NAHREP CEO: Listing wars, MLS autonomy and collateral damage 

The vast majority of real estate agents rely on multiple listing services to distribute and discover listings, but as marketing strategies have changed, the role of the MLS has come under fire.

The debate over private listings and MLS policies has even sparked legal battles, most recently between the country's largest brokerage, Compass International Holdings, and one of its largest MLSs, California Regional MLS.

What many view as a war of competing interests now threatens to negatively impact homebuyers who face the greatest challenges, according to Gary Acosta, co-founder and CEO of the National Association of Hispanic Real Estate Professionals (NAHREP).

"There are usually winners and losers to every change," Acosta told Real Estate News during a recent conversation about private listings, policy and the changing face of the industry. "In the last few years, almost every major change has come at the expense of first-time buyers and buyers of color."

Challenging the status quo

Since the beginning of this decade, the industry's institutions have been methodically challenged, Acosta suggested, with the debates over listings and the role of the MLS being the most recent examples.

"[The commission lawsuits were] the first step in this direction, and now, there's the notion that the MLS systems have overreached historically and need to be challenged as well," Acosta said. "It's sort of just the next iteration of that."

The question now seems to be how much control the MLS should have over listings distribution.

"Everyone has to have an equal commitment to having the same data on there so that people can see an apples-to-apples comparison between homes," Acosta said, arguing that MLSs should be able to create their own rules about how data is shared. 

"I think the MLS has the right to say, 'No, you can't pick and choose how you use our system at the end of the day, because our system is designed to try to create a level playing field for everybody.'"

A battle of wills between lawmakers, industry players

Some state legislatures have responded to the private listing debate by proposing bills that restrict the use of selective marketing strategies. While Wisconsin, Washington and Connecticut have passed private listing laws, the legislation has not appeared to deter the most vocal private listings proponent, Compass, which has asserted that the new laws actually enshrine "seller choice" into state law.

Acosta has previously argued that legislative action and policy changes are key to resolving the private listing debate, a point he reiterated earlier this month in a letter co-signed by multiple housing advocacy groups and published in HousingWire.

But if Compass, the largest holder of private listings, says the new laws are no obstacle to its marketing strategy, is legislation still a viable solution?

"I think we're very early in this process," Acosta said. "It's very unclear right now how it's going to shake out. Everybody is lining up and protecting their business interests."

Ideally, the industry should "take a mature approach" by trying to solve the question of private listings itself while putting the consumer first, Acosta added. "But if we don't, that's when I think policymakers will step in and make those decisions for us, which may or may not provide the outcome that I think is necessarily best."

'Competing business models' vs. consumer harm

When listings are seen as proprietary data rather than part of a cooperative system, the role of the agent shifts from service provider to gatekeeper of listings for their brokerage, Acosta suggested. 

And with some companies touting private listings and seller choice as simply "competing business models" rather than a fundamental change to an open system, Acosta added that "it's hard to put that genie back in the bottle." 

If the pre-marketing and private listing push continues and more listings are harder to find, "the folks that are probably going to suffer the most," Acosta noted, "are those first-time homebuyers who just don't have that much experience in the process." 

"I could very easily see scenarios where a home goes for sale, maybe it's in an affordable neighborhood, but it never makes its way to the MLS because one particular brand who wants to double-end that deal, they sell it to an investor, and an owner-occupied buyer who wants to live in that house never even gets to see that listing."

If that scenario becomes a trend, Acosta believes people will eventually start to notice, and at that point, "I think legislation is probably going to have more teeth attached to it."

Fair housing concerns

Private listings have a place in the market, Acosta said, but "everybody needs to follow those same rules."

 "And I think the reason for that is because — and this is what kind of gets lost in the conversation — there are two sides to every transaction. There are sellers and there are buyers, and trying to create a balance in that scenario is what I think the MLS has strived to do for a number of years."

Some studies have shown that private listing networks tend to have a disproportionate impact on communities of color, particularly among buyers, and a recent report by the Association of Real Estate License Law Officials (ARELLO) suggests minority sellers are also at a bigger disadvantage in private transactions. 

The potential fair housing risks should raise an alarm for real estate professionals on a human level and a transactional one, Acosta said, given the growing rate of homeownership among communities of color.  

"This is not a niche part of the market anymore," he noted. "So the outcome of this [debate] is going to be profound one way or the other."