Above, Brian Donnellan, president and CEO of Bright MLS, at RISMedia’s CEO & Leadership Exchange Sept. 5. Photo by AJ Canaria.
Editor’s note: Bright MLS offered the following clarification regarding the below coverage of CEO Brian Donnellan’s comments with respect to the relationship between the MLS and NAR, which RISMedia is printing here in its entirety:
“Recently, Bright CEO Brian Donnellan was quoted in two RISMedia articles: one about the RE/MAX settlement, and one about MLSs and NAR, and those comments were taken out of context. To clarify: RISMedia asked Donnellan to speak at a closed session VIP event, and share his thoughts on the state of the industry, and what MLSs needed to think about moving forward.
Donnellan’s remarks during that closed session were not at all related to litigation, or NAR—they were about the future of the business, the MLS and its system of governance, and the value proposition as the convenor of cooperation among all brokers for the benefit of consumers. His comments also focused on what Bright as an MLS needs to do to continue to support our brokers to compete effectively in a shifting competitive landscape.
What did not come across in the two articles where Donnellan was quoted was his focus on the MLS business and more specifically, the MLS that he leads, Bright MLS. Just to be crystal clear, and to ensure that there is no ambiguity on Donnellan’s or Bright’s thoughts on the matter: Brokers and agents are the lifeblood of the real estate industry. Period.
Bright will continue to focus our efforts on building the best systems, products and services for our brokers and our subscribers, so that we can all service the best interests of the home-buying and selling public together. And if we are to extend Donnellan’s thoughts beyond the footprint of Bright: MLSs need to take a hard look internally and ensure they are doing the right things to help Brokers and subscribers succeed in a tech-fueled competitive landscape.
If through that internal discovery MLSs uncover that they aren’t doing the right things – which many are not – the respective MLS leadership and the boards that govern them need to have serious discussions about what their next steps will be. The status quo is not a winning strategy by any means.”
Facing the pressure of multiple major class action lawsuits and federal investigations that have now stretched out over half a decade, some of the most prominent voices in the MLS industry are beginning to call for major structural changes—specifically, in the relationship between MLSs and the National Association of REALTORS® (NAR).
At RISMedia’s CEO & Leadership Exchange, Brian Donnellan, president and CEO of Bright MLS and one of the leading voices in the multiple listing world, offered a frank, if very preliminary, summary of this new impetus, addressing a VIP audience representing some of the largest MLSs around the country.
“We need to figure out how to move away—not divorce from them, but move away (from NAR), Donnellan said. “NAR is not going to be making rules for us, I think, moving into the future.”
The relationship between MLSs and REALTOR® associations remains a focal point of regulatory scrutiny. Multiple class action lawsuits as well as a Department of Justice (DOJ) investigation have alleged that NAR policies, including requiring offers of buyer broker compensation and mandating that listings appear on NAR-affiliated MLSs, inflate commissions and violate antitrust statutes.
RE/MAX and Anywhere Real Estate both recentlysettled lawsuits, paying out tens of millions of dollars and agreeing to change policies. Several other major brokerages, as well as more than a dozen MLSs, are still defendants in these suits, which are seeking total damages in the tens of billions.
With the fallout from these lawsuits still extremely uncertain, and worries that real estate businesses will see their bottom lines heavily impacted, Donnellan and other MLS leaders are urging proactive change, while still working to mitigate the potential impact of regulatory moves.
Merri Jo Cowen, CEO of Stellar MLS in Florida, said the beginning of the conversation needs to now be about preparing for change, rather than resisting it.
“Are we going to just sit back and see what happens? I don’t think so. To me, what we should be focusing on right now is the big ‘what ifs,’” she said. “What if compensation in the MLS becomes optional? How do you negotiate outside of the MLS?”
For the average agent or broker, it is hard to predict what, if anything, might change in the day-to-day operation of a real estate business. But there remains a possibility that regulators could order major changes, potentially even having buyers pay agents out of their own pockets.
Dionna Hall, CEO of Broward, Palm Beaches and St. Lucie REALTORS® and BeachesMLS in Florida, said she has hired two lawyers who are former federal agents to lobby on behalf of the industry, as well as an economist who is going to “put numbers behind” the value consumers get out of the MLS.
“We’ll be setting up meetings with, and sitting down with the DOJ and the FTC to really talk about what this all means,” she said.
At the same time, however, the tone of the conversation has shifted significantly over the last few months—and even more so in the last few weeks following the RE/MAX and Anywhere settlements.
Donnellan used the image of a rock being repeatedly struck by a hammer over a long period.
“It’s not that last strike that actually makes the rock split,” he said. “(But) I think we are here right now with that rock splitting.”
Plans and procedures
Unfortunately, with no clarity on exactly what these looming changes are, real estate leaders are still forced to speak in generalities, and prepare for a plethora of scenarios.
But the “divestment” of MLSs from NAR seemed to be a point of consensus, even as that scenario was not inherently attractive on its own merits.
“I come from an organization with 19 shareholders, all REALTOR® associations that own our MLSs—that’s going to freak them out,” said Cowen.
The close ties between MLSs, major brokerages and REALTOR® associations is a focal point of the class action commission lawsuits, as well as the DOJ investigation (which remains in limbo after a settlement agreement was voided in 2021).
Another lawsuit dealing with policies that favored REALTOR®-owned MLSs over competitors was dismissed in part earlier this year.
Whether this sort of decoupling would be enough to satisfy regulators is unclear. Donnellan proposed that a shift away from NAR would allow a more supportive, constructive and efficient relationship with brokers, specifically regarding cooperation—the commitment of giving all agents access to all listings on the MLS.
“The brokers are now selectively honoring cooperation—cooperation, the foundation of this industry, and it has been for a hundred years,” he said. “Most MLSs are governed by brokers, and there’s an inherent conflict there, which I think we need to deal with.”
Donnellan urged brokers to “stand up and take control of their business,” and begin “calling balls and strikes” when agents don’t follow the rules. He added that a fractured MLS industry, with hundreds of semi-independent individual organizations across the country, is an easy target for big players like the portals to “roll up.”
Issues of expansion or consolidation—something that has long been a source of controversy in the MLS world—is at least partially a product of relying on local REALTOR® associations, according to Anne Marie DeCatsye, CEO of Canopy MLS, who claimed that many smaller organizations are “still in the lockbox and key business,” to the detriment of members and consumers.
“It’s simply for revenue and it keeps them alive from a revenue standpoint,” she said.
She added that NAR and other REALTOR® associations “have a role in advocacy and education,” but that mandating rules for MLSs is no longer something that makes sense for them to be involved in.
“NAR should really recognize that a lot of MLSs are…regulated by state law, and we don’t need regulation from NAR, because where did that get us?” she asked.
But what would a post-NAR MLS system look like? And who would create standardizations or rules across the industry (if anyone)?
Donnellan again emphasized the role of the broker, working in direct cooperation with the MLS, in efforts to consolidate and create efficiencies, as big national players like Zillow seek to expand their influence.
“You have to recognize the portals for who they are. They’re in here. They are actually going to move you further and further away from the transaction. They’re going to actually make you come to them,” he claimed.
Another proposal was carving out a larger role for the Council of Multiple Listing Services (CMLS), an industry advocacy organization which claims more than 225 MLS members “work(ing) to promote the value proposition of the MLS.”
Denee Evans, CEO of CMLS, said that having training or requiring certain qualifications for MLS board members could better “set the standard” for the industry.
“I’m excited about that opportunity. I think that’s one of our biggest areas to make improvements and impact over the coming years,” she said.
For everyone, a very important emphasis going forward will be not repeating the same mistakes that caused so much regulatory scrutiny and legal attacks.
Richard Haggerty, CEO of OneKey® MLS, characterized the issues between NAR and the DOJ as a “total breakdown,” urging industry leaders to “thoroughly vet” any new product, policy or service from a legal perspective.
“We’ve had to shell out a fair amount of money to do that kind of analysis, but it’s worth it in the end,” he claimed.