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There’s the story, and then there’s the story behind the story.
The headlines read “National Association of Realtors overturns ‘no-commingling’ rule.” That sounds like a big story — an influential national organization just changed a policy that could affect millions of agents and consumers. But looking at it more closely, the headline might as well have read “NAR changes policy in attempt to show relevance.”
The story behind this story is actually the “portal war” playing out between Zillow, Compass and Redfin, along with NAR’s attempt to be a relevant player in that fight. Think of it like a monster movie where Godzilla, King Kong and Mothra (Zillow, Compass and Redfin) are going at it, knocking down buildings, setting things on fire … meanwhile, NAR is the reporter in the foreground saying, “Tokyo is burning.”
Sure, the reporter is an important character to explain what’s going on, but that reporter isn’t making it onto the movie poster.
NAR’s optional “No-Commingling Rule” (NCR) prohibited MLS listings from being displayed alongside non-MLS listings. Now, forgive me if I’m being cynical, but it’s pretty clear the purpose of this “segregation policy” was to keep MLSs and listing platforms from cannibalizing and chipping away at the dominance of the Realtor-controlled listings.
Keep in mind, the policy was never “mandatory,” it was “optional,” which hints at the behind-the-scenes power struggles back in 2005 when the policy was implemented, which set the stage for today’s portal wars some 20 years later.
Back in the early 2000s, the internet was still a shiny new object. Most people were connecting to the “World Wide Web” using dial-up modems, pages loaded slowly, graphics were low resolution, most brokerage websites were pretty barebones, and fax machines were still an office mainstay.
(For those of you not old enough to remember uncurling thermal fax paper to make photocopies, so you could drive to a client’s home to get wet signatures with an actual pen … you have no idea of the fun you missed.)
As connections got faster, the MLS provided public access through a client account set up by their agent. Access to listings was still in the control of brokerages and the MLS.
Enter IDX
The Internet Data Exchange protocol was a true game changer, allowing brokerages to set up Virtual Office Websites (VOWs) and eventually allowing individual agents to have MLS search access and listings on their own individual websites … and in some cases, in addition to the IDX fed listings on their websites, brokerages and agents were showcasing off-market/non-MLS listings.
In 2005 the industry was facing an existential dilemma — technology was moving fast, the MLSs faced losing control over their data as brokerages (even small brokerages) posed a threat to their hegemony — and NAR stepped up to level the playing field by limiting consumer choice, if only as an option: “If you want to include non-MLS listings, well, we prefer you didn’t, but if you have to, we’ll be disappointed.”
Enter Zillow
The No-Commingling Rule was implemented just in time for Zillow’s entrance in 2006, which eventually created yet another existential dilemma for brokerages, prompting some brokerages to establish policies regarding syndication and withholding listings. And then Redfin became a bigger player in the industry, and then Zillow became a brokerage, and then the iPhone and apps, and then private listing networks, and then Compass, and then REX and lawsuits, and the DOJ, and then Clear Cooperation Policy and then …
Sorry, I had to sit down because the room started spinning.
Every item on the above list was considered “industry rattling,” “game-changing” and a reason to decry the end of “the brokerage business” as we know it. That’s why news of NAR rescinding the optional “No-Commingling Rule” barely woke me from my afternoon nap.
For the record, NAR had another “major” announcement in March with their head-scratching “Multiple Listing Options for Sellers Policy,” which is yet another optional policy an MLS can choose to adopt or ignore. I hate to admit it, but I don’t fully understand why they announced this policy and what it even does, but a broker friend of mine put it this way: “It allows NAR to stay out of the fray and allows Zillow and Compass to both say they won.” I guess I’m not the only cynic in town.
In 2023, California decriminalized jaywalking. I’m glad it’s now off the books, but I didn’t really notice because, as a born and bred New Yorker, I was jaywalking anyway. And I don’t think I’d notice that NAR repealed the optional NCR if no one told me because it didn’t change how I did my job.
Whether siding with Compass and its three phase listing strategy, or rooting for Zillow and the hard line it’s taking against the three phase listing strategy, at the end of the day, the agents I work with have their shoulders to the wheel helping their clients buy and sell homes, regardless of what is thrown their way.
NAR exists to protect the industry, and that industry has changed — and so is what NAR is protecting. In light of the “settlement,” possible Department of Justice intervention, and the portal wars happening all around us, NAR needs to do more than announce (what I think are) meaningless policy changes.
Instead of manning (and womanning) the walls of the castle to fend off the [insert existential threat du jour here], it’s time for the industry to truly examine the role of the MLS in the decoupled commission universe, and how we, as an industry, can truly better serve the public. To that end, I applaud NAR’s exploration of refreshing the Code of Ethics, but don’t get me started on SOP 10-5!
To repeal a rule that was only optional to begin with is not a repeal of anything, and based on its timing, it comes off as a desperate play for attention. So, Godzilla, King Kong and Mothra might be battling it out. And Tokyo might be burning … but agents have houses to sell.
Spencer Krull is a managing broker with Side, and also works as a real estate expert witness and consultant for attorneys.
