS is in a B2B situation because now everybody can put each other’s listings all over their website. That’s fine, but there’s companies that are set up to sell our listings [and] they don’t have any listings. They’re monetizing their business off of us [and] our agents procuring the listings.
In the Buffalo, New York, MLS, it was 300 firms last year that didn’t sell a house … but they have websites that our listings are all over. If a customer went there, who are they talking to? What is that person representing about that listing? Are they saying it’s fairly priced, or saying it’s overpriced? Are they giving good representation? I think this industry went too far saying we have to be able to put data on everybody else’s sites, that it has to be clear for everybody.
This is a silly reaction … as opposed to saying, “Hey, local MLSs, if you don’t have good rules and regulations, clean yourself up and don’t make it a national thing.”
As far as this new policy, it sounds like you’re saying it didn’t really go far enough.
They should have killed Clear Cooperation.
The backers of the Clear Cooperation Policy say that big brokers who don’t want the policy are only out for their profits and they want to double-end deals and that all these things with exclusive listings are going to lead to a fragmented market where consumers have to go to multiple different websites to see all the listings that are for sale and they have to call up each brokerage to get a full picture. What do you say to those criticisms?
We still want to cooperate, but we want to make sure that customers who are choosing to sign a contract to work with Howard Hanna are knowing about the Howard Hanna listings from the source quicker, sooner, earlier.
I go back to the criticism of “the bigger brokers want to make more money.” Well, it is why we’re in business. I don’t see that as a criticism. This is still a capitalistic society. Isn’t that why they’re in the business to figure out how to grow and make their business more profitable? That criticism I’ve never quite understood.
I think the idea is that it’s making profit at the expense of consumers. I guess it depends on your attitude toward dual agency and whether you think that’s in the best interest of consumers, but also the idea of consumers being able to see all of the listings in a market and the agent not being able to restrict the listings to just their own circle of people who are likely to be like them.
Where do you go today to see all the listings on the market?
Zillow, Redfin, sites like that, Realtor.com.
You don’t see the exclusives.
Right, so [NextHome CEO] James Dwiggins’ argument is basically that yes, because the exclusives exist, then that is fragmenting the market, and that’s not good for consumers.
If you go to Zillow, which doesn’t operate a brokerage firm that I know of right now, that has agents paying to get the leads, and the consumer finds a listing, clicks on it, and they get an agent from … a ZIP code from two counties away. Is that a good consumer experience? And for the seller, is that a good consumer experience?
If everything is at Zillow, why does it have to be at the brokerage firm that happens to belong to an MLS that has never sold a house in the market?
I think when we mandate rules, we take away creativity. The creativity is gonna come in because Rocket’s gonna change the game with Redfin. And Zillow’s gonna make rules that change the game. Those of us who have been in this real estate brokerage business trying to do a really good job and don’t have everybody’s publicly-traded money behind us, we’re trying to be innovative and be creative and grow our businesses, and somehow creativity is getting penalized.
I want to drill down on exactly what you might be changing. You mentioned Howard Hanna is considering moving to registration in all markets. Any timeline on that particular decision?
Not right now. What I believe we’ll probably end up doing with our site is figure out that better registration experience as a consumer but still allow people to search without registration for those who are just beginning, but make sure they know throughout the online experience that you get maybe better value options, programs, systems, by registering.
We’re going to see how markets change over the next couple of quarters.
You mentioned potentially leaving MLS, leaving NAR. When should I check in with you about that?
It’s challenging enough in the housing market, low inventory and interest rates being higher than necessary, and now who knows what’s going to happen out of tariffs. As an industry, everything from the DOJ [Department of Justice], from the [Sitzer | Burnett] loss in Missouri, it’s all tied to the National Association of Realtors’ “rules.”
And now, even though a customer signed a contract to work with Howard Hanna, they can’t know about your listings before people who didn’t.
Am I leaving tomorrow? No. But I am sitting back and saying NAR has to get its house in order. NAR has to focus on what they do best, which is homeownership advocacy. And I’ll sit back and watch a little bit and see how it plays out.
