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Amid growing discontent about its divisive three-way agreement policy, the National Association of Realtors is attempting to squash Phoenix Realtors membership alternative, MLS Choice, before its Jan. 1 rollout.
NAR issued a cease-and-desist letter to Phoenix Realtors Thursday, threatening legal action if it charges forward with MLS Choice, a $249 membership that would give agents access to state-compliant forms, legal aid and continuing education without joining NAR and the Arizona Association of Realtors.
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Agents joining MLS Choice can’t call themselves Realtors and won’t have access to NAR advocacy, business tools, education opportunities and certifications.
Lesley Muchow
Despite PAR’s attempt to make a clear delineation between the membership choices, NAR General Counsel Lesley Muchow said MLS Choice still blurs the line.
“[MLS Choice] purports to allow real estate licensees to become members of PAR without becoming a member of the Arizona Association of Realtors or NAR,” she said in an email obtained by Real Estate News on Thursday.
Muchow said PAR’s membership violates NAR’s three-way agreement, which requires agents and brokers to join a local, state and national Realtor association to qualify for membership in any of those NAR affiliates. Muchow also clarified NAR’s policies around MLS access, noting that NAR doesn’t require agents to be Association members to access an MLS.
“[Realtor associations] are chartered to strengthen the Realtor organization to benefit its members and the consumers they serve and set and enforce standards for ethical real estate practices,” Muchow said in the email to NAR’s board of directors and association leaders. “To be clear, NAR does not require that real estate professionals be members of a Realtor association to access an MLS. MLS participation is determined at the local level.”
“NAR continues to promote competition and supports pro-consumer local broker marketplaces,” she added. “This is a matter of maintaining standards for the Realtor brand as we always have and will continue to do.”
Inman contacted NAR for additional context about the cease and desist letter, and details on the next steps if PAR refuses its demands.
“NAR took this necessary action in response to Phoenix REALTORS offering an option for non-REALTOR real-estate licensees to be members of the Phoenix REALTORS to support and defend the REALTOR trademark, our integrated model, and the members and consumers they serve,” a NAR spokesperson said in an emailed statement. “Without the consistency and partnership created by our integrated approach and our efforts to uphold NAR’s constitution, by-laws, and Three-Way Agreement, the benefits NAR members rely on—such as market research, business resources, a unified advocacy platform, and a single Code of Ethics—would be at risk.”
“This is a matter of maintaining standards for the REALTOR brand to best meet the needs of our members and their consumers—as we always have and will continue to do,” they added. “To be clear, this issue is about REALTOR association membership… NAR continues to promote competition and stands by pro-consumer local broker marketplaces. ”
Andy Fegley | Credit: LinkedIn
PAR CEO Andy Fegley hasn’t commented on the letter. However, he told Inman in November that MLS Choice isn’t about undermining NAR.
The CEO said MLS Only — the predecessor to MLS Choice — has long been used by Arizona brokers in cases where agents aren’t required to maintain three-way memberships to access the Arizona Regional Multiple Listing Service. MLS Only and now MLS Choice, he said, became possible thanks to a 1994 NAR rule that eliminated the requirement that participants in Realtor-association MLSs must be Realtor association members. That left MLSs to decide whether subscribers needed to be Realtor members, which has remained a common requirement today.
“It’s modernizing the option of MLS Only to accommodate and provide choice to brokers to then provide choice to their agents to conduct their business,” he said. “For it to be a choice, we have to provide all the tools necessary for real estate professionals to do their job.”
NAR’s cease and desist against PAR comes as the Association faces a brewing battle over its three-way agreement.
Since August, at least seven agents and brokers have filed suit against NAR over the agreement, arguing that violates antitrust laws. In the latest suit filed with the U.S. District Court for the Northern District of Texas, broker Luz de Amor Eytalis said the agreement “unlawfully restricts competition in the real estate market” and is “monopolistic.”
“Brokers must ‘purchase’ association memberships they may not need or want to obtain MLS services,” Eytalis said. “This structure has created an anti-competitive monopoly over MLS services, limiting the market’s ability to support alternative trade organizations, thereby stifling competition in violation of the Sherman Act.”
“It’s all a money grab,” she added. “We need to be focused on doing a better service for our clients [and] achieving the goals that we’re supposed to be achieving, which is to sell real estate. That’s the bottom line. We’re here to sell real estate, not to take classes and pay dues and fees and fill out more forms.”
Despite the growing number of lawsuits, NAR CEO Nykia Wright said the Association will continue to defend the policy.
Some of you have heard rumblings of the challenging of the three-way agreement,” Wright said at NAR NXT. “Well, we are here to make sure that those rumblings subside because it is our duty to make sure that people understand what happens at the local level, the state level and the national level, and really make sure that people understand that there isn’t a cannibalization of services, but it really is working together … to make things work.”
Fegley has not answered Inman’s request for comment.