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Howard Hanna Real Estate Services CEO Howard “Hoby” Hanna told Inman his decision on Wednesday to send a missive to the National Association of Realtors and more than 70 MLSs informing them that his brokerage no longer considers NAR’s Clear Cooperation Policy binding was all about choice and innovation.
Inman immediately reached out for a phone interview to find out more and the conversation touched on nationwide and local MLS policies, antitrust risk, Zillow’s new private listing rule, possible fines for Howard Hanna brokers, the catalysts behind the CCP, fair housing, and how Howard Hanna’s parent company, Hanna Holdings, will handle CCP compliance by market.
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“This is not about private or exclusive listing but more about trade associations mandating policies upon the industry that eliminate innovation creativity and unique marketing strategies that provide consumer choice regarding how their home is marketed,” Hanna told Inman in an email.
This interview has been edited for length and clarity.
Inman: Will you be having a dialogue with the MLSs that ask for it?
Hoby Hanna: Yeah. What I really think is MLSs should make their own rules in regards to participation that affect their members and have a voice, and not just take a policy that was written up top across the whole country and say, “This is how you have to do business,” and then makes all of us complicit in that form of business if we belong to the MLS.
To me that looks like antitrust, and that looks like we’re all having to do something if we want to participate. I think there should be individual participation rules.
Even in regards to this Zillow policy, Zillow is a broker in almost every MLS. They’re a participant like everybody else. One thing was when they said, “Well, you couldn’t display it on your website without [it] being on Zillow.” Well, that’s a far reach. Then you come back and say, “You can’t market it [on] anything, even if a seller requires it or that listing is banned for life.” It seems like that, in itself, is a pretty far reach and taking away consumer choice.
I’ve even said to some MLS executives, some of them should turn around and say to Zillow, “You can’t be a participant here and have our feed if you’re putting these stipulations on our members’ ability for seller choice.” If Zillow wants to say you can’t be on Zillow, but then they shouldn’t get the IDX feeds that they get everywhere.
The MLSs that said, “We have to follow NAR’s policy,” did they say, “We have to follow the policy, so we will levy fines or suspend members”?
They have not said that. I’m not even sure how they would collect the fines. But their answers were pretty straightforward: “We have our policies. They’re in conjunction with NAR and we expect that if you’re going to be a member here, that you participate to those policies and procedures.”
So what will Hanna Holdings do if its brokers are suspended because they don’t follow the policy, or if they levy fines? Are you going to pay the fines?
We won’t pay the fines. We don’t think our agents should pay the fines if the seller has choice. I’m saying that each MLS should have its own individual policies, and then we, as a broker and our separate franchises and in separate markets, will decide in those markets if we agree with those policies and how we’ll participate.
But if it’s just an adoption of Clear Cooperation, and they want to then turn around and fine on those policies and we have contracts that sellers don’t want to be privy to those policies, and they still want to fine us, we won’t pay the fines. For them, what does that lead to, if we don’t pay the fines? Then, okay, they’re going to say we can’t participate in the MLS? Well, is that really what they want to do? They want to have less inventory in the MLS? Do they want to destroy the MLS?
We could still put everything on our website and say to cooperative brokers, “You guys can come in, look at the homes here, and we’ll still cooperate with you,” because the MLS doesn’t offer cooperation anymore. There’s no offer of compensation; that’s been taken away. Cooperation is no longer offered as per the rulings and NAR settlement, we can’t offer cooperation. You have to find it. You can’t put it in the MLS to find out what it is.
It’s going to be your brokers, your franchisees, they’re going to get a notice saying, “You’re gonna have to pay this fine because you violated this policy,” so are you going to-
They’re going to have to decide individually what their reaction is at a franchise level. At a corporate level, we will decide when we talk to those different MLS executives and they say, “We’ve created our own participation policy, and this is what it is.”
We’ll decide, “Okay, that seems fair to us. That seems logical. You’ve given solutions that aren’t just to the 24-hour rule of Clear Cooperation. You’ve addressed seller choice.” So then we’ll decide individually, “Yes, that seems good to us, so we’ll be a member in good standing and abide by that,” and if there are fines in that case, we’ll pay the fines.
But just somebody blindly adopting NAR’s policy and saying we all have to abide by it, that we just can’t continue to do. That’s what got the industry in its last antitrust case.
It all stems back to MLSs specifically following rules that were mandated by NAR and then no brokers ever took a stance like this, saying, “We disagree with that. We’re separating ourselves from this. We’re giving our sellers and ourselves choice.”
We want to separate ourselves from the edicts of organized real estate.
So if your brokers decide to pay the fines, then that’s fine with you? If they make their agents pay, that’s fine with you?
Yes, they’ll make their overall decision. But as a holding company, we’re making it clear that we do not believe that Clear Cooperation as it exists is in the best interest of the industry or in the best interest of Howard Hanna being an innovative, technology-based leading broker.
We don’t think it captures seller choice if seller choice is disclosed. We do a pretty good job of making sure they understand their options. We think that just everybody blindly [following the policy] just puts too much exposure on future litigation.
You mentioned in the letter that CCP was adopted in response to fear that brokers were pursuing novel marketing strategies and taking advantage of new technologies. Why would NAR fear that?
Well, remember, it wasn’t just NAR. It was NAR’s MLS advisory board. A lot of the people that make up [that board], they’re not the leading brokerage firms in the country. There were people who were worried about Compass’s exclusive listing model. They were worried about programs like our Find It First, which allowed people to come search [listings before they were posted in the MLS]. They were worried about new entrants that said, “I don’t need an MLS.”
It’s just there was so much technology happening and plenty of people got scared of the status quo being disrupted.
So you’re saying it’s not NAR that’s fearing these new strategies, it’s the people on the MLS advisory board and committee?
Which, therefore, NAR sanctioned it, supported it, and said, “We are pushing this down to that three-legged stool,” saying you have to operate with this new rule.
And why would NAR do that?
I don’t know. In 2020, I never understood why they passed Clear Cooperation.
Well, I was there in the meetings at the time, and the big thing seemed to be fair housing.
I heard that too, and I looked at people and said, for example, if Howard Hanna left the MLS and our seller said to us, “We don’t need MLS. We think you guys do a great job, and you’ve got a website, and you’ve agreed to put our listing on HowardHanna.com” and let’s say we agreed to put it on Zillow and Realtor.com. Let’s just say that was our business model. Would that be a violation of fair housing?
And if there’s logic in that, if a seller wants to sell their own home, why don’t they have to put their house on Zillow, or put their house in a multi-list? These multi-lists and Zillow aren’t public utilities. Why does a builder not have to put the house in the multi-list? Are they violating fair housing? I just think that’s like one of those scare tactics.
If you could prove to me that HowardHanna.com doesn’t allow people of color or minorities or those affected by fair housing to look at our website — that doesn’t make sense to me. Maybe I’m wrong. Does that make sense to you that you have to be in the MLS to offer fair housing?
I think the idea at the time was, if you put it in the MLS, it goes out to not just HowardHanna.com but it goes out to all these other brokerage websites. It goes out to all the brokers and agents in the market. And so the maximum number of people will be able to see the listing, and not just the people that know to go to HowardHanna.com or the people that know a Howard Hanna broker or agent.
Ok, but under that same logic, if you’re a homebuilder, they don’t have to be in the MLS, and they don’t share their listings together. They choose if they’re going to put their listings online or partner with Zillow or give a feed.
My argument isn’t about holding all your listings off. It’s not about a three-phase marketing plan. It’s about if a seller wants to have choice, or you can create innovation or somebody in the industry could come up with a better way to display, share, promulgate their business, or somebody doesn’t want to have their house on the market in 24 hours.
It’s these unintended consequences. It’s not about not sharing inventory. It’s just, don’t put such stipulations and rules on it. I don’t think it’s a violation of fair housing. If the government wants to, [it can] say, “We think there should be a public utility, and whether you’re an individual homeowner or builder, developer, Realtor, everybody has to put their listing for sale on the public utility for everybody to see.”
We’re taking this position to distance ourselves a little bit from this organized real estate mandating what everybody else does. We actually think other people should take a hard look.
Do you know if any other brokerages have sent similar letters to NAR or MLSs?
I do not, and I didn’t talk to any brokers prior to doing this. This was our choice and our decision. We haven’t consulted, asked, gone into a coalition. We just said this is where we, as an independent business, feel we need to be.
At the end of the letter, it says Hanna Holdings and its affiliates and franchisees will determine, on a market to market by market basis, whether to require the listing brokers to submit listings on an MLS within one business day of marketing. How will Hanna Holdings determine whether to require that?
We will leave it up independently to our local markets and our franchisees, after discussion with MLSs, and let them make [the decision] but we’re not mandating that they have to operate in that sense. Sort of like we don’t mandate that you have to be a member of the National Association of Realtors to work at Hanna Holdings or any of its subsidiaries.