The California Regional Multiple Listing Service (CRMLS) appears to be anti-agent. Yes, you read that right – an anti-agent MLS. This organization is working to prevent agents from prospecting to expired listings using data acquired from the CRMLS. Edward Zorn, the Vice President and General Counsel of CRMLS, is reacting to his sister-in-law’s annoyance over receiving phone calls from numerous agents the day her own listing “expired”. He is now using the organization’s bylaws to threaten fining agents for prospecting expired listings if they get the homeowner’s information from the CRMLS. The CRMLS’s stance against expired prospecting needs to be stopped for the sake of the industry – here’s why:
A Threat to the Industry
Data shows over the last couple of years, 19% of homes listed in the CRMLS expired. Of those properties, 62% of them ended up selling with a different agent.
More than 300,000 homes across America expired in January alone. Nearly 7,000 homes expired during February just from the CRMLS. Data shows over the last couple of years, 19% of homes listed in the CRMLS expired. Of those properties, 62% of them ended up selling with a different agent.
Why do these homes not sell and whose fault is it? Sometimes even the best real estate agents run into trouble selling a home, but often they don’t sell due to a lazy or inexperienced agent.
Maybe an agent is able to get the listing because they convince the homeowner they can sell the home for more than it’s worth. Other times it all comes down to really bad marketing; the photos of the home might be terrible or maybe the agent uses poor grammar or spelling in their advertising materials. A homeowner could be dealing with an agent who doesn’t follow through with basic administration duties like sharing the listing through the proper avenues. Or maybe they are bad at showing homes. They might put a sign up in the seller’s yard, but never actively market the property. You get the idea.
The point is, although many agents are very good at what they do, many aren’t. According to NAR’s Danger Report, the number one threat to the real estate industry is the incompetent agent. Anyone who passes the state and federal exams can get a license – regardless of their ability or skill. As a result, many agents aren’t properly trained to manage their clients’ largest asset and the underserved homeowners lose faith in real estate agents and the industry.
“This industry has a very low barrier to entry, which varies state-by-state. Unlike law, accounting, engineering, or finance, the education and certifications required to practice real estate are very low. In some states less than 20 hours of mandatory education are required before taking a license exam,” says Jack Miller, President of T3, the company behind the Danger Report.
He goes on, “because of this, it is relatively easy for less-qualified individuals to practice in the industry, which can significantly damage the perception of the industry as well as create bad customer experiences. This perception, and the actual bad experiences themselves, create an environment where the good are lumped in with the bad, thus potentially devaluing the work of the truly professional individuals that practice real estate as a life-long career.”
A Blatantly Anti-Agent “Solution”
“This definitely feels anti-agent,” said Bill Arseneau, a California agent/broker for more than four decades. “The rule hasn’t been enforced in 20 years. Why now? It’s just creating more work for good agents. Now, if you get information about an expired home on the CRMLS, you have to work the neighborhood to keep from looking like you are just prospecting to the one expired home.”
So how does this make the CRMLS “anti-agent”? In preventing agents from prospecting expired listings, they’re prohibiting very powerful tools that combat what the NAR considers the main threat to the real estate industry: incompetent agents. Prospecting to expired listings gives good real estate agents the opportunity to restore faith in the industry for discouraged homeowners who unsuccessfully listed with an under-performing agent. Again, 62% of the homes that expire in the CRMLS sell under a different agent.
Kelly French (an agent in Florida) uses expired listing tools to help combat poor perceptions of the industry. She finds homeowners whose agent couldn’t sell their home and works very hard to replace the bad experiences for positive ones. “Prospecting Expireds is good, because we can take a bad real estate experience for a homeowner and show them a good experience.” She uses her abilities as a competent agent to restore the industry’s reputation and build her business.
Luckily for Kelly, she doesn’t prospect in California. If you’re an agent in California, CRMLS is working hard to take this option away from you. They’re doubling down on a rule that doesn’t allow agents to use data entered into the MLS to prospect for new clients. They’re threatening potential fines of up to $15,000 against agents who are turned in for calling expired listings with phone numbers obtained from the CRMLS.
CRMLS’ Rule
A rule set by the MLS states that, “The purpose of an MLS is to market properties and offer compensation to other broker participants and real estate subscribers for the sole purpose of selling the property. Sellers of properties filed with the MLS have not given permission to disseminate the information for any other purpose. Participants and subscribers are expressly prohibited from using MLS information for any purpose other than to market property to bona fide prospective buyers or to support market evaluations or appraisals.”
Edward Zorn, Vice President and General Council at CRMLS has stated that, “trolling expired or canceled listings in an effort to secure a new listing clearly falls outside of the permitted uses of MLS information pursuant to the rule.” The CRMLS task force (made up of active brokers and agents) decided that the language within this rule does indeed prohibit agents from marketing to expired listings. However, they directed the CRMLS Compliance Department not to issue citations for any alleged violations for that practice.
“Brokers on this committee are not looking out for the best interests of their agents. The committee is most likely made up of brokers and agents who may only have minimal transactions a year,” said Arseneau.
Zorn writes, “They determined that marketing to expired listings is a very fact-sensitive allegation and would most appropriately be addressed by either the seller or their prior listing agent reporting those solicitations to their local association for a disciplinary hearing.”
An Opportunity to Turn It Around
This announcement is frustrating to California agents like Arseneau who believe very few agents even realize there’s a rule on the books that could result in a fine. It’s especially troublesome to those who know that prospecting expired listings is a great way to change homeowner perceptions of the real estate industry and the commissions they pay agents. Think about it: what better way to turn around a “bad agent” experience than to give sellers a completely different experience – one where their home sells.
There’s no doubt that sellers are being contacted by agents the same day their listing expires. This practice is what prompted the CRMLS to remind agents that it’s against their rules to prospect to Expireds. The CRMLS board believes homeowners find the onslaught of early-morning phone calls a violation of their time and privacy. However, Robert, a homeowner from Nevada, doesn’t see it that way. He advises sellers to adjust their mindset to one of gratitude towards these competent agents who are calling with the intent to help. He says they can use the calls as an opportunity to interview some of the best agents in their area to find someone who can sell their home.
“When you start getting those calls,” Robert says, “you have to be open-minded. In return, you have to be serious about selling your home.”
When he was contacted the same day his home expired, Robert found the new agent’s market knowledge to be very valuable. The new agent, Paula Burlison, was honest with him about the market value of his home, and she showed him that by lowering the property just $5,000, it could create an opportunity for multiple offers. Robert took her advice, and within a couple months of signing with Paula, he finally sold the home. She found his contact information under an expired listing and ended up being the very agent he needed to feel better about the industry.
Dangers of Continuing Down this Path
It should be stated that not all homes expire because of “bad” agents. But it doesn’t matter whether the agent is good or bad. In the homeowner’s mind it’s never their own fault, it’s the fault of the agent. If homeowners are left with the perception that the agent couldn’t get the job done, then CRMLS is forcing these people to alternative methods of selling their home.
If homeowners don’t experience a “turn-around” with a new agent, they’re far more likely to devalue agents altogether and cut them out of the process entirely. They may want to take a route that leads them to Zillow Instant Offers, Offerpad, FSBO, or discount brokerages. This course of action will not be advantageous to agents or brokers (who feed the MLS their info). A broker’s focus should be entirely pro-agent.
After speaking with hundreds of real estate agents, I’ve found that the successful ones get many of their clients from prospecting expired listings. It’s one of the top five ways they find new clients, and it’s also the number one way they get referrals.
What the CRMLS Should Do Instead
Arseneau believes the CRMLS board should only target the worst offenders. He would like to see them only attempt to fine those who are making calls before 9 a.m., or making a ridiculous amount of calls to the same homeowner.
Better agent training can go a long way in helping homeowners have a positive experience when their home expires. Jack Miller believes that, “The broadest path to mitigating this problem is increasing the educational requirements at the state level, so that it is more challenging to attain and keep a real estate license. Secondly, brokers can play a big role in upping the quality of the agent population, by refusing to hire agents that create legal or customer service risks.”
He continues, “The best thing at this point is to invest in yourself in order to practice real estate at a very high level. Education, staying up with current trends and your market, and consistent marketing and prospecting are the best practices for a successful real estate career. The professionals that practice real estate full time generally have less to worry about, despite the risks to the industry, and are better equipped to handle turbulent times.”
Final Takeaways
Great agents need to be able to prospect to expired listings. It’s critical in helping many homeowners sell their homes and restore their trust in the real estate industry – changing growing perceptions that real estate agents are incompetent. CRMLS should stop pushing agents away from expired listings and allow them to rescue disgruntled homeowners who still need to sell their home.
Brokers can educate agents on respecting the Do Not Call registry and other telecom guidelines. And of course, agents do have a responsibility to be very respectful of a homeowner’s time. They should have boundaries with how early and how often they call.
This alleges that our MLS is “anti-agent” and “threatening potential fines.” Neither of these is true. Let’s use this as a moment to clear up a few things.
Yes, farming expired listings is against the rules. If a seller’s listing expires, and a real estate professional uses MLS information to contact that seller, they are violating CRMLS Rule 12.11.
However, CRMLS did not invent the expired listing rule. It’s part of the California Association of REALTORS® Model MLS Rules, and has been for over 20 years. Rules like these are created by committees of hundreds of California agents and brokers. The CRMLS rule mirrors these rules.
(In another potential rule violation, the companies that “scrape” for expired listing data often also include “On Hold” and “Withdrawn” listings. These types of listings are still under agreement. Contacting anyone with this kind of listing would mean breaking the Code of Ethics, with all the attendant risk involved.)
It isn’t just CRMLS rules, either. The Do Not Call registry exists for cases like this. If you call or text someone with their phone number listed on the DNC registry, no amount of convincing sellers to “be open-minded” will save you from significant legal liability.
As for the task force – CRMLS convened it not to punish anyone, but to explore whether the rule should be changed. Here’s the full quote from the original article:
“However, [the task force] directed the CRMLS Compliance Department not to issue Citations for any alleged violations for [farming expired listings]. They determined that marketing to expired listings is a very fact-sensitive allegation and would most appropriately be addressed by either the seller or their prior listing agent reporting those solicitations to their local Association for a disciplinary hearing.”
CRMLS is not “threatening fines” or “punishing agents.” CRMLS is advising professionals to follow their own, long-established rules to shield them from liability. That’s pro-agent, not anti-agent.
Finally, as real estate professionals, we have to do what is in the best interest of the consumer. We’d encourage you to put yourself in a seller’s shoes. Does anyone really like getting calls from dozens of strangers all throughout the day? The seller agreed to enlist someone to help sell their home. They didn’t agree to publish their phone number once the contract expires. It’s borderline harassment, and, if the seller’s phone number is on the Do Not Call registry, it’s illegal
We hope this helps clear up more information on this controversial issue. Please let us know if you have any questions or concerns.
Hi Art, I appreciate your response as the CEO of CRMLS. I do stand by the statements made in my report. I understand that you are pulling back from the CRMLS doing the fining, but the whole point of the blog CRMLS posted was to remind agents if they are caught soliciting to expireds with information gained from the CRMLS, they could face a fine up to $15,000.
Here’s the continuation of the paragraph you posted above.
“By proceeding in this manner, a local Association’s Professional Standards hearing panel would have the ability to fine up to $15,000 for any violation of Rule 12.11.”
It’s a scare tactic the CRMLS hopes works with agents. Your board may have wanted to pass the buck to the local Association’s Professional Standards hearing panel, but you wanted the message to get across loud and clear. Do it, and you may find yourselves $15,000 poorer.
To me the most powerful statistic of my story is: More than 300,000 homes across America expired in January alone. Nearly 7,300 homes expired during February just from the CRMLS. Data shows over the last couple of years, 19% of homes listed in the CRMLS expired. Of those properties, 62% of them ended up selling with a different agent.
When you try and convince agents that working hard to get the business of a homeowner who couldn’t get their homes sold by one agent from hearing from an agent who could sell their home, your motives are “anti-agent”, and detrimental to the industry as a whole.
If you’d like to participate in an interview to discuss further, please reach out: kimberly@prospectingtoday.com.
Hi Kimberly,
There’s a critical difference between reminding someone that a rule exists and threatening someone with enforcement of a rule. The CRMLS Compliance Department does not investigate and does not issue any fines for agents that call on expired listings.
As an example, if I as a private citizen told someone robbery was illegal, and that they shouldn’t do it lest they be punished by the authorities, most people would understand that as a warning in their best interest. It’s a reminder of the rules, rather than a threat to put them in prison if they commit robbery.
There may be a break for you in understanding the differences between a reminder not to break agent-created rules and a threat. Your anti-CRMLS agenda is based on fundamental misconceptions. This is one of them.
Remember: this is a rule created by agents, for agents. It’s been around for decades and is part of the CAR Model Rules. Agents and brokerages have been sued when calling on expired listings and violating the Do Not Call laws. By raising awareness of this issue, we hope we can prevent real estate professionals from running afoul of their laws and the government’s.
Let’s talk about data for a moment. Our information dramatically differs from yours, including anecdotal and hard data.
First, the call data. You don’t work in our call center, so you don’t hear the hundreds of calls we get from angry agents and sellers – people who have experienced incalculable harassment at the hands of unethical agents who ignore the rules and call them around the clock when their listings expire. There’s a reason these people sue. They don’t want to be contacted, and they never agreed to have their contact information shared upon listing expiration. Some of these complaining sellers have also threatened to sue CRMLS for harassment.
Last and most importantly, the data on expired listings themselves. I don’t know where you got your numbers, but I suspect someone’s trying to sell you a bridge. Your central number – that 62% of expired listings ended up selling with a different agent in “the last couple years,” whenever that is – is wildly inaccurate. We have the MLS data in front of us.
1,776 residential sale listings in CRMLS expired in February 2019. As of April 25, 2019, only 201 of them have been re-listed with a different CRMLS brokerage firm. That’s 11.3%, not 62%.
Additionally, 269 of those expired listings were re-listed with the same brokerage firm, which is 15.1%. 25% more sellers re-listed their properties with the same brokerage firm rather than hire a new broker.
The actual numbers also call into question the value of calling on expired listings. Assume that each expired listing received only 20 phone calls. (We know this is far below reality, as most sellers call us to complain they have received dozens of calls in a single day.) That means based on the 1,776 expired residential listings in February, over 35,000 phone calls were placed, resulting in only 201 listings. That is a call-to-listing conversion rate of only .57%. For each new listing obtained, how many sellers were harassed and as a result now have a lower opinion of the real estate profession?
If I can repeat myself for a moment:
CRMLS is not “threatening fines” or “punishing agents.” CRMLS is advising professionals to follow their own, long-established rules to shield them from liability. That’s pro-agent, not anti-agent.
This will be our final response. Thank you for reading.
P.S.: CRMLS does not charge agents directly for MLS fees. We wholesale our services to Associations and Boards, who set their own price points for agents and brokers.
Unless your data is different than what your members see, the number of expired listings in Feb is 6,629. According to the agents that are giving this information, there could potentially be duplicates – but not 5000. I’m also arguing two different things. The 62% statistic comes from looking at 2 years of data – not two months – especially two months where many people wait until spring/summer to sell their home. But this was not who re-listed with a new agent, it was of the properties that ended up selling, 62% were with a new agent. What your research shows is that those who will re-list with the same broker tend to do it quickly.
This is an incredible article! Amen that CRMLS is anti-agent… this isn’t the only way either. We’re so dysfunctional as an industry, and this is only a small example of it!
MLS leadership loves to remind pesky agents that they only answer to the brokers, yet they charge agents directly for their MLS fees! They take our money but don’t want to listen to us speak up. Most tech companies like Zillow recognize that whoever pays you money is your client… but MLSs, instead of trying to provide amazing service to their clients, have a list of ways they are going to fine their clients?!?! And then they have an enforcement group to go out and make that happen. (#mlsgestapo).
Let’s talk about consumers, Art! And let’s talk about expireds… the worst experience for consumers is to have an incompetent agent lie to them about the value of their home in order to get the listing! But telling agents that we can’t talk to a homeowner who is attempting to sell their home after their contract is expired is ridiculous. The contract with the previous agent is expired and the best thing we can do in our industry is to have a competent agent take over the deal and get the home sold. It’s an ethics violation for us to contact a homeowner who is represented… but this policy from the MLS is making it a violate to contact them when they are no longer represented by a contract. The contract has expired. Is the MLS trying to making the initial listing contract with the homeowner permanent?
Anyhow, I’m amazing agents in the MLS were willing to share — kudos for them. I’m certain the CRMLS leadership will try to punish those agents who speak out about these practices. I just heard yesterday of an agents fined over $600 by the MLS because they didn’t fill out all their form data correctly. But don’t worry, they’re “pro-agent”…
As a broker with an office of active agents, I’ve had to deal with our clients that have been on the other end of aggressive agents wanting to get the expired or withdrawn listing. Clients are shocked at the rude and unethical behavior they are faced with and it makes our entire industry of real estate agents look like a bunch of unscrupulous scammers.
In an era where consumers privacy rights are challenged daily, I commend our industry professionals to actively uphold the law and protect the rights of consumers rather than ignore a practice that has been ignored for decades. It is apparent that this article was written with no respect for consumer privacy and attacks the institutions instead of addressing agent based behavior.
Hi Brenda, I ended the article addressing agents needing to be respectful with how early and how often they call. The point of the article was to show how prospecting Expireds is a very useful tool for building business and giving homeowners the very thing they were aiming to get when they met with an agent – to get their home sold. Therefore, I profiled homeowners who were happy they got connected with a different agent when their home expired.
I also made the point of referencing what led to the CRMLS writing the blog post which was to highlight homeowners who feel harrassed. I understand not every agent prospecting Expireds will do so respectfully, but should that prohibit all agents from giving homeowners a good “turn-around” experience? It should be up to brokers to train their agents to be respectful of homeowners.
I think this is a misleading article. This rule has been in place for decades and is the model MLS rule from the California Association of REALTORS. A rule that has been created and approved by REALTORS not an MLS. Further the rule does not prohibit marketing to prospects who were listed with an agent and had their listing expired. It prohibits use of the MLS data to find those prospects.
As an agent, I submit my listings to the MLS so that other agents with a potential buyer can be aware of it and to offer those agents a share of the commission if they bring a buyer who completes a transaction. The other use is so that other agents can use that listing information to help them determine value for a similar property.
That is what the Seller understands when they sign a listing agreement. The seller is NOT agreeing to be bombarded by hundreds of agents the minute their listing agreement expireds. I think this makes our industry look unprofessional and in turn makes our sellers and the public “anti-agent”.
These are the 2 critical issues you miss. The information contained in the MLS is not public information. Each listing belongs to each agent/broker who input it. The Seller does not want their listing information used in this manner. Have we not learned the lessons from all the data privacy concerns that have been in the news in the last few years? Do we really want the government to regulate the industry in this area?
“The information contained in the MLS is not public information. Each listing belongs to each agent/broker who input it. The Seller does not want their listing information used in this manner.”
Funny, the mls sells that information to zillow and all the other sites. The mls does not sell or collect the phone numbers. The agents who are calling use 3rd party companies to get the phone numbers. Similar to a phone book. Again, all public information. You cannot expect privacy when something is put on the internet. If you want privacy, don’t be on the internet.
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