NAR & NWMLS Support Fair Housing with Listing Policies
If you’ve taken a fair housing class, you know there is always the section of class where the instructor says “…and you should avoid use of these words in advertising”.
Typically, there is a list of words following that statement that causes students to respond with something along the lines of “yeah, but I use that word all the time and I’m not trying to say anything bad, I’m just describing the property” and then a discussion ensues about why the historical use of some words is so entrenched in advertising intended to segregate, that the words should be avoided even if the advertising broker intends no harm. Almost always, a word near the top of that list of words to avoid is the word “exclusive”. Do not advertise a home as being located in an “exclusive neighborhood”. Again, it is easy to push back on that word of caution with “yeah, but …” however, the roots of that advertising phrase run deep into our nation’s history of segregated housing. Even when it was no longer lawful to prohibit people from residency in a neighborhood based on their skin color, beliefs or religion, developers, builders, sellers and real estate brokers drew boundary lines by advertising a neighborhood as “exclusive.” If a neighborhood was “exclusive” that meant that certain people were included and all others were excluded. The substantive meaning assigned to the word “exclusive” is that a few are included but most are “excluded”. Something is not exclusive if it is open and available to everyone.There was a time, before multiple listing services existed, that brokers marketed property only through yard signs, word of mouth and individual advertising. That one-to-one marketing system limited exposure. Using code words or not, it was easy to control who was able to purchase property when property was advertised only to certain people. A buyer who was not deemed suitable by the real estate broker and the seller would never learn of the availability of the property. With the advent of the MLS, a listed property is marketed broadly, to all potential buyers, regardless of whether the buyer is known to the listing broker and regardless of what the buyer looks like or how the buyer thinks. Most MLSs introduce property to worldwide buyers through a download to various real estate internet sites through syndication and IDX feeds. The ability to expose a seller’s property to the broadest market is the very reason MLSs were created in every corner of the country.
There was a time, before multiple listing services existed, that brokers marketed property only through yard signs, word of mouth and individual advertising. That one-to-one marketing system limited exposure.
In Washington, most residential brokers are members of NAR and/or NWMLS and most residential brokers find value in marketing residential property through the MLS to which the broker belongs. For decades, NWMLS rules have required listing brokers to input their listings in the NWMLS database for sharing with other brokers and buyers. More recently, NAR adopted a similar policy known as the Clear Cooperation Policy. These policies undeniably further fair housing goals. The policies have some key differences but the over-arching driver for both policies is the same: when a marketed property receives broad exposure, more buyers have an opportunity to purchase the property, regardless of whether the buyer knows the listing broker or not. There are benefits to sellers when more buyers view seller’s property. In very general terms, more buyers for a property will typically improve the seller’s price and terms through competitive negotiations. This article, however, will focus on the benefits to buyers and specifically, benefits viewed through the lens of fair housing.NAR promotes the Clear Cooperation Policy, which has been in existence for five years, and requires a listing broker who is a member of an NAR MLS to market property through the MLS within one business day of public marketing. The NAR policy has always included the opportunity for a seller to direct the listing broker to refrain from all public marketing, including listing in the MLS, so long as seller signs an informed consent following disclosure of the risks associated with an “office exclusive” listing. In that case, listing broker may offer the property but may not engage in public marketing. That marketing approach is not used frequently in Washington but for an NAR MLS member, it is available in the rare instance that a seller wants to avoid notoriety and publicity.
The Clear Cooperation Policy was recently amended to allow a seller to direct the listing broker to engage in public marketing through the MLS, making the property available to all MLS members but withholding marketing through syndication or IDX feeds that would be available for viewing by the public for an identified period. Again, the seller must sign an informed consent after disclosure regarding the marketing exposure seller rejects.
NWMLS’s policy requires all listings to be entered into the MLS before any promotion of the property, but also provides sellers and their brokers with a host of options for their listings to address privacy and security and different approaches to marketing to address sellers’ unique circumstances.
Common sense suggests and history shows that the best way to provide exposure of seller’s property to the largest number of buyers and buyers who demonstrate a diversity of background and thought, is through the MLS. The MLS is the one and only central repository for information regarding the availability of real estate in a localized area. While there are lots of websites and other real estate promotional opportunities, each MLS offers the most comprehensive database of available properties within its region. It is the only reliably viable option for buyers to view property outside the presence of seller and listing broker. Thus, an MLS policy creating an obligation on listing brokers to market residential property through the MLS is a policy that promotes the goals of fair housing.
If a broker operates outside the framework of the broker’s MLS to market property, many buyers, if not most, will never know the property is available. “Pocket listings”, or as they are sometimes called, “shadow listings” or “off-market listings”, will be seen only by the buyers who are introduced to the property by the listing broker or the seller. This begs a simple question. If a property’s availability is exposed only to acquaintances of seller or listing broker, what is the likelihood that the property will be exposed to potential buyers who look and think differently from seller and listing broker? Said differently, what is the likelihood that a property which is made available only to the acquaintances of seller and listing broker will sell to a buyer who is a member of a protected class under fair housing laws? Any chance is significantly diminished as neighborhoods retain long established consistency of race, religion and other immutable characteristics.
The listing broker who counsels the seller to avoid listing on the MLS risks allegations of Fair Housing violations. A frustrated potential buyer, who never knew the property was for sale, and who is a member of a protected class, may argue that broker withheld the listing from the MLS in an effort to limit the diversity of buyers who might pursue the property. Conversely, inclusion of the listing in the MLS guarantees that all buyers and their brokers have equal access to information regarding the property and equal opportunity to bid for ownership.
As is the case with seemingly all industry policies these days, there is enormous controversy and confusion swirling around these MLS mandatory listing policies. Politics, personal biases, fears and uncertainty often drive frustration and anger. Cutting through all the chaos, these MLS listing policies result in a goal that every real estate broker should be able to cheer. The policies result in a market where every buyer, regardless of color, creed, religion, sexual preference, disability or any other immutable characteristic has access to purchase residential property. There should be no confusion or controversy. That is a worthy goal and policies designed to achieve that goal should be embraced by all industry members.
Annie Fitzsimmons
Annie is the Washington REALTORS® Legal Hotline Lawyer. To ask Annie a Legal Hotline question or to access the Hotline Q&A database please visit warealtor.org/legal-hotline.