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This story will be followed later today with an interview with Howard Hanna Real Estate Services CEO Howard “Hoby” Hanna IV. Check back in a little bit.
Howard Hanna Real Estate Services is drawing a line in the sand.
On Wednesday evening, company CEO Howard “Hoby” Hanna IV sent a letter to the National Association of Realtors and more than 70 multiple listing services the brokerage belongs to, informing them it will no longer consider itself bound by the organization’s Clear Cooperation Policy, Inman has learned exclusively.
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The policy requires brokers to submit listings to the Realtor-affiliated MLSs they belong to within one business day of marketing to the public. After months of consideration and vigorous debate across the industry, NAR chose in March to keep the policy as-is while adding a new delayed marketing option for sellers.
But it wasn’t enough. In the letter, Hanna describes Clear Cooperation as “bad policy” that Hanna Holdings — Howard Hanna’s parent company — never agreed to and voted against when it was adopted in 2020. “It deters innovation in the industry by restricting how Realtors market homes,” he wrote in the letter.
“Indeed, it was adopted in response to a fear that brokers were pursuing novel marketing strategies and taking advantage of new technologies. Stamping down on that innovation harms brokerages and it harms their customers.”
NAR, the letter continues, should not dictate how brokerages conduct business.
“Hanna Holdings does not consider the Clear Cooperation Policy binding and, accordingly, no Hanna Holdings affiliate or franchisee will adhere to the policy as a matter of course,” Hanna wrote.
“Instead, Hanna Holdings and its affiliates and franchisees will determine on a market-by-market basis whether to require their listing brokers to submit listings on a multiple listing service within one business day of marketing the property to the public.
“It will make these decisions based on its own business interests and independent of NAR and of any other brokerage.”
In a statement, a NAR spokesperson told Inman, “Clear Cooperation remains a mandatory policy, and MLSs are responsible for enforcing MLS policies. By joining a Realtor association-owned MLS, participants and subscribers agree to comply with the MLS rules and regulations.”
NAR did not respond to questions asking whether there will be any consequences for the company or its brokers if they don’t follow the policy, whether NAR will be taking any action as a result of the letter, whether any other brokerages have informed NAR they won’t follow the mandate, whether NAR had responded to Hanna’s letter and when NAR planned to respond.
Hanna told Inman in a phone interview that he called NAR CEO Nykia Wright before sending her and NAR’s chief legal counsel the letter and said it was “a very cordial call.”
“I said, ‘I just felt that [it was] probably better to make you aware of the situation, rather than just getting a blind letter,’ and she appreciated the call ahead of time, but we haven’t heard anything back,” Hanna said.
He said some MLS executives, such as those at West Penn MLS in Pennsylvania, Bright MLS in the Mid-Atlantic region and MLS Now in Ohio, had responded that they “want to have some dialogue,” while others, such as the Charlottesville Area Association of Realtors MLS in Virginia and a small MLS in North Carolina, had said “that they have to do whatever NAR tells them.”
Hanna told Inman that that doesn’t make sense to him.
“We have to make independent decisions, not just follow suit,” he said. “That’s what gets industries in trouble.”
Looming large in Hanna’s mind is that Howard Hanna was one of more than 90 large brokerages that were not covered under NAR’s $418 million settlement of multiple commission-related antitrust lawsuits nationwide last year, which meant that the company had to fight, and then settle, litigation it otherwise would not have.
Hanna believes MLSs should make their own participation rules rather than adopting a nationwide policy from NAR that mandates a particular way of doing business.
“[That] makes all of us complicit in that form of business if we belong to MLS,” he said. “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.”
None of the MLSs who said they had to follow NAR’s rules had thus far threatened fines, according to Hanna. But MLSs across the country have instituted hefty fines, some in the thousands of dollars, for violations of the CCP.
“We won’t pay the fines,” Hanna said. “We don’t think our agents should pay the fines if a seller has choice.
“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?”
Hanna has previously said his company was considering leaving the MLS due to NAR’s mandatory MLS policies.
“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,” Hanna said.
The company would leave it up to its brokers whether to follow the CCP and whether to pay the fines or require their agents to pay the fines if they choose not to, according to Hanna.
“They make their overall decision,” Hanna said.
“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. And we think that just everybody blindly [following the policy] just puts too much exposure on future litigation.”
Read the letter (re-load page if document is not visible):
