Fiduciary duty requires that agents “follow all lawful instructions of the client.” This is not optional. This is the law.
When an MLS threatens to take away an agent’s MLS access if they follow their client’s lawful seller-directed marketing plan, the MLS is forcing the agent to choose between breaking the law or losing their job.
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The problem is that MLS membership isn’t voluntary. Because they function with near-100 percent market control, membership is not a choice — agents simply cannot work without MLS access.
The only entity that can supersede an agent’s fiduciary duty is the government. However, MLSs are private organizations imposing mandates on licensed professionals, professionals who, under the law, owe a fiduciary duty to one person and one person only: the seller sitting across the kitchen table. By law, listing agents must put their clients’ interests ahead of what’s best for NAR, MLSs, agents, buyers and themselves.
The new coming-soon option on Redfin, Zillow, Homes.com and Realtor.com will inevitably lead to a single client question that will end the practice of MLSs punishing listing agents for publicly marketing outside the MLS (Clear Cooperation Policy).
The client will ask: “Why can I only market my home as a coming-soon listing, prioritized at the top of the Redfin/Zillow, for one day?”
The real estate professional will be breaking their fiduciary duty and state law if they respond to the client’s question with, “I’m sorry, I can’t give you the prioritized Redfin/Zillow coming-soon option for more than one day because the MLS will fine me up to $5,000 and will block my MLS access.”
By imposing a fine of up to $5,000 on listing agents who follow their client’s lawful instructions, the MLS is coercing agents to breach their fiduciary duty and fining those who refuse to break the law.
Moreover, since the MLS fine creates a personal financial risk for the agent, the MLS is manufacturing a conflict of interest. State law mandates that real estate professionals disclose to the homeowner the conflict of interest resulting from the threat of an MLS fine.
With coming-soon listings now being publicly marketed to hundreds of millions of consumers on portals, the MLS will no longer be able to claim that listings have to be on the MLS to protect transparency or fair housing.
Any sophisticated client will quickly conclude that the MLS isn’t protecting transparency; the MLS is protecting the MLS. They are trying to impose a one-size-fits-all marketing mandate on a profession that requires nuance, customization and professional judgment tailored to each home, each market, each client.
MLS compliance efforts regarding data integrity, such as issuing fines for inaccurate property facts, are not called into question; however, fines for listing agents following their clients’ lawful seller-directed marketing plan are an overreach and directly interfere with an agent’s fiduciary duty.
Here are some observations on how leading MLSs across the country are evolving to better respect that homeowners — with full disclosure — should be able to decide how their home is marketed. By implementing policies that offer greater flexibility within the coming-soon window, we have seen success. Specifically:
- Suspending days on market and price history in pre-market phases
- Eliminating the restriction on the number of days a homeowner can market a coming-soon listing
- Submitting a coming-soon listing to the MLS for cooperation should not automatically trigger a mandate to broadcast that data via all MLS-facilitated feeds. As confirmed by the latest NAR guidance, coming soon is a marketing strategy used by the seller and broker to limit advertisement, online or publicly, pursuant to the seller’s interests. By utilizing “Yes/No” options for specific data feeds, MLSs respect the homeowner’s right to a phased exposure strategy, including marketing on the brokerage’s own site or social media per the seller’s lawful instructions. Furthermore, under Policy Statement 8.3, a brokerage firm is entitled to a data feed of its own listing content, which it may share with any designee it chooses. This ensures that the homeowner retains ultimate control over their data distribution strategy.
If MLSs don’t adopt the three aforementioned options, they will be creating an unstoppable incentive for listing agents to market outside of the MLS, which will result in diminished value of the MLS.
Contrary to what people may suspect, Compass International Holdings deeply values the MLS benefits. MLSs do add meaningful value (data accuracy, IDX feed syndication, comps, cooperation within the constraints of the client’s lawful requests, etc.).
The MLSs do not need to insert themselves between sellers and their agents — as proven by BAREIS MLS, Bright MLS, Canopy MLS, HAR, MLS Listings, MLSPIN, MRED, Realtracs, SFAR MLS, The MLS/CLAW and Unlock MLS — 94 percent of Compass sold homes were sold on the MLS, including Compass Private Exclusives and Compass Coming Soons.
Let’s empower seller choice and marketing freedom, where MLSs serve their roles without overreach and brokerages and portals compete for agents and clients using innovative marketing products, not one-size-fits-all mandates.
Let agents be fiduciaries. Let sellers choose. And let the MLS serve its members, not rule them.
And most importantly, as Rob Hahn said, “leave marketing entirely in the hands of brokers. It is they, after all, who the seller hires to sell their house, not the MLS.”
Robert Reffkin is the Chairman and CEO of Compass International Holdings.
