Fiduciary duty requires an agent to “comply with all lawful instructions of the client.” This is not an option. This is the law.
When an MLS threatens to remove an agent’s access to the MLS if the agent follows a client’s legitimate 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 joining MLS is not optional. They operate with almost 100% market control, so you can’t choose your membership. Agents can’t do their jobs without access to the MLS.
The only entity that can override an agent’s fiduciary duty is the government. But an MLS is a private organization that imposes duties only on qualified professionals, professionals who under the law have a fiduciary duty to only one person: the seller sitting across the kitchen table. By law, listing agents must put their clients’ interests ahead of what’s best for NAR, MLS, agents, buyers, and themselves.
A new option coming soon to Redfin, Zillow, Homes.com, and Realtor.com will inevitably lead to one question from customers and end the practice of MLSs penalizing listing agents who publicly market outside of the MLS (clear cooperation policy).
The client asks: “Why can I only advertise my home as a priority upcoming listing at the top of Redfin/Zillow for only one day?”
A real estate professional would be violating fiduciary duties and state law if they responded to a customer’s question with, “Sorry, we are unable to provide you with a priority Redfin/Zillow Coming Soon option for more than one day because the MLS will fine you up to $5,000 and your access to the MLS will be blocked.”
MLS forces listing agents to violate their fiduciary duties by imposing fines of up to $5,000 on listing agents who follow a customer’s lawful instructions, and fines agents who refuse to violate the law.
Additionally, MLSs create a conflict of interest because MLS fines pose a personal financial risk to agents. State law requires real estate professionals to disclose conflicts of interest arising from the threat of MLS fines to homeowners.
With soon-to-be listed properties now publicly available for sale on portals to hundreds of millions of consumers, the MLS will no longer be able to claim that properties must be listed on the MLS to protect transparency and fair housing.
A sophisticated client will quickly conclude that the MLS does not protect transparency. MLS protects MLS. They seek to impose a one-size-fits-all marketing mandate on a profession that requires nuance, customization, and professional judgment for each home, each market, and each customer.
MLS compliance efforts regarding data integrity, such as issuing fines for inaccurate property facts, are not challenged. However, imposing fines on listing agents for following their clients’ legitimate seller-driven marketing plans goes too far and directly interferes with agents’ fiduciary responsibilities.
Here are some observations about how the nation’s leading MLSs are evolving to be more respectful of allowing homeowners to decide (with full disclosure) how to sell their homes. We have been successful in introducing more flexible policies over the coming period. in particular:
Pausing days on market and price history during the pre-market stage Eliminating limits on the number of days a homeowner can sell a coming soon property Submitting a coming soon property to an MLS for cooperation should not automatically trigger an obligation to broadcast that data through all feeds provided by the MLS. As confirmed in the latest NAR guidance, there will soon be marketing strategies used by sellers and intermediaries to limit online or public advertising depending on the seller’s interests. By utilizing “yes/no” options for certain data feeds, the MLS respects homeowners’ rights to a graduated exposure strategy that includes marketing on the broker’s own site and social media in accordance with the seller’s legal direction. Additionally, pursuant to Policy Statement 8.3, brokerage firms have the right to obtain a data feed of their listed content and may share that data feed with designated parties of their choice. This gives homeowners ultimate control over their data distribution strategy.
If the MLS does not adopt the three options mentioned above, there will be an unstoppable incentive for agents to list in markets outside of the MLS, resulting in a decline in the value of the MLS.
Contrary to people’s expectations, Compass International Holdings deeply values the benefits of MLS. MLS adds meaningful value (data accuracy, syndication of IDX feeds, comps, cooperation within the constraints of a client’s legitimate requests, etc.).
As evidenced by BAREIS MLS, Bright MLS, Canopy MLS, HAR, MLS Listings, MLSPIN, MRED, Realtracs, SFAR MLS, The MLS/CLAW, and Unlock MLS, an MLS does not need to come between a seller and their agent. 94% of homes sold on Compass were sold on the MLS, including Compass Private Exclusives and Compass Coming Soons.
Enhance seller choice and marketing freedom. MLSs do their job without going overboard, and brokers and portals compete for agents and customers using innovative marketing products rather than one-size-fits-all mandates.
Have your agent act as your fiduciary. Let the seller choose. And let MLS serve its members, not control them.
And most importantly, as Rob Hahn said, “Put marketing completely in the hands of the brokers. After all, they are the ones sellers hire to sell their homes, not the MLS.”
Robert Refkin is Chairman and CEO of Compass International Holdings.
