October 25, 2011

NAR MLS Issues and Policy Committee, Nov 2011

This Issues Briefing Paper is for Study only and has not been approved by the MLS/Computer and Business Technology Committee, Executive Committee, or the Board of Directors.

INTRODUCTION: 

At the upcoming NAR MLS Issues and Policy Committee meeting, NAR is proposing amendments to its policy on the mandatory nature of reporting sold information, including price, to the MLS.

DISCUSSION: 

For states such as California, NAR’s proposal strengthens an MLS’s ability to require the reporting of a sales price by expressly including the term “sales price” in the mandate as follows: 

That Multiple Listing Policy Statement 7.75, Reporting Sales to the MLS, be amended as follows (underscoring indicates additions):

Sales of listed property, including sales prices, shall be reported promptly to the MLS by listing brokers.  If negotiations were carried on directly between a cooperating participant and the seller, the cooperating broker shall report the accepted offer and price to the listing broker, and the listing broker shall report that information to the MLS.  Listing agreements should also include provisions expressly granting the listing broker the right to authorize dissemination of sales price information by the MLS to its participants.

However, NAR is proposing a totally different standard for mandating the reporting of selling prices in “non-disclosure” states.  Non-disclosure states are those like Texas where there is no legal requirement for property owners to disclose to the state the price they paid for a piece of property.  For non-disclosure states, NAR’s proposal puts additional impediments and conditions on the mandate that potentially weaken the MLS’s ability to require the reporting of a sales price to the service.  NAR’s proposal for non-disclosure states would disable an MLS’s ability to mandate the reporting of a sales price in the event the MLS licenses, sells or otherwise provides sale price information to 3rd parties (i.e. any non-participant or subscriber such as R.com, RPR, etc.).  NAR’s proposal for non-disclosure states is as follows:

Important Note for “nondisclosure” states:

In states where the actual sale prices of completed transactions are not publicly accessible, failure to report sale prices can result in disciplinary action only if the MLS:
1.    categorizes sale price information as confidential;
2.   permits sale price information to be used only by participants and subscribers; and
3.   limits use of the sale price information a) to participants and subscribers in providing real   estate services, including appraisals and other valuations, to customers and clients and b) to governmental bodies to be used only in accordance with state law. 
If the MLS licenses, sells or otherwise provides sale price information to individuals or entities other than participants and subscribers, a listing participant’s withholding of the sale price at the direction of the seller shall not be construed as a violation of the requirement to report sale prices. 

Note:  As established in the Virtual Office Website (“VOW”) policy, sale prices can only be categorized as confidential in states where the actual sale prices of completed transactions are not accessible from public records. 

The Texas Association of REALTORS® (“TAR”) is seeking to amend NAR’s proposal as it impacts non-disclosure states.  TAR is requesting that MLSs be allowed to share data with 3rd parties so long as the 3rd party does not publicly display sale prices.  If  NAR’s proposal were to pass as drafted (without the indicated TAR amendments), local MLSs in states such as Texas - which have no other source for sale prices but from its Participants - would be prevented from requiring listing brokers to report sale prices if the MLS shares its data with any 3rd party that is able to match sale prices with individual listings.  TAR’s requested amendments would revise NAR’s #3 above so that it instead reads as follows:

3. limits use of the sale price information a) to participants and subscribers when providing real estate services, including appraisals and other valuations, to customers and clients, b) to governmental bodies to be used only in accordance with state law, and c) to third party entities that do not publicly display sale price information for individual listings.
  If the MLS licenses, sells or otherwise provides sale price information to individuals or entities other than participants and subscribers, a listing participant’s withholding of the sale price at the direction of the seller shall not be construed as a violation of the requirement to report sale prices. 

Note:  As established in the Virtual Office Website (“VOW”) policy, sale prices can only be categorized as confidential in states where the actual sale prices of completed transactions are not accessible from public records. 

CONCLUSION:

Since the compilation of sold data is a significant MLS function that participants rely on for determination of market value and comparables, reporting sold information is an important MLS issue.  C.A.R. directors may recall that at the beginning of 2011, in light of certain communications previously exchanged between NAR and a couple of local California AORs, C.A.R. had developed concerns that NAR might move to weaken an MLS’s right to mandate the reporting of a selling price.  Accordingly, in January of 2011, C.A.R. voted to advocate at NAR for an MLS’s right to mandate the reporting of sold prices in the event NAR was inclined to limit it.

In light of C.A.R.’s position on this issue, C.A.R. strongly supports the NAR MLS policy proposal to bolster the general mandate to require the reporting of sales, including sales price. 

Additionally, C.A.R. supports Texas in its efforts to amend NAR’s policy proposal for non-disclosure states so that MLSs in those states can also continue to require the reporting of a selling price.