A brokerage cut off from its MLS is like an office left dark by a lightning storm — powerless until plugged back in.
But the typical real estate office presumably doesn’t operate in fear of an MLS blackout. The country’s 800-plus MLSs, where brokers exchange property details and hat-tip one another in the spirit of competitive cooperation, pump the lifeblood driving movement in real estate deals.
Bryn Kaufman
So when principal broker of OahuRE.com, Bryn Kaufman, received a certified letter from the Honolulu Board of Realtors’ (HBR) HiCentral MLS (HCMLS) stating that his firm had outstanding fees and, gone unpaid, would result in suspension of services, he was surprised by two things: the potential penalty and the short notice.
“My first thought was, oh my god, this is like working with the mafia,” he said.
Timeline of billing, payment and notification
The best things in business aren’t free.
Everyone who uses the MLS pays a fee to gain access, including an office’s broker, real estate agents and assistants, who customarily submit their payments to the MLS separately.
HCMLS (a wholly-owned subsidiary of HBR) service subscriptions are renewed annually.
Kaufman and his five agents pay their annual renewal dues to HCMLS online via credit card. That subscription process was working perfectly fine, until this year’s snafu.
On June 1, Kaufman and his five agents were billed for their yearly dues. Kaufman made his payment on time and assumed that his agents had done the same.
It was business as usual until July 7, when Kaufman received the certified letter dated July 1 in the mail from HCMLS stating that his firm had “outstanding MLS fees and late fees owed for licensees and assistants” as of June 30, 2016.
In addition, the MLS notified Kaufman that a $30 late fee had been assessed for those who did not pay by the end of June.
Kaufman checked his office’s payment records online through HCMLS (instructions for how to do this were laid out in the letter).
“Apparently, one of the agents on my team was late making their payment,” he said. At this point, Kaufman sent an email to the agent with outstanding dues and relayed the situation. “They said they just forgot.”
The amount in question was $450.
“Then, for some reason, I decided to read the rest of the letter, and almost fell over when I read [that] in eight days, they will shut me down if [the agent] does not pay,” he said.
Kaufman then paid the fee immediately using his credit card, and later collected it from the agent to avoid further consequences.
Specifically, HCMLS wrote that the past-due amount must be received (not postmarked) by July 15 — 45 days from the initial billing, and an eight-day window since the letter arrived in Kaufman’s mailbox — or his office would face MLS suspension, to include:
- Loss of MLS access for all licensees and assistants affiliated with the firm
- Withdrawal of OahuRE.com’s active listings and cancellation of its listing data feed
- An outstanding financial obligation to HBR, which in accordance to HCMLS bylaws, could result in termination of the firm’s local board membership
The letter outlined a reactivation option in the event that MLS services were cancelled: a $100 reinstatement fee (applicable within 90 days of suspension) or $250 reapplication fee with a new application (applicable after 90 days from the date of suspension).
Kaufman said that HCMLS sends out individual bills and reminders to each agent, so “we do not have to worry much about it, unless an agent does not pay. This never happened to me as previously my agents always remembered to pay, so this was a real shocker.”
HCMLS renewal messages and reminders
HBR CEO Suzanne Young elaborated on the initial renewal messages sent to the principal broker and all subscribers (agents/licensees), which provide a minimum of 30 days’ notice and are sent through the U.S. Postal Service.
Moreover, “reminders are sent via various email communications, including weekly e-news and personalized emails, as well as notices posted to our MLS service welcome screen and our member website,” Young said.
The certified letter is sent during the “15-day grace period” and “courtesy calls are made to the participants” before suspension occurs to address outstanding fees, allowing for a total of 45 days before a firm loses access.
In addition, when brokers join the MLS, they complete an application wherein they agree to understanding that “my office’s MLS services shall be suspended for failure to pay MLS dues, fees, fines, or other MLS assessments within 45 days of the billing date,” and that the suspension won’t be lifted until the amounts are paid in full (including the reinstatement fee), to include the removal of all an office’s active listings.
Let bylaws be bylaws?
Local association HBR reports having 6,000-plus members, and according to HBR’s website, HiCentral.com, “access to the HBR Multiple Listing Service is available to members who are Realtors or Realtor-associates and are affiliated with a firm that also subscribes to the MLS.”
Like 45 percent of the respondents to Inman’s Realtor association survey in July who said their No. 1 reason for joining an association was “I needed access to the MLS and I can’t join the MLS without belonging to the association,” Kaufman believes “the big benefit of the Board is the data they have in the MLS.”
So who are the MLS money-collection rule makers? The local boards, and in this case, HBR.
That means the timeframe for payment of MLS fees and the consequences for nonpayment are established locally and are not mandated by the National Association of Realtors (NAR).
However, Young explained, the bylaws and rules and regulations that govern HBR are approved by NAR.
According to NAR’s Board Policy team: “While the timeframes for payment of MLS fees may vary in each MLS, imposition of late fees, suspension or termination of MLS privileges, and reinstatement fees are not uncommon consequences for failure to pay MLS fees within the established timeframes.”
Kevin Milligan, NAR’s vice president of Board Policy, added that while NAR can’t speak to the internal customs firms have for paying MLS fees, “from our understanding, it is not uncommon for MLSs to hold the participant (broker-principal) ultimately responsible for any delinquent MLS fees.”
Although an MLS could, at its discretion, make individual subscribers exclusively responsible for payment of MLS fees, Milligan says he suspects that’s the exception.
The Chief Strategy Officer and General Counsel for eXp World Holdings Russ Cofano, who has 25 years of executive-level experience in technology, association, MLS, brokerage and law, confirmed that this type of policy is “not uncommon.”
“This is similar to how NAR collects dues in that the member broker is essentially financially responsible for dues for all licensees in the broker’s office, but gets ‘credit’ for dues actually collected from the individual agents,” he said. “There are some MLSs, however, that direct bill the subscriber and if they don’t pay, they just shut them off. In those MLSs, the broker is not responsible for the unpaid fees.”
A plea to uncross the wires
In addition to what Kaufman views as a crime-punishment injustice, his concern about communication — or lack thereof — is also at the heart of what happened.
Not long before he received the certified letter, Kaufman had been on a two-week vacation. Luckily, he said, he was on the island the day it arrived, but if the sequence of events had unfolded a bit earlier, it’s possible that his office would have been effectively shut down while he was away.
On July 7, Kaufman sent an email to HBR president Kalama Kim inquiring whether he had correctly understood the terms of the certified letter. Kim said that he, too, had received the notice, and believed Kaufman had the details straight. He then directed Kaufman to contact Donna Asino, Director of MLS for HiCentral, for additional details.
Kaufman took him up on that. He sent an email the same day to Asino asking if the policy had been reviewed recently, an excerpt of which is below:
“I can totally understand if someone does not pay on time assessing them a penalty, and after a warning they are no longer a member of HBR and lose their MLS access. However, to suspend an entire company, to cut off everyone’s ability to make money to support their family, just because one bad apple did not pay their dues, it just seems too extreme.
“Sometimes it feels like the Board makes rules without listening to the public and without taking input from their members. Decisions are made without regard to how it could change people’s lives.”
Kaufman says he checked his inbox for a response from Asino but couldn’t find one, and he doesn’t believe she sent one.
Asino did not reply to a request for comment. However, Young added in a statement to Inman: “Participants are ultimately financially responsible for the payment of the MLS renewal fees. We allow participants to set up their own office policies to ensure that the financial obligations of all their subscribers are met in a timely manner to avoid suspension.
“Participants have access online 24/7 to identify the outstanding balance of their firm.
“Again, we value the importance of the MLS service to our participants and subscribers and ensure that every opportunity is provided to them before we would take the step of suspending their firm’s service.”
In the Inman reader Realtor association survey, a broker-owner expressed a desire for higher communication standards: “Our particular association could improve its focus on customer service and putting members first — catering to members and better meeting their needs — including communication. Better organization and advance planning, too.”
What’s to learn?
With HCMLS, regular dues come around just once per year for Kaufman’s team, though he alone does pay a monthly fee for data access. He has a more vigilant plan in place to make sure the possibility of MLS suspension never happens again.
“Next time they bill us, I will remind my agents that … they will shut us down and put everyone out of business if not paid on time.
“Then I will diligently track their payments, and once everyone says they are paid, I will double check it with the online records to make sure.”
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