Top Agent Network (TAN), a firm that operates a members-only private group of top-producing real estate agents, has filed a federal antitrust lawsuit against the National Association of Realtors over a policy designed to curtail pocket listings.
The suit alleges NAR and fellow defendants the California Association of Realtors and the San Francisco Association of Realtors have violated a slew of antitrust and unfair competition laws for adopting the Clear Cooperation Policy, also known as MLS Policy Statement 8.0, which requires listing brokers to submit a listing to their multiple listing service within one business day of marketing a property to the public. The controversial rule is meant to effectively end the growing practice of publicizing listings for days or weeks without making them universally available to other agents.
The Clear Cooperation Policy implementation deadline was May 1, and some MLSs have instituted hefty fines to enforce it. This includes SFAR, which has said it will impose a $5,000 fine for the first offense with subsequent violations doubling and tripling the fine amount. Some brokerages, including Compass and The Agency, and discount franchisor Assist-2-Sell have come out against the policy while MLSs, Redfin’s Glenn Kelman and others argued in favor of it, in part because they believe it promotes fair housing.
David Faudman
TAN, however, wrote in the complaint, “This action is necessary to stop the National Association of Realtors (‘NAR’) and its affiliates from conspiring to shut down competition, disrupt the relationship between real estate agents and their clients, require agents to violate California law, and take away a family’s freedom to choose how to market their home for sale.”
In a letter to TAN members, TAN CEO and founder David Faudman said the Clear Cooperation Policy “harms the real estate industry and, more importantly, harms you and your sellers” because:
- The Policy allows NAR to control your client’s data and keep its membership counts high.
- The Policy stifles the ability of agents to communicate with their peers and prevents them from getting information to best serve their clients.
- The Policy carves out office exclusives, which encourages double-ending of deals and puts smaller brokerages (and their clients) at a disadvantage compared to larger ones.
- The Policy takes away consumer choice and a consumer’s right to privacy. If sellers want more privacy — and thus wish to avoid marketing to everyone via the MLS — they should have that freedom. This is especially important in light of COVID-19 and the California Consumer Privacy Act.
In the complaint TAN refers to itself as a “private MLS” and alleges the policy constitutes a “group boycott” of TAN that NAR is using to keep agents tied to Realtor-affiliated MLSs and paying association and MLS dues and fees.
“The Policy has the effect of acting as an exclusive dealing and/or group boycotting arrangement, severely damaging the value of professional associations and real estate listing services that compete with NAR,” the complaint says.
“The Policy, in a pernicious backdoor way, cuts off TAN’s supply of valuable property listing information by coercing the relevant market players — experienced agents — to stop using TAN. This is NAR’s tool to stamp out any competitive threat before its market dominance dwindles away.”
According to the complaint, former agent members of TAN have canceled their subscriptions to the network due to the policy and said they feared reprisal from NAR for using TAN’s services. TAN alleges “NAR specifically designed the Policy to target TAN and discussed this goal during its internal deliberations before formally adopting the Policy” and points to the reference to “multi-brokerage listing sharing networks” included as an example of public marketing in the policy as evidence of this.
“TAN’s members pay dues to TAN in part because it provides a forum through which real estate agents could offer or solicit off-MLS sales. However, there is no value to initiating negotiation on an off-MLS sale if the property must be listed within one business day on an NAR-affiliated MLS,” the complaint says.
“Because the value of agents’ using TAN comes from obtaining information that would not otherwise be available, requiring such information to be posted on the MLS largely defeats the purpose of TAN’s business model.”
In an emailed statement, NAR said the suit “has no legal basis” and the 1.4 million member trade group would “vigorously contest it.”
Mantill Williams
“The Clear Cooperation Policy ensures greater transparency and competition between real estate listings and between brokers, while still addressing privacy concerns,” said Mantill Williams, NAR’s vice president of communications.
“Importantly, the Policy only applies to listings that are publicly marketed. In those instances, the Realtor has concluded cooperation with other MLS participants is in their client’s interests and enables the listing to be shared with the widest group of potential buyers. This benefits both sellers and buyers and promotes equal opportunity for all.”
Joel Singer
California Association of Realtors CEO Joel Singer also said the suit “is baseless.” “C.A.R.’s position has always been that the consumer is best served by having information in the MLS and available to the widest audience of potential buyers and the broadest possible network of agents,” he said in an emailed statement. SFAR declined to comment for this story.
The six-count lawsuit alleges violations of the Sherman Antitrust Act, the Clayton Act, the Cartwright Act and California’s unfair competition law as well as intentional interference with contractual relations. The suit asks for treble damages, including lost profits, legal costs, punitive damages, restitution, the Clear Cooperation Policy’s repeal and an injunction barring enforcement of the policy.
Read the complaint:
Email Andrea V. Brambila.
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