Texas Brokers Reject NAR Ban on Off-Market Co-Brokerage

(Illustration by The Real Deal with Getty)

Texas realtors call it serving the customer.

Their main trade association says that makes them “dirty players”.

It’s the impasse that has yet to be resolved in the wake of the National Association of Realtors’ campaign to ban members of its locals from marketing homes not listed in their MLS. Banning such transactions — known as “pocket listings” — goes against longstanding business practices in Texas, where under-the-radar transactions are often preferred to avoid reassessments that drive up utility bills. ‘property tax.

Many upscale Texas sellers and buyers want the price of their home to stay out of the public eye for tax purposes because property taxes are so high in a state that avoids income tax. And the concern is not unfounded. In May, the Austin Board of Realtors sent a cease-and-desist letter to the Hays Central Appraisal District, citing unauthorized use of its MLS data to determine home values.

The policy advocated by NAR is simple: any broker must submit a listing to MLS within one business day of marketing the property via public-facing websites, emailings, sharing networks multi-brokerage listings, social media or other methods.

Since MLS is public, the so-called “clear cooperation policy” is meant to ensure that all homes for sale are accessible to all other brokers and potential buyers, according to NAR.

Shana Acquisto of the Collin County Association of Realtors

“It was basically designed to prevent unfair advantages and keep everyone on the same level playing field, and keep consumers with the most accurate information,” said Shana Acquisto, incoming president of the Collin County Association of Realtors, a North Texas affiliate of NAR.

Capturing all sales in MLS also benefits NAR, of course, as it improves the quality of data the association collects for its reports.

But Texas brokers and agents – some of whom would comment only on condition of anonymity for fear that what they said could be retaliation by the NAR – complain that the policy unfairly restricts the services they can provide to sellers who do not want their homes listed in MLS.

“With the new policy, you also can’t market it” as a pocket listing, a broker said. “As soon as you market it, it has to go to MLS.”

Agents are allowed to share listings within their brokerage without entering them into MLS, but realtors complain that this is unfair to smaller stores.

“It limits people who are not part of a large office. You are discriminating against a small office,” said another agent, who also wished to remain anonymous. “Everyone is just trying to do the best job they can, and they make it harder.”

Brokers caught marketing a home not listed in MLS can face fines and other penalties.

NAR has left it to its local affiliates to interpret and police the rule, making enforcement uneven, especially in Texas. The Austin Board of Realtors doesn’t even recognize the rule, according to some brokers. Meanwhile, in Dallas, fines start at around $1,000 and can go up to $2,500 – and after a third violation, a broker can lose their license.

Off-market deals aren’t unique to Texas, but they’re certainly more common in the Lone Star State than elsewhere. According to a Dallas broker, the proportion of homes sold off-market in the DFW area is about 30%, even as public listings have increased. A 2021 report from Redfin put the national figure at just 4 in attendance.

While it’s primarily sellers of the most expensive homes who want to keep their listings out of public view, even homeowners at the other end of the market may want to sell off-market, according to Chandler Crouch, realtor and attorney for the Dallas area.

Chandler Crouch

Chandler Crouch

“I have clients who have a house they want to sell that’s not in good shape and no owner or occupant is going to buy it, so they have to sell it to an investor,” Crouch said. “Some investors will pay a lot more for a property not listed on the MLS.”

In this case, the NAR policy may actually put pressure on an agent to go against their legal obligations to the seller.

“The obligation I have as a fiduciary to my client is to put their interests first — that should be what our system is built on,” Crouch said. “And if I don’t do that, then I’m breaking the law.”

Acquisto speculated that much of the local backlash against the policy is driven by what it called “dirty players” who get a power trip by dominating their access to off-market deals over other brokers.

“I think the way it’s affected is the ‘dirty players’, they don’t like that. Because they kind of have control and like to be the ones everyone has to go to because ‘ they have a secret list,” she said. “So it’s kind of a power move, I guess.

But some Texas brokers see the policy as NAR putting its own interests above those of the sellers its members are supposed to serve.

“Is your angle to do what is in the best interest of the owner or what is in the best interest of the Board of Realtors?” Crouch asked.