SF agent network sues Realtors associations over new rule limiting ‘pocket listings’

A San Francisco firm that operates a private network for real estate agents sued the national, California and San Francisco associations of Realtors over a policy implemented May 1 aimed at reducing the number of homes sold without being advertised on a Multiple Listing Service.

In the suit, plaintiff Top Agent Network calls itself “in effect, a private MLS” and says the new rule “is intended to undercut TAN’s entire business model.” Filed in U.S. District Court in San Francisco on Monday, it alleges violations of federal and state antitrust laws and contract law.

More than 80% of homes put up for sale are listed on an MLS, and the vast majority of them are controlled by local Realtors associations, according to the suit.

These associations historically have required agents to “deliver” a listing to the local MLS, generally within two days of signing an agreement with the seller, said Rene Galicia, the National Association of Realtors’ director of MLS engagement. Most listings include photos, address, price and details about the home, and can be seen by other agents who belong to the MLS. Listings are also distributed to real estate websites unless the agent tells the MLS to keep the home off the internet and share it only with other Realtors.

With the seller’s written permission, an agent could classify the listing as an “office exclusive,” which prevents the listing from being seen by anyone outside the agent’s brokerage firm, Galicia said.

In recent years, a growing number of properties were being listed this way, then marketed privately through groups such as Top Agent Network or through a single brokerage firm. These are sometimes called pocket listings or “off-MLS sales.”

In the suit, Top Agent Network says it was founded in 2010 as “a private, member-only community” open to agents who can show they were within the top 10% of agents in their area based on sales volume in the past 24 months. Like an MLS, it “provides agents in its network with a platform to share market information and data” and “to share information about properties for which they are acting as sellers’ agents, including properties the seller does or does not intend to list on an MLS.”

It recently introduced a new “matchmaking” service that “facilitates one-on-one private conversations between a buyer’s agent and seller’s agent with symmetrical needs,” such as homes in a certain price range in San Francisco. The agents “can then move off the TAN platform and begin communicating privately,” the suit says.

In November, the National Association of Realtors’ board adopted a new “clear communication” policy that says, “Within one business day of marketing a property to the public, the listing broker must submit the listing to the MLS for cooperation with other MLS participants. Public marketing includes, but is not limited to, flyers displayed in windows, yard signs, digital marketing on public facing websites, brokerage website displays, digital communications marketing, multi-brokerage listing sharing networks, and applications available to the general public.”

However, if the seller refuses to permit the listing to be disseminated this way, the agent can take the listing as an office exclusive and market it only with agents in the same brokerage firm. Local Realtor associations had until May 1 to implement the policy.

“I think it was a reaction to all the secret silos and I think it’s great,” said D.J. Grubb, owner of the Grubb Co. Realtors in the East Bay.

The suit says this policy will “damage competition” in residential real estate listings and sales, “as well as TAN’s economic relationship with its members.”

The suit says it names San Francisco’s association because it has taken the position that properties discussed in one-on-one meetings between agents must be listed within 24 hours, which jeopardizes its matchmaking service. It also says the San Francisco association has threatened penalties of “$5,000 for the first” violation of the new policy and “double and triple for subsequent offenses.”

The San Francisco association referred questions about the suit to the national association.

“We believe this lawsuit has no legal basis and will vigorously contest it,” Mantill Williams, a spokesman for the national association, said in an email. “The Clear Cooperation Policy ensures greater transparency and competition between real estate listings and between brokers, while still addressing privacy concerns.” It added that the policy “only applies to listings that are publicly marketed.”

The California association called the lawsuit “baseless” and said its 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.”

The suit asks for monetary damages and injunctions barring enforcement of the new policy.

Kathleen Pender is a San Francisco Chronicle columnist. Email: kpender@sfchronicle.com Twitter: @kathpender

Article source: https://www.sfchronicle.com/business/networth/article/SF-agent-network-sues-Realtors-associations-over-15262789.php

This entry was posted in SF Bay Area News and tagged . Bookmark the permalink.

Comments are closed.