In recent developments surrounding real estate listings, Washington Realtors said it supports legislation that would limit the use of private listing networks in the state.
The bill is scheduled to be introduced publicly in the Washington state Legislature, which begins its 60-day legislative session this Monday. A draft of the bill was obtained by Inman on Monday.
The bill would amend existing state laws related to licensing and torts and would require brokers to sell properties to the broader public rather than to a “limited or exclusive group of prospective buyers.”
In a video update late last week, Washington Realtors executives said they support the change as part of the organization’s goal to make the state the most consumer-friendly place to buy and sell real estate.
“Ultimately, we feel that the use of a private property network is inconsistent with our goal of being the most consumer-friendly state in the nation for buying and selling real estate,” association President Ryan Beckett said in a video.
He added, “We believe the potential growth of private listing networks poses a threat to the transparent marketplace that ultimately benefits both consumers and real estate agents. And it could set us back in fair housing practices.”
Given that the bill has not yet been released, it remains unclear how exactly the state will regulate private listing networks, which are popular in some markets and have been the subject of heated debate within the real estate industry over the past year.
“It is important to note that this bill does not prohibit privately listed networks,” Annie Fitzsimmons, the group’s attorney, added in the video.
“Agents currently using private listing networks will be able to continue to do so as long as properties are publicly marketed,” Mr Fitzsimmons said.
Bill details
A draft of the bill was shared with Mr. Inman on Monday afternoon ahead of its expected publication later this week.
“It is an unconscionable practice for a real estate licensee to sell or rent residential real property to a limited or exclusive number of prospective purchasers, prospective tenants, real estate licensees, or any combination thereof, unless the property is sold simultaneously to the general public and to all other real estate licensees, except as reasonably necessary to protect the health or safety of the owner or occupier,” the draft states.
Another provision explicitly requires brokers to publicly market sellers’ properties “unless the health or safety of owners or occupiers requires a different approach.”
“A broker representing a seller must sell residential real estate to the general public and to all other brokers, and may not sell real estate solely to exclusive purchasers or brokers, unless necessary for the health or safety of the owner or occupier,” the text reads.
The draft bill does not identify the bill’s legislative sponsor.
compass responds
Robert Refkin speaking at Compass Retreat 2023 |Credit: Compass
In response to news coverage of the bill, a Compass spokesperson said the bill was a “veiled attempt” to limit consumer choice.
“This bill is a veiled attempt by NWMLS and Zillow to maintain their market dominance by restricting homeowner choice and limiting competition, to the detriment of both sellers and agents,” the spokesperson said.
“Compass believes that homeowners in Washington state should have the same flexibility to choose when and where to sell their homes as homeowners in every other state. Every other state offers homeowners the flexibility to test pricing, gain critical positioning insights, maintain privacy and confidentiality, and generate early demand without lowering the public price or going to market.”
Compass, which completed its acquisition of Anywhere Real Estate on Friday, is leaning toward a marketing strategy that includes periods where properties are only available through brokers and their agents.
The properties, which brokers are calling Compass Private Exclusives, allow sellers to test pricing and prepare homes outside of the MLS period. They can receive offers and sell at that stage, but most end up moving to MLS.
“Compass fully supports and complies with fair housing laws,” the spokesperson added.
Access listing disrupts industry
The debate over private listing networks intensified in Washington last year after Northwest MLS temporarily terminated Compass’ license to the MLS’s IDX data feed in April.
In response, Compass sued Northwest MLS, alleging that MLS was acting as a “monopolist” in Washington and Oregon.
“NWMLS is a monopoly and a combination of competing real estate brokers,” Compass said in its complaint filed in the Western District of Washington. “Almost 100 [percent] Of the residential real estate transactions by real estate agents in the Seattle area that are listed on NWMLS, NWMLS has no significant competitors. ” This means there is no competing MLS.
A jury trial is scheduled for October.
Northwest MLS is the only named defendant in the lawsuit, but the complaint also mentions Windermere Real Estate Services as “Washington State’s largest real estate brokerage.”
The City of Windermere has previously clashed with Compass over listing issues, but Washington Congress appears to be backing the bill.
“With very few exceptions, sellers want and deserve transparency, broad disclosure, and confidence that they are receiving the strongest possible offer on their home. Only an open market can provide that,” Jacobi, a former Windermere real estate president, said in a statement to Inman on Monday.
“Rather than taking a step back, [the bill] “It is more important than ever to strengthen and protect the standards already in place. Our industry should be built on serving consumers, not exploiting them, and we should all support consumer protection measures like this,” Jacobi added.
The lawsuit between Compass and NWMLS is playing out in Zillow’s backyard as well, with Zillow similarly engaged in a legal battle with the brokerage giant. The battle stems from Zillow’s policy of banning certain products from its platform that are not listed on Zillow and are publicly available for sale.
In addition to the conflict with Compass, Zillow’s rules have also been the subject of debate and, in some cases, disputes in markets such as Chicago and San Antonio. Privately listed networks are widely used there and do not comply with the portal’s policies, despite being allowed by the MLS.
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