There’s always something to howl about.

By withholding the secrets of the mystical MLS system are we betraying the home-buyer’s interests?

In all my spare time, I’ve been working over the past few days on a real estate porn movie. The film features pictures from hundreds of homes, with loads of juicy details. We took the photos over the course of years, so it’s entirely possible that some of those homes are listed for sale right now. In making the movie available to the public, will we be “advertising” those listings without the listing broker’s permission? I don’t think we will be, but I also don’t give a damn. We have a right to our work product, and we have a right to do as we choose with our work product, and I will joyfully fight for my rights down to my last dime.

Let’s be obvious, at least for a moment. An appraisal is something you contract to have done and pay a substantial fee to obtain. Any state attorney general, even Arizona State Attorney General Terry Goddard, should be able to comprehend such a simple fact. In the same way, advertising is something you pay for. Quibblers will insist that paying web site hosting fees is alike unto paying publication line rates or broadcast fees. To this “argument,” the only reasonable retort is a Bronx cheer. When a word means almost anything, it means almost nothing.

The obvious fact is that MLS rules against advertising other broker’s listings without permission are devised to prevent Broker Paul from placing paid ads representing Broker Peter’s listings as his own. In fact, the motivating premise behind the rule is that Broker Paul, even while giving a false impression about his prowess as a lister, would nevertheless be promoting the homes in a positive light.

So why would Broker Peter object to free advertising of his listings? In other words, why does this MLS rule exist in the first place?

Too obvious, isn’t it? It’s because of the double dip. If Broker Paul advertises Broker Peter’s listings as his own, then Broker Peter might lose out on some opportunities to collect commissions from both sides of his transactions.

Real estate brokers implemented Buyer Agency not because they wanted to make sure that buyers got a fair shake — they didn’t then and still don’t — but because the doctrine of “several liability” was bleeding them white. When every agent of every brokerage was a sub-agent of the listing broker, the listing broker was “severally liable” for every act of negligence or misrepresentation committed by any sub-agent, even if that agent were employed by another brokerage. Buyer Agency gave buyers a nominal kind of representation, but the actual objective was to shield the listing broker from liability for all but his own agents’ errors.

Swept in with the new doctrine of Buyer Agency was a revolutionary change in… almost nothing. Why are days on market to be kept secret? To protect the listing broker. Why is the buyer’s broker’s compensation to be kept secret? To protect the listing broker. Why do MLS rules prohibit one member from advertising another’s listings? To protect the listing broker.

Every mission-critical piece of the MLS system remains just as it was under Sub-Agency, except that the buyer’s broker’s compensation is by now listed under the Buyer’s Broker’s field, rather than the Sub-Agent’s field. In the realms of the Multiple Listing Service, Sub-Agency is not dethroned, it is a monarch in temporary exile — sure to return, one day soon, in triumph.

I’m not saying anyone actually intends to bring back Sub-Agency. But people are thoughtless — they fail to think — and, in consequence, they have never yet thought about what else must be changed, to achieve true Buyer Agency.

Is Days on Market a matter of importance to buyers? The amount of the buyer’s broker’s compensation? Would buyers welcome a frank and public discussion of, for example, soil subsidence issues affecting an entire subdivision? Is there anyone who would want to claim that knowledge of these facts would be bad for buyers, that they should not want to know these things? And yet, if I share facts like these with my buyer clients, I am in violation of MLS rules.

Is there anyone reading this who wishes to claim that these rules are of benefit to buyers? And, if they are not, if withholding material facts like these actively harms buyers, why is this not an agency violation in itself?

I think these rules exist for no reason other than to protect the listing broker, who is in turn protecting the seller. The seller has every right to expect earnest representation from the listing broker and every one of his agents. But the buyer’s broker is not a sub-agent of the listing broker. MLS rules should not oblige him to behave as though he were.

Coming back to the start for a moment: I do not believe real estate porn — photographs and discussion of homes — is a form of advertising. But, even if you insist that it is, I cannot see any benefit to buyers to forbidding the creation and dissemination of real estate porn. Sellers may not like it, and the director of Shrek 3 is probably not going to take much joy in today’s movie reviews, but the interests of consumers are best served by the unfettered flow of information.

All that notwithstanding, in fact we’re solving the wrong problem. The real problem, of which this current dispute is just a symptom, is that the listing broker contracts for and technically disburses the buyer’s broker’s compensation. All the secrets of the mystical MLS flow from this one fact, itself a vestigial remnant of Sub-Agency. If the buyer’s broker’s compensation were divorced from the listing broker’s commission, there would be no more need for secrecy in the MLS system.

In other words, if we are actually following the MLS rules when we represent buyers, we are de facto sub-agents of the listing broker, betraying our fiduciary duty to our buyer clients with every material fact we withhold. We can wait until we run up against an attorney crafty enough to sell that argument to a jury, or we can clean up our industry now, by implementing true Buyer Agency. How? By divorcing the commissions. Boundless benefits to the consumer will flow from that one simple change.

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