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No one’s talking about what brokers would actually be offering sellers if they were concerned about seller choice.
That’s according to James Dwiggins, co-CEO of franchisor NextHome. Inman spoke to Dwiggins ahead of his appearance at Inman Connect San Diego at the end of this month. In Part 1 of this interview, Dwiggins laid out three possible paths for the industry as a result of the current private listings debate.
READ PART 1 OF THIS TWO-PART EXCLUSIVE INTERVIEW HERE
In Part 2 of this interview below, Dwiggins commented on Compass’s latest missive declaring the brokerage doesn’t consider the National Association of Realtors’ Clear Cooperation Policy binding, the future of multiple listing service policy, his agent workflow product, Rayse, and why he thinks NAR’s ad campaign does a “horrible” job of promoting Realtor value.
This interview has been edited for length and clarity.
Inman: It’s no secret that you’re pretty opinionated about big issues in the industry. The latest thing that happened last week was Compass’s letter to NAR and MLSs. What were your thoughts on that?
James Dwiggins: I think it is posturing by Robert [Reffkin] to get his way. I don’t think there’s any scenario where MLSs can not enforce the rules because if they’re not going to enforce rules, then what’s the point in having any rules? So they can’t be selective about them. MLSs will enforce the rules. Agents will get fined, and they’ll either have to choose to comply or keep getting fined. The last recourse that an MLS will do — I verified this — is they’ll boot them from the MLS. I don’t know how an agent is going to do business without having access to the MLS.
Robert’s own [court] declarations have stated that the entire future of Compass rests on this [three-phased marketing] strategy. They’re not going to back down. Maybe they’ll start suing MLSs and NAR to get the rules changed.
But this is a fight for what’s right for sellers. If everybody’s so hell-bent on seller choice and the options that are there aren’t good enough, there’s an easy answer to give sellers 100 percent of whatever choice they want: an open listing agreement.
An open listing agreement means it’s not binding, it’s not exclusive. It means that the seller can do whatever they want. An open listing agreement means that it’s not on the MLS, there’s no requirement to follow CCP, there’s no requirement to follow almost any MLS rule at all because it’s an open listing agreement.
I think sellers deserve optionality. In the very rare case that someone needs to have complete privacy, there’s the option to remove the address from the MLS so it’s not searchable. There’s an option to “Internet: No,” which has been around for forever, so it’s not distributed out to the portals. It’s only in the MLS for agents to see.
Then worst case scenario is if sellers don’t like that, then an open listing agreement allows them to do whatever they want. Then an agent’s only compensated when they procure a buyer.
You said it was posturing by Compass, that letter. Why do the posturing?
I think it’s posturing to try and put pressure on the MLSs to make a change to the rules, or not enforce CCP or not follow NAR’s issues, but then if they don’t follow NAR’s structure, they can have their charter revoked. There’s a whole bunch of things that can go wrong if they’re not doing that.
There are some brokerages like Compass, Howard Hanna, Windermere, where their leaders have suggested that NAR should get out of the national MLS policy business. What are your thoughts on that?
It’s a double-edged sword. They’re not wrong in some ways, but they’re wrong in others. It doesn’t take more than going back in time, where we had 1,000 MLSs and there was very little governance, where you have overlapping policies.
Where I am in the Bay Area, you’ve got three MLSs and if you’re in Fremont, you could literally overlap between all three. Those policies between them can vary significantly. What you’re getting is very different processes and rules and regulations and fines that can be very hard for a brokerage to work around those rules. They have to adapt the way that they do things for display of data, you’ve got different rules for governance on that.
It becomes a problem when you’re dealing with lots and lots of MLSs. We have 230 MLSs that we aggregate. I’m in 50 states. It’s a nightmare. The fact that there is national governance makes it a lot easier to do things with. If every one of those MLSs was operating in their own vacuum, I don’t even know how we would handle that.
In theory, I like the idea of NAR not dealing with that. I’ve been pretty strong about “they need to focus on advocacy.” The reverse of that is, if you don’t have some type of national governance structure, especially when companies are in multiple markets, it can become a real issue very, very quickly. So I’m kind of in the middle.
Is there anything else about MLS policy or litigation that you want to predict for the second half of the year? Is there anything big that you think is going to change?
You’re going to find a lot of MLSs aren’t going to enact the delayed marketing exempt listing status from NAR. A lot of MLSs have already said they’re not going to implement it, or that it already crosses over with some of their other things. That’ll be some controversy. I don’t think you’ll see the DOJ [Department of Justice] having a lot of involvement based upon where we think they’re going now with their direction, which is a good thing.
This right now what we’re dealing with is the fight for how the industry positions itself in the future. The decisions the industry makes on this there’s going to be massive domino effects from it, and a lot of things people are not thinking about. So we’ll see where it goes.
Why do you think the DOJ is going to be hands off?
Certainly the Department of Justice is moving away from government oversight. It’s been pretty clear by a lot of their decisions that they’re making. I think as [U.S. Attorney General] Pam Bondi is changing people out and staffing, there’s just been a lot of conversations about the DOJ trying to learn a little bit more about our business.
Obviously, with every administration, the appointees have different directions and initiatives. You saw MLS PIN’s settlement that they finally got approved. [The DOJ] didn’t go further, of basically saying that cooperative compensation has to go away completely. It has to go away in the MLS — that was enough for them.
The Department of Justice, up until recently, and they may still have the same opinion, just wants to see cooperative compensation go away, period. I have to agree with them on this. But they’ve managed to state that as long as it isn’t on the MLS, that seems to be fine. Just from reading the tea leaves of the news, there’s probably a lot of other more important things they want to worry about.
My last few questions are about Rayse. What led to its creation? Why do you think that agents weren’t doing enough to demonstrate their value before?
Well, 90 percent of what agents do is behind the curtain. It’s the stuff that you can’t see. It’s the phone calls they’re having. It’s the emails they’re having back and forth. It’s driving to a property. It’s showing homes. It’s showing 15 houses, and the buyer still hasn’t made an offer on anything.
The way all human beings operate is we only place value on what we can visually see. And if you think about most of what a Realtor’s job is, it’s to shelter the clients from all the drama, and they’re doing all of these things behind the scenes, and it also is done over a period of time.
So imagine if you’re buying a house and you look at 15 homes over the course of two or three months, the Realtor has been spending all that time with you, making a phone call, talking to listing agents, setting up the appointment, going to the appointment, showing the property, calling the listing agent back, reading the disclosure package, sending you everything you know about that property. “Do you want to write an offer?” “No, I don’t.” And you go to the next home and the next home, the next home, the next home, the next home.
Before you know it, the Realtor is already 60 hours in, but you forgot about all that because that was 30 to 45 days ago. So Rayse’s whole point is to bring all of that forward so that there’s the ability to articulate the amount of work that goes into a real estate transaction — phone calls, drive time, mileage, expenses, activities, outcomes, expectation — all of it in a presentation, in an app to collaborate with the consumer on, which the consumer absolutely loves, because they can actually see what the agent’s gonna do and as it’s being done, is updating them in real time.
Two things have come out of it. No. 1 is buyers. They go, “I had no idea my agent was doing all that work,” and there’s a total different appreciation for it. And then No. 2, which is the funny part, is agents, after they see all of it, they realize all the work they did, and they’re like, “I’m not charging enough.”
What Rayse is doing today is the future of how every Realtor will do business. You cannot work with a consumer in a non-transparent experience in the future, and that future is coming really fast.
NAR has had this advertising campaign promoting Realtors forever, but is there something NAR can do to bring out this value? Why does it fall on entrepreneurs to showcase this value when agents are paying into Realtor associations and devoting all this money to ad campaigns and things to show the value of Realtors?
I’ve been very openly critical of where there’s problems with NAR. Do I think NAR lost vision? Yes, I think that they’ve lost an understanding of who their customer was, that they also need to constantly articulate their value better, their communication needs to be better, and their job is to make sure people understand what they’re paying for too.
[NAR CEO] Nykia [Wright] is absolutely the right person to change it. I know her very well. She’s an amazing leader. She’s the right change agent for the business. It takes time.
Do I think NAR needs to be thinking about how it wants to actually show Realtor value? Yeah, I do. I think their ad campaigns have been horrible. The consumer doesn’t care. Zillow does a significantly better job on identifying what the consumer cares about in a real estate experience, unfortunately, but NAR is going to find its way. They’re going to figure this out. I do believe that.
They understand what they’re good at. They’re learning what they’re not good at. That’s why she’s making a lot of changes with staffing. They’re reducing departments down. They’re going to hone in very strongly on advocacy. They want to focus on training. I don’t think that personally that’s where they should be, but again, they may know something that I don’t.
