When a big decision is on the table, you try to gather as much information as possible.
You weigh options based on research, and your opinion may change based on the completeness of that data.
Buying a house, arguably the most consequential financial decision for most people, is no different.
Right now, a very important conversation is happening around the completeness of real estate’s listing databases. These are valuable data repositories that agents, brokers and appraisers everywhere rely on to counsel their clients, and that power consumer sites like Realtor.com, Zillow and Redfin.
That conversation has been dominating real estate industry debates lately, and in several episodes of NAR REALTOR® News Change Agents, transparency emerged as a common thread. Brokerage leaders Leo Pareja, Bess Freedman and James Dwiggins each offered their own twist on why equal visibility of the residential market is a standard worth fighting for.
‘A Pricing Problem’
Looking at real estate from a global perspective, the U.S. and Canada “are the only two [countries] that have an organized MLS cooperative system where it’s a transparent market,” said Leo Pareja, CEO of eXp Realty in a conversation with NAR CEO Nykia Wright.
Pareja’s company has more than 83,000 agents and operates in 29 countries. Pareja said the U.S. and Canada are far friendlier for buyers, compared to other eXp Realty markets and he called the two countries’ MLS systems “the envy of the world.”
Without the MLS, local housing data isn’t easily accessible, he says, making it a lot harder for mortgage lenders to determine a home’s value. Therefore, they may be more cautious and require buyers to cough up bigger down payments before considering financing.
“What the rest of the world has is a pricing problem,” he said. “When you’re not sure what stuff’s worth, guess what financing looks like? It looks like 70% [loan-to-value], 60% LTV, 50% LTV.”
Low down payment lending, like 3.5%, 5% or even 10% down, “all that disappears in a confusing, opaque market that doesn’t have real-time data.”
Trust Is at Stake
Likewise, James Dwiggins, founder and president of NextHome, cast the MLS as a model example to the world, despite its flaws.
“Go spend time in another country where there isn't one and you will think that this was the greatest gift ever given to you as an industry,” Dwiggins said in a conversation with NAR Chief Marketing & Communications Officer Bennett Richardson. “Because in that world you have no idea what's for sale. You have no idea what stuff sold for. You have no context on how to do your comps. Everything becomes such a mess.”
What’s lost in such a scenario: consumer trust.
Speaking in favor of policies that deliver a comprehensive database of homes for sale, Dwiggins said, "I have been very passionate about the fact that if you don't speak up now and say what is right and wrong and hold leadership accountable for decisions that will hurt your career, then we are going to end up in a very scary spot in the next few years.”
If the industry loses consumer trust, Dwiggins said, it’s game over.
“If we don't get this right, our industry will get wiped out, and it's not because of AI,” Dwiggins said. “It's because the consumer doesn't trust us anymore. It's because we allow decisions to occur that harm the consumer.”
Days on the Market Is Valuable
Bess Freedman, CEO of Brown Harris Stevens, a major player in the New York-New Jersey-Connecticut area, took aim at private listings in a conversation with Wright, explaining that playing fast and loose with datapoints like days on the market is not consumer friendly.
“You can’t manufacture the market,” Freedman said. “The market is the market. It needs to flow freely for true price discovery ... so when you manipulate that ... you’re hurting the buyer because they’re not getting the right information to make decisions about their life savings.”
Private listing networks aren’t really about protecting seller privacy, she said. There are tactics like nondisclosure agreements for that.
“A private listing network is something else,” Freedman says. “That is where one company has all the listings for their firm, and they're not putting them on the open market. They're keeping them within one company, and they're saying they're not on the market, but they're on their ‘sort-of market’ or ‘pre-market,’ and thousands of people know about it.”
“I find that to be a real issue,” she said.
Competition Is Necessary
At HousingWire’s annual conference The Gathering in April, Wright said the association must walk a fine line on private listing discussions. Over the past three years, the association has worked to de-risk its portfolio of rules and reinforce local discretion and flexibility in MLSs.
That includes rules that could been seen as dictating the business models of members. MLS business decisions, she said, sit squarely with the MLSs themselves, and not with NAR. The association has published “coming soon” resources, including a checklist and list of considerations, intended to help MLSs and their users navigate NAR rules.
When asked what the future holds for MLSs, she explained that it’s up to MLSs and brokerages to work together for the consumer.
“I think the MLSs that continue to pay attention to market dynamics—capitalism—what buyers are wanting, what sellers are wanting, what brokerages are wanting, what they are needing in terms of the economics and the flow of information, will dictate the future of the MLSs,” Wright said in April. “It is my hope, given that our mission is to protect, preserve and advance homeownership for all Americans, that that is still protected at the end of the day.”
