09/23/2024
The National Association of REALTORS®’ Clear Cooperation Policy
A Clear Violation of the Code of Ethics and State Law
The National Association of REALTORS® (NAR) enacted the Clear Cooperation Policy with the intention of enhancing transparency by mandating that listings be submitted to the Multiple Listing Service (MLS) within one business day of public marketing. While it is easy to argue why Clear Cooperation has some benefits, they pale in comparison to the restrictions it places on homeowners’ consumer choice and an agent’s obligation to uphold NAR’s Code of Ethics and State Law. Under the Clear Cooperation Policy, REALTORS® are forced to compromise both the ethical foundations upon which their profession is built and their obligations under State Law governing privacy and fiduciary duty. Prior to the enactment of the Clear Cooperation Policy in 2020, agents had the freedom to publicly market properties per their clients’ wishes without the risk of violating NAR ethics rules and State Law.
There is a moral responsibility for all REALTORS® to abide by the Code of Ethics, ensuring that they protect and promote their clients’ best interests. However, there is an equally important obligation to challenge policies that conflict with those ethical standards. While the Clear Cooperation Policy may endeavor to serve a noble purpose of transparency, it imposes restrictions that must be questioned—not out of defiance of NAR policies, but out of profound respect for our client’s individual needs and privacy. By complying blindly with the Clear Cooperation Policy, REALTORS® risk perpetuating policies that may do more harm than good. It is an ethical imperative to challenge such policies in pursuit of a practice that truly aligns with our professional duty to serve our clients.
Below are examples of how the Clear Cooperation Policy conflicts with the NAR’s Code of Ethics and State Law. Key articles are examined, and real-world scenarios where conflicts arise are provided.
1. Article 1: Protecting Clients’ Interests
Section: “When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS® pledge themselves to protect and promote the interests of their client.”
Conflict: The Clear Cooperation Policy forces REALTORS® to comply with MLS-mandated rules even when they do not ‘protect and promote the interests of their client.’ Clear Cooperation sometimes requires REALTORS® to act against their clients’ best interests when clients want to market their homes publicly for more than one day without placing them on the MLS. The assumption that every client desires maximum exposure for their listing is mistaken:
Many clients don’t believe that more exposure equals a higher price. If more exposure equals a higher price, why do home builders sell hundreds of thousands of homes off-MLS each year? If more exposure equals a higher price, why do hundreds of thousands of companies not sell their products on Amazon, where there is the most exposure?
Some clients care more about privacy than price. They shouldn’t be forced to surrender their privacy to sell their home.
Examples where the client may not want to market on the MLS:
A family member is seriously ill, and the family wishes to maintain privacy to avoid additional stress.
A couple going through a divorce prefers to avoid public attention until their affairs are settled.
An individual is moving for a confidential job opportunity.
The property is undergoing recommended improvements; the owner wants feedback on how the improvements may impact sales price before showcasing it to potential buyers.
Sellers want to test the asking price privately without accumulating unnecessary “days on market.”
In these instances, REALTORS® must question whether complying with the Clear Cooperation Policy is truly in line with their ethical responsibilities. REALTORS® must balance marketing and cooperation on the MLS with the duty to prioritize their clients’ best interests. When these two priorities conflict, client interests must precede MLS policy. Moreover, State law states “A seller’s agent has, without limitation, the following fiduciary duties to the seller: reasonable care, undivided loyalty, confidentiality, full disclosure, obedience and duty to account.” Clear Cooperation is forcing agents to break the law (fiduciary duty) by forcing them to push their clients to list in the MLS, even if their clients believe that marketing outside the MLS will result in a higher price or desired privacy. Furthermore, it damages the relationship between agents and MLSs, fining agents up to $5,000 for doing what their clients asked. The Clear Cooperation Policy should be removed so that NAR ethical rules can provide more flexibility to account for a wide variety of clients’ interests when marketing their homes.
2. Article 3: Cooperation with Other Brokers
Section: “REALTORS® shall cooperate with other brokers except when cooperation is not in the client’s best interest.”
Conflict: While promoting cooperation, the Clear Cooperation Policy does not account for situations where the client believes that sharing their listing on the MLS to all REALTORS® could harm their confidentiality.
Examples of Client Interests:
The sale involves sensitive family legal arrangements.
An estate sale involves parties not ready to publicly acknowledge the sale.
High-profile clients and law enforcement officials need discretion due to privacy concerns related to security or public image.
REALTORS® must balance cooperation with the duty to prioritize their clients’ best interests. When these two priorities conflict, client interests must take precedence over MLS policy.
3. Standard of Practice 1-9: Client Confidentiality
Section: “REALTORS® shall not knowingly… use confidential information of clients to the disadvantage of clients; or use confidential information of clients for the REALTOR®’s advantage or the advantage of third parties unless clients consent after full disclosure”
Conflict: It can be easily argued by homeowners under state laws that information they deem confidential is being used to advantage the MLS, a third party that sells their data, and that the Clear Cooperation Policy limits the homeowners’ ability to provide explicit and informed consent to use such information. State law in many states considers home addresses and photos confidential information. Privacy laws such as the California Consumer Privacy Act (CCPA) in California, the Texas Data Privacy And Security Act (TDPSA) in Texas, and the Virginia Consumer Data Protection Act (VCDPA) in Virginia are very focused on these issues, and Clear Cooperation exposes industry participants to increased risk under Privacy Laws. Moreover, under laws like CCPA, the MLS must have a “Do Not Sell My Personal Information” link to allow consumers to exercise this right. In this case, the MLS is violating state law when they make money from syndicating listings to any source, and aggregators are violating state law when they sell leads to third parties.
Examples of Required MLS Fields Clients May Consider Confidential:
Photos: MLS entries typically require exterior and, often, interior photos of the property. Clients might wish to keep certain home features private for security or privacy, such as ADA improvements, high-value artwork, luxury items, or floor plans.
Address Details: Clients may feel that exposure of their property’s location could impact their security/privacy, especially in cases involving high-profile individuals or those with concerns regarding disclosure of their location such as an individual with a protection order.
As REALTORS®, it is crucial to preserve client confidentiality—as defined by the client and State Law—even when policies like the Clear Cooperation Policy promote greater transparency.
Conclusion
While rooted in a desire to improve transparency, NAR’s Clear Cooperation Policy can inadvertently lead REALTORS® to breach State Law and the ethical codes NAR established to guide their profession. By understanding that each client situation is unique and often requires a tailored approach, NAR would do well to avoid conflicting policies that risk interfering with REALTORS®’ ability to serve their clients best interest. Any concerns regarding transparency and informed consent by the client can be mitigated through clear, plain-language disclosures that state what the client forfeits by not marketing on the MLS. NAR must consider the real-world implications of its policies and allow for various marketing strategies that respect the diverse needs and privacy concerns of all clients.
In challenging these policies, REALTORS® are not undermining the system but are, instead, upholding their highest moral and ethical duty to protect and serve their clients. Only then can REALTORS® truly advocate for their clients in line with the law and their foundational ethical mandates.
Thanks - kb🌞
