Clear Cooperation Policy (CCP) and Participation Rule: The Conflict of Interest
Both the Clear Cooperation Policy (CCP) and the Participation Rule have been central to the ongoing Department of Justice (DOJ) investigation into the practices of the National Association of Realtors (NAR). While these policies are designed to promote transparency and fairness, they also raise concerns about potential conflicts of interest, particularly due to the fact that MLS systems are often owned by real estate brokerages.
The Conflict of Interest
MLS systems are crucial tools that enable real estate agents and brokers to share listings and facilitate transactions. These systems essentially serve as a central database where real estate professionals can access properties for sale, track market trends, and coordinate deals. In most cases, MLS systems are owned by real estate brokerages or associations of brokerages.
The potential conflict of interest arises because real estate brokerages that own MLS systems might have an incentive to implement policies—such as the Clear Cooperation Policy (CCP) and the Participation Rule—that benefit their own interests, including increasing commission income and restricting competition. Here's how these conflicts manifest:
Commission Fees: Under the Participation Rule, in order for a real estate agent to earn a commission through the MLS system, they must agree to certain rules set by the MLS. Because MLS systems are often owned by brokerages, there’s a built-in incentive for those brokerages to maintain the structure increasing the costs of home transactions.
Control Over Listing Information: The Clear Cooperation Policy (CCP), which mandates that homes listed for public marketing be placed on the MLS, could be seen as restricting sellers’ freedom. If MLS systems are owned by brokerages, they could influence or enforce policies that limit sellers’ options, such as compelling them to put their listings on the MLS, even when they might prefer to market their home privately or to a smaller, more targeted group of buyers. This limits competition by forcing sellers to use MLS systems controlled by brokers, which may not always align with their best interests.
Limited Access for Non-Traditional Services: MLS ownership by brokerages could also create barriers to alternative or non-traditional listing services (e.g., flat-fee services or iBuyers) that may offer lower-cost, more flexible options for home sellers. These alternatives are often unable to participate in MLS systems or must adhere to restrictive rules designed by traditional brokerages. The CCP and Participation Rule contribute to this by potentially shutting out innovative real estate models that could lower costs and give sellers more control over their home sales.
The DOJ Investigation: Potential Antitrust Concerns
The DOJ’s antitrust investigation is focused on whether these policies unfairly restrict competition in the real estate market. By controlling access to MLS systems and dictating how compensation works, brokerages with ownership stakes in MLS systems might be disadvantaging home sellers and limiting market entry for new or non-traditional competitors.
“In essence, the DOJ is questioning whether these policies create a closed ecosystem where certain real estate professionals—particularly those who control the MLS—can benefit at the expense of sellers and buyers.”
The Clear Cooperation Policy (CCP) and Participation Rule may contribute to higher costs and less flexibility for home sellers, all while benefiting brokerages that own MLS systems. If the DOJ concludes that these policies are anti-competitive, it could lead to significant changes in the way homes are marketed, how agents are compensated, and how the real estate market operates overall.
What This Means for Home Sellers and the Industry
If the DOJ’s investigation leads to changes in the way real estate transactions are handled, home sellers could see lower costs and greater flexibility in how they market and sell their properties. For example, sellers could be allowed to bypass traditional MLS listings and work with alternative platforms that offer more cost-effective or streamlined services, potentially keeping more of their equity.
At Sunday, we believe the future of home selling should be transparent, flexible, and affordable. By cutting out the need for traditional commission structures and giving homeowners more control, platforms like Sunday aim to disrupt the current system and offer a better, more cost-effective alternative to the traditional real estate model. With the growing scrutiny on NAR policies, changes in the industry are paving the way for new, innovative home-selling models—models that better serve the interests of the consumer, not the brokerage.
The evolving legal landscape highlights the need for a more competitive, transparent, and seller-friendly market, and we’re excited to be a part of that change.
