Compass vs. Northwest MLS: What the "First Look" Settlement Means for Washington Sellers and Buyers

Episode summary

After sixteen months of legal warfare, Compass — the largest brokerage in the world, with over 340,000 agents and Sotheby's, Century 21, and Coldwell Banker now rolled under its umbrella — settled with the Northwest MLS. Both sides declared victory, which is what everyone does in a settlement. The question we actually care about is the one neither press release answers: did sellers and buyers win?

The settlement produced a new listing status, First Look, live as of September 4. It lets a seller and agent put a property into the NWMLS and market it however they want for up to 21 days — no required syndication to Zillow or Redfin, no public display of days on market, no price history — while still holding showings, open houses, and accepting offers. That last part is what separates it from a normal "coming soon," which can't go under contract. As Nick puts it, it's essentially a Compass private exclusive with an MLS number attached — coming soon plus.

We steel-man it honestly, because there's a real case here. If comps are thin and a seller believes their house is worth $75K more than your CMA says, First Look lets you test that number and relaunch clean instead of wearing a giant price drop. There's a scarcity/buzz argument for genuinely unique properties, and a privacy argument for the rare seller navigating illness, divorce, or fame.

Then we follow the incentives. Because sellers aren't the only ones who wanted this — brokerages pushed hard for it, and it's worth asking why. Listings have always been lead-generation: the yard sign was free advertising. Then the portals ate that, and now Zillow's "schedule a tour" button routes your buyer to whoever is paying Zillow a 35% referral fee. First Look hands those leads back to the listing agent — who, in a state where dual agency is still legal, may be happy to double-end the deal, or refer it inside the brokerage where the split lands anyway. The brokerage wins either way.

Practical takeaways: ask your agent to defend the strategy, ask what's in it for them, and know that you do not have to consent to dual agency. Also worth knowing — the unrepresented buyer is a legitimate category; your agent can treat them as a customer while their fiduciary duties still run to you. And if you're a buyer without an agent, understand what just happened: a meaningful slice of Washington inventory may no longer be findable on the portals at all.

Hosted by Nick Aufenkamp and Dave Miller of The Tartan Team, brokered by Real Broker, LLC. Serving Clark County and Southwest Washington.

In this episode

• [02:50] Compass, the biggest brokerage in the world — and who's under its umbrella now
• [03:19] Sixteen months of litigation, and a settlement both sides claim they won
• [04:37] The question that actually matters: did sellers and buyers win?
• [05:07] Local context: Clark County is RMLS, not Northwest MLS
• [09:20] Compass's three-phase marketing and the "private exclusive"
• [10:47] Why NWMLS drew a hard line — and started fining agents up to $5,000
• [13:36] Compass's case: "seller choice" and the war on negative insights
• [17:44] NWMLS's case: the cooperative, the data, and fair housing
• [21:31] The settlement: a new status called First Look, effective September 4
• [22:35] What First Look actually allows — 21 days, no DOM, no price history
• [25:08] The screenshot problem — and who this really shuts out
• [27:54] Steel-manning it: testing an aspirational price without the stigma
• [30:57] Scarcity, luxury marketing, and the genuinely rare cases
• [33:30] What happens if First Look just becomes the default?
• [34:54] First Look vs. coming soon — why it's "coming soon plus"
• [38:38] The real question: what's in it for the agent?
• [40:22] Lead capture, the yard sign, and Zillow's 35% referral fee
• [41:37] Dual agency, double-ending, and why the brokerage benefits most
• [46:03] Why one person can't serve two masters
• [48:55] What to actually ask your listing agent
• [51:35] You do not have to consent to dual agency
• [54:37] The unrepresented buyer is a legitimate category
• [55:03] Who's most disadvantaged: buyers who don't have an agent yet

Links from this episode

• Episode 10 — What to Fix, What to Skip, What to Never Touch When Selling — the previous episode
• Realtor Gone Rogue — Nick's Substack, including his writing on unrepresented buyers and MLS policy
• How we sell — our listing service tiers
• Book a Strategy Call

Transcript

Lightly edited for readability. Speaker attribution in the fast cold-open banter is approximate; attribution through the substantive discussion is reliable.

Nick (00:00): Hey, welcome back to Disclosures. I am your host, Nick, along with my wonderful co-host, Dave Miller. Dave, what's going on?

Dave (00:07): Not a whole lot. Fresh off a trip out to the coast. Did some whale watching. Had a beautiful day — sunny, clear.

Nick (00:14): Just sounds so romantic.

Dave (00:17): Yeah, well, it was with my girlfriend, so it actually was.

Nick (00:20): Well, even better. That's fantastic. Had you done any whale watching before?

Dave (00:26): No. I mean, you see a couple — I guess those are orcas, you normally see them in closed exhibits — but no, first time whale watching.

Nick (00:33): And you saw some?

Dave (00:35): We did. We saw a couple California gray whales, was I think what they said. I think three of them were out there. Somehow they knew exactly where they were. That was a little — I was a little skeptical. I'm like, I wonder if they have a tracker on them. They drove us right out and they found them.

Nick (00:52): Made it sound like it was going to be a maybe.

Dave (00:56): They're like, "We're on the hunt for it." And then there was already like three boats out there and they're just circling. Seems a little harassing to the poor whales.

Nick (01:05): Well, I just appreciate that it's not only people that are exodusing from California, but even the California gray whales need to get out and move north.

Dave (01:13): I believe it's more of an informal naming, but your point still stands.

Nick (01:18): I thought it was the taxes that were better up on the Washington and Oregon coasts.

Dave (01:26): Yeah, they were also headed north out of the Oregon waters up to Washington.

Nick (01:32): Well, that's awesome. And thanks to you as listeners for bearing with us — a couple weeks off. It hasn't all been play. We have had a busy few weeks with closing some deals and new listings that have gone live, so that's been exciting on the business front. I did also take a week and went up to visit family in the beautiful British Columbia — which is beautiful, but also was very much on fire.

Dave (01:58): Just outside Vancouver BC?

Nick (02:08): A couple hours outside of Vancouver BC, just as a relative term.

Dave (02:14): And they got some major fires. But by the time you made it there, they had a lot of it under control, right?

Nick (02:21): Yeah, it was all under control. It wasn't terrifying — more just a nuisance with the smoke. Just like, you know, don't spend too much time outside or you might ingest lung cancer.

Dave (02:32): Catch the black lung. That's how that works, right?

Nick (02:38): Speaking of lung cancer — no, that's not the segue.

Dave (02:44): Freudian slip, huh? Tell us how you really feel about this upcoming topic.

Nick (02:50): More on the subject, since none of you tune in to listen to the whale watching — genuinely interesting — and probably less of you listening to hear about the status of wildfires in British Columbia. But there was a major settlement between Compass and the Northwest MLS. Compass is the largest brokerage in the world. They've got over three hundred forty thousand agents, and under the umbrella of Compass International Holdings you've got brokerages like Sotheby's, Century 21, Coldwell Banker — those are at least some of the biggest ones that are in Clark County. So all of those, as of January this year, have all gotten rolled up under Compass.

Nick (03:19): And Compass was in a sixteen-month legal battle where they had sued the Northwest MLS, which is the largest multiple listing service in Washington state. And after sixteen months of back and forth, they finally came to a settlement — which Compass is claiming is a huge victory. Of course, because it's a settlement, Northwest MLS is also claiming a victory. How both parties can win remains TBD, and that's frankly kind of what we're going to dive into.

Dave (03:55): They kept a little money out of the lawyers' pockets, and that might be the actual only real win that happened with the settlement.

Nick (04:19): That's true. I've never heard of a legal settlement where any one side said, "Yeah, we lost that one big." Everybody's always trying to look for their own silver lining.

Dave (04:30): Silver lining. The one area — and this is really why the podcast is relevant —

Nick (04:37): The real question that concerns us, and you as a listener, is: whether Compass or Northwest MLS won probably doesn't matter to you at all. The question is, did you as a home seller or a home buyer win? And that's really the much more interesting part of the conversation.

Dave (04:58): Definitely. So maybe then a good layout of the history leading up to the verdict would be good. I think it would also be worth noting that if you're a local Clark County listener, we're covered under a different MLS.

Nick (05:07): For the most part. We're covered by RMLS, which actually is more located in Oregon than it is in Washington. But the twin-city proximity of Vancouver to Portland — it makes more sense for the Southwest Washington metro area around Vancouver to be covered within Portland, because those two markets, Portland and Vancouver, are more tied than Vancouver and Seattle.

Dave (05:52): So that's an important distinction if you're local. Not that the larger settlement doesn't have impact on us, being in a separate MLS — but just if you're listening.

Nick (06:00): And these aren't hard statistics, it's really just going more off of my sense of having been in this market for five-plus years. But somewhere around ninety-five percent of the agents who primarily serve Clark County, Washington are part of the RMLS. Now, of those ninety-five percent, there's probably fifty to sixty percent of those agents that are also part of the Northwest MLS. And then maybe five percent of agents serving Clark County that are only part of the Northwest MLS. That's usually an agent who's Seattle-based, but they know a seller who lives in Vancouver, and the seller wants them to list the property, so they put it in Northwest MLS because they're not an RMLS subscriber.

Nick (06:50): Now, all of that feels like it gets very convoluted, but this matters because if you live in Washington, you're going to probably hear the headlines or hear some rumblings of the outcomes of this settlement. And because if you're interviewing multiple agents, there is a good chance that one of the listing agents you talk with is part of both RMLS and Northwest MLS. And because they're part of both, you could hear about some of the effects of the settlement and options that it opens up for you as a home seller.

Dave (07:20): That'll be interesting. And as we get into it, the teaser is that the new option for marketing out of Northwest MLS gives more freedom than the RMLS and some of their listing statuses.

Nick (07:45): Which for us at a local level could actually start to increase the amount of agents who are primarily Clark County-based but are going to become subscribers to both multiple listing services, just to have more optionality — a competitive edge in pitching exposure.

Dave (08:10): I guess — what was it you had said? And once again, not hard statistics, but you kind of have to get north of Longview to really start to see a sizable amount of properties listed in NWMLS.

Nick (08:20): For the most part. And we don't want to get too far into — we're more focused on the settlement than a compare and contrast. But since we're taking a minute to talk about the geography in general: if you're south of Longview — Longview-Kelso is really that cutoff, where the majority of Longview-Kelso agents, and then everybody north of there, is primarily Northwest MLS. One of the ways that we know that, too, is because the closest Northwest MLS branch or office to Vancouver happens to be in Longview. So if you are going to, as an agent, join Northwest MLS and go pick up your Sentry key boxes — actually they use Supra, not that this matters — but you've got to go to Longview.

Dave (09:16): Okay, good. Set the table. Maybe can you take us through what the original legal fight between Compass and NWMLS was, and then we can get into the settlement?

Nick (09:24): So Compass has been making waves for a couple of years now, rolling out what they call their three-phase marketing strategy. And part of these three phases is that they encourage sellers to start in phase one, which is Compass Private Exclusive. And Compass Private Exclusive is a listing that is essentially like an old-school pocket listing with a little bit greater distribution. So it's a listing that does not go out to Zillow and Redfin. The only way to really find out about it is to either know a Compass agent, know an agent who knows a Compass agent, or to be looking on Compass.com. So it's making these inventory of private exclusive homes less accessible to everyday home buyers. And then the next phase is coming soon. And then the final phase is just like a traditional full active listing that's available on all the major portals and platforms.

Nick (10:36): Now, these first two phases — private exclusives and coming soons — have been hotly debated as to who the strategy really serves and whether or not it's actually good for consumers. And Northwest MLS took a very hard stance very early on, saying that private exclusives are bad for the industry, they are bad for consumers — that having hidden inventory that's available to some but not to all fundamentally makes a less transparent and less equal housing marketplace.

Dave (11:12): Which sounds pretty clear on the face of it.

Nick (11:15): Now, the way that this all led to a lawsuit was because Northwest MLS was fining Compass agents who did not enter their new listings onto Northwest MLS within one day of the property being publicly available. They were fining them up to five thousand dollars. And it got to the point where they finally just cut off Compass's feed to any of the portals — basically, for all intents and purposes, kicked them out of participation in the MLS. And Compass stepped in and said, "You can't do that, we're paying subscribers." And they also accused them of changing the rules. Anyhow, that was really the genesis of the lawsuit.

Dave (12:06): Okay. So to double-click on it and bring some clarity: Compass wants to keep these listings in the two phases of their marketing. They want to keep it out of active status in the MLS. When an agent goes into the MLS — whether it's RMLS or NWMLS — they fill out the listing, they put all the details in, they mark the property active. Once that's active, it gets sent out to all of the portals like Zillow and Redfin and Realtor.com. And then it also gets plugged into the database where, if you're a broker member or a member at all of the MLS, you have access to it.

Dave (13:01): So maybe explain what Compass's reasoning is for not wanting to put the home that they're listing for sale active in the market immediately. And maybe some greater context around what is really, in the most positive light, for Compass. If we're saying, what is their argument — why would they want to hold back the listing from active status? Because if you're doing a real quick thirty-thousand-foot flyby, it's like, why the heck would you do that? Wouldn't you want the maximum amount of exposure for your listing? Economics 101, right? Broader market exposure creates more demand, more demand leads to higher offers. So why would anybody want to do this limited-exposure private exclusive strategy?

Nick (13:54): It's a fantastic question. And frankly, the answer to it — like, why would somebody recommend this, or why would you do it — this is the billion-dollar question that is going across the entire industry. The most positive case for it is what Compass calls seller choice. So Compass says that it's sellers that are driving this. Because as soon as a home goes active in the MLS and gets sent out to Zillow and Redfin and all of the rest, there are a few things that start happening. One, that property starts collecting days on market. Two, if there are any changes to the price, that price history gets reflected. And then three, the different portals have their own automated valuation systems — the Zestimate would be the most popular one. And sometimes that Zestimate will show up right alongside the list price of the house, and that Zestimate could be fifty to a hundred grand below what the house is actually listed for.

Nick (14:52): Compass calls these metrics "negative insights." They don't believe that days on market, price history, or automated valuations — no seller asked for these things. As a property collects days on market, they make it look like damaged goods. They give buyers more leverage to negotiate against the seller. And so Compass has said, why would we participate in a system that disadvantages our sellers? Why wouldn't we give them the option to have more privacy and control over the way their property is marketed? And if we route around listing in the MLS, or being a full active listing on day one, then we can have control and — I don't know that they necessarily use that term, but essentially hide, not display, days on market, price history, those negative insights. So that's the case for protecting sellers and giving them greater optionality in how their property gets listed.

Dave (16:09): Right, I think that sums it up well. What then is the argument that NWMLS — and let's just say people who are lined up on the opposite side of the court from Compass — what is the argument against this? And correct me if I'm wrong: previous to this settlement, NWMLS was considered to have the fewest options out of almost any MLS in the country. So RMLS — letter R, not O-U-R, the regional MLS — has an option for coming soon, no showing, which is similar to this new category that's being created out of the lawsuit, but different. And maybe I'm getting a little bit too far ahead. But the point being, Northwest MLS has historically been one of the most restrictive in terms of options for marketing. What is the argument for continuing on the way that they've started out? There's no status that allows you to maybe show the property beforehand. If you want it on the MLS, you have to put it into the MLS full rip, right?

Nick (17:44): So there's multiple arguments that they would make as to why private exclusives are wrong. One is that it breaks the spirit of the MLS cooperative — which is that every broker enters every listing that they have, so that all other participating brokers have equal access to that property information. Which is valuable certainly for agents that are serving their buyer clients. Can you imagine if you're an agent and you're out with clients and you're showing them a home, and then right across the street you see another house that has a Compass sign in the yard, but you didn't see it in your MLS? And so your client is asking you, "Well, hey, what's going on with that house across the street?" And you're like, "It's a private exclusive, I don't know, I've got to call the Compass agent." It really undermines the agent as a professional if they can't see every property that's on the market. So that's one issue that the Northwest MLS is trying to protect against. They want all inventory in the MLS to serve all brokers equally.

Nick (18:54): The other piece is related to that data. The MLS serves as a single source of truth for the housing market. And so appraisers — and really the whole financial system around lending on homes — depends on having an accurate picture of what's happening in the market. And so once listings start to exist outside of the MLS, the numbers about true days on market, price history, the story of a property, gets skewed in ways that undermine the potential integrity of the appraisal system. Which could then lead to issues with getting loans, or loans feeling more risky, which would be higher interest rates.

Nick (19:38): And then there's also fair housing concerns. That's a big one that the Northwest MLS has pushed on. Because there's a systemic fear that even if Compass and its affiliates are not trying to single out specific communities with private exclusives, there's network effects — you kind of have to know the right people, you kind of have to be in the right community, in order to find these private exclusive listings. And Northwest MLS was saying, "Yeah, we just don't even want to flirt with the boundaries of that, and the best way to do it is to just ensure that all listings are in our database."

Dave (20:36): Okay, that's good. We got two sides laid out here. The lawsuit was Northwest MLS saying, hey, you've got to put all your listings in day one — as soon as you make the listing public, it has to go into the Northwest MLS. The sticky phrase is: if a property is available anywhere, it must be available everywhere. And correct me if I'm wrong — the agreement that any broker agrees to when they sign up to be a member of the Northwest MLS is that they don't get to pick and choose which listings go in. They have to put all of their listings in. Correct?

Nick (21:20): Correct.

Dave (21:24): Okay. So they've been duking this out. Compass sued NWMLS and then there was a counter-suit. They've been going back and forth doing what the courts do. Fast forward to today — unless we skipped over anything important, let us know — but fast forward to today, where'd the chips land?

Nick (21:44): So they settled. And Northwest MLS announced that effective September fourth — the week that we're recording this — there will be a new listing status called First Look. Now, First Look is not exactly a coming soon listing. It's similar, but coming soon is very difficult to define because every MLS defines coming soon differently. So I'm going to table that whole discussion for now.

Nick (22:20): But First Look allows a seller and their agent to put a property into Northwest MLS and market that property really however the seller and the agent want to. So they do not have to syndicate it to any of the portals. Also, while the property is in this First Look status, there is no public display of days on market or price history. And a property can remain in First Look status for up to twenty-one days before going active. And during those twenty-one days — open houses, showings, receiving and accepting offers — all of that is fair game and allowed. And so the way that I've talked about it, or thought about it, is it's very similar to a Compass private exclusive, just with a Northwest MLS number attached.

Dave (23:25): That is interesting. I would really be curious to see some of the rules around the pricing, and how that's going to play out for NWMLS members, and who's going to be able to see that data in hindsight. Let's say a Compass agent, or whoever, wants to use this First Look, and then they have it in the status and they don't get an offer — well, they don't get an offer that the seller wants, or maybe they don't get an offer at all because they came in too high on price. I'm curious, if you know — I did a little research, I don't think we have clarity quite yet — who will have that info on what it went into First Look at, what the price went in at. I understand that the listing will be switched to active automatically at the end of twenty-one days. So I'd be curious to know, if you don't drop the price before that, does it go in at the same price as active? Or do you have to punch in a different price? And who's going to have that recording?

Dave (24:40): Because it's safe to say that Compass's main argument for this is that — days on market and all that, yes, but isn't it primarily you could test a really high price, and then if you don't get it, you can come back onto the market essentially as a no-issue? But what's interesting to me is if you were a broker that was paying attention, you could write that down somewhere.

Nick (25:08): You could grab a screenshot.

Dave (25:12): So it seems like a bit of a moot point. What I find interesting is that it's singling out consumers who don't have access to the NWMLS, right? And I think that's primarily the issue. That was the first thing, reading through this, that I was taken by — it seems to incentivize more people to get an agent, not to attempt to represent yourself.

Nick (25:40): We could go on that for a little while.

Dave (26:04): Sort of the fact that it seems the industry tries to continue to pull all possible business into itself, right? No attempt to help anyone outside of the industry. But yeah, I don't know. How's that strike you? Is the focus there wrong?

Nick (26:31): I'll respond to that, and then I'll lead you with your thoughts on the potential for turning this into a dual agency debacle — we can visit that in just a second. I think it might be even more beneficial for the sake of discussion to make the most positive case for why a seller would potentially want to take advantage of the First Look status. What are the potential benefits from it, best case scenario? And then I think that'll lead into some of the critiques and the concerns that we both have about it, because the points that you're raising are dead on.

Nick (27:24): And there's also, just to frame it up a bit — there's this perpetual battle within real estate of trying to protect and do what's in the best interest of both the seller and the buyer, both sides of the transaction. The seller owes the buyer certain disclosures because of the risk the buyer's taking on in purchasing the property. But the industry also owes the seller some degree of control and protections, right? And this is a difficult thing where it's like, well, to give sellers protections here, what freedoms or things are you taking away from a buyer? And vice versa.

Nick (27:54): So — the positive case for First Look. You raise the point about testing a price. And I think we can all acknowledge that there are some properties where pulling comps is just really difficult to do, because it's in a neighborhood where there haven't been many sales in the last year or eighteen months, and where maybe it's a really unique property. And so an agent like us will show up to a listing appointment and we've got the five best comps that we pulled that indicate this is a valuation — but a seller might have a strong opinion that, hey, I actually think my house is worth seventy-five thousand dollars more than what you're saying it is.

Nick (28:54): And that puts the agent and the client, the seller, in a really tough spot of: what number are we going to go with? And you can appreciate the seller's desire to be like, isn't there some way that I can test to just see if I can get that higher number? And First Look, I think at its best, is really intended to answer that question of, hey, let's go ahead and try for the higher number. And if that doesn't work, then we can relaunch the listing at a lower or more realistic number without having the stigma of "whoa, they did a huge price drop, this looks like damaged goods." I think that's the best-case scenario for First Look. I don't know if there's anything you'd add.

Dave (29:50): That's a good summary. I think the second thing — and in my opinion, I'd say it's secondary to what we just discussed with having the option to test price — is in a hot market where there's a ton of demand, there is a real aspect that a lot of agents will try to play on the psychology of getting something out early and then creating a buzz around the property. There's been plenty of reactions to this lawsuit settlement that have put that up as a primary thing. And in my opinion, it's not nearly as big of a deal, because in order for that to make sense the property really has to have high demand around it and be something unique and really desirable, or you have to just be in an insanely hot market. But in general, that could be another check mark for the side of the argument for First Look — the trait of marketing a luxury good is to create a sense of scarcity.

Nick (30:59): Now, this is tough for me, because every house and every property is unique. There's already a scarcity. But we can also acknowledge that in a production D.R. Horton neighborhood where there were three floor plans and they built a hundred of them — the scarcity of that versus a Street of Dreams custom home. To have a more limited buyer pool, controlled access, controlled marketing — it can create this feel of a premium. Again, at its best.

Dave (31:36): And to really examine something that has as much dissension around it as this, you have to look at both sides. So I think that's good. And there are a few other things we don't need to touch on that they might put in the positive check mark — like super rare scenarios where, because of some illness or familial strife, a divorce, or maybe it's a famous person. Just stuff that is out of the ordinary for ninety-nine percent of sellers, where they say, well, maybe you don't want people walking through your house. If you're selling, you know, Leonardo DiCaprio's house — he doesn't want it just showing up on Zillow for everybody and anybody to click the "request a tour" button.

Nick (32:25): Hoping to run into Leo on your home tour. Exactly. I think those things can be true, but they don't apply to very many use cases.

Nick (32:44): So in summary — and what is helpful, I think, as a listener: if you are a seller in Washington, you should expect that any Northwest MLS agent is probably going to tell you the merits of First Look. And it is that, hey, we can test your price without days on market, without price drop history. Best case scenario, we get an offer that you love and we accept it in that period. Worst case scenario, we go active, but we look like a brand new listing on Zillow and Redfin and we don't have any of the penalties for this little test period.

Dave (33:21): I didn't want to forget this point, because I haven't heard anyone mention it yet — and maybe segue this into the potential negatives. I will be really curious to see if First Look is just going to become an automatic default. Given the way the rules are written — and we can get into this distinction, I suppose we probably should have gotten into the distinction of what is First Look versus coming soon, because they're similar but not the same — but if it becomes a default where ninety-nine percent of agents are saying, "Well, there's not really much downside, there's only upside, because it doesn't record days on market and we have some cover for price changes" — if every listing in the NWMLS gets this First Look, doesn't it to a certain extent become a moot point? Where it's like, yeah, well, if I'm an agent and a property I saw was First Look and then went in, I'm just going to assume that they did a price drop and it's twenty-one days on market, even though those things don't say it.

Nick (34:26): That could be an unintended consequence — people assuming the worst about your listing if it didn't sell in First Look. It'd certainly be a question that I think every buyer would be asking an agent: "Hey, did you do First Look with it? How did the first three weeks go?" It is confusing.

Nick (34:54): And really, I think of First Look as coming soon plus. While I mentioned earlier that coming soon programs vary dramatically from MLS to MLS — in the RMLS here in Vancouver, coming soon no-showing is basically just a way to get a listing that's going to be going active within the next, I think it's ten days, maybe two weeks, out in front of the agent community. To just say, hey, if you've got a buyer that might be interested in this specific property, you can send this to them. It has very basic information about the property, but you are not allowed to show it, you're not allowed to accept any offers. All it is is just to say, hey, know that this is going to be available, and if it's something that your client is interested in, have them line up their financing so that the moment we go active, they can be ready to make an offer. That can be a really legitimate strategy. But the key there is that in coming soon status — and this is almost universal across MLSs — if a property is in coming soon, it can't go under contract while it's in coming soon status. It's got to go active first. First Look is coming soon, but the plus is that it allows you to show it, market it, go under contract in that coming soon period.

Dave (36:19): So in RMLS, just a clarifying point for us — coming soon no-showing, is there an option to syndicate that out to Zillow?

Nick (36:28): That's one of the areas that RMLS is weird. Most MLSs that have a coming soon allow those coming soons to be syndicated. So like North Star in Minnesota, every coming soon, you can see it on Zillow. And certain brokerages are cutting deals with portals like Redfin and Zillow so that they have their own off-MLS coming soon program. So you could still see a Vancouver-based coming soon, but it would be because of a direct broker feed to the portal. And this is getting so convoluted — but the short answer to your question is no. Through RMLS, there's no syndication feed. On the First Look, the syndication of that listing is entirely up to the seller and their agent.

Dave (37:20): So NWMLS is giving more optionality. You could say for our regional MLS that it truly is a back-end, like, warning the brokers.

Nick (37:40): You mention North Star out of the upper Midwest — Minnesota and Western Wisconsin. Their coming soon actually could serve the function we just talked about, of creating some buzz, creating some scarcity there. And that is how oftentimes people in that market use it.

Dave (37:55): Which I think is a really legit strategy, without sidetracking too much on that.

Nick (38:15): I think most agents would encourage sellers to do First Look, because the way that they pitch it, there's a lot of upside, very little downside. I think the really interesting questions come of: well, who is disadvantaged by First Look, and what are the advantages to the agent in First Look? Agents and brokerages. It's not just consumers, sellers, that have asked for more optionality. Compass and brokerages are pushing for this. They want it. And it's really fascinating to think through why.

Dave (38:50): Let's unpack that a little bit. So we've hopefully steel-manned the argument of, all right, there are some real potential benefits for sellers here. What are the downsides? What are the negatives? You're going to pitch me — I'm selling my house and you're trying to be my agent, and you say, "Here's why you want to go with me, we're going to do the three-phase marketing." What's the pitch?

Nick (39:15): I mean, I think it's everything that I just said in terms of like, no days on market, no price change history, we can test your aspirational price, come to the market fresh. I think if you were discerning and asked me, "Well, what's in it for you?" — and if I was honest, I would say: well, lead capture.

Dave (39:45): Explain that.

Nick (39:48): So, having more limited exposure. Listings are the lifeblood of a brokerage, and consumers should know that. Since the dawn of the real estate industry, the sign in the yard — yes, it's to signal that a house is for sale, but it's really basically free advertising for the real estate agent. Because people see the sign, they call the agent, and then that person becomes a lead, because they called since they're interested in buying a home. So whether they buy the home that actually has the sign in the yard or they buy some other home, that's how agents have met clients for decades and decades.

Nick (40:39): Now, the portals — Zillow and Redfin and Realtor.com in particular — have really cut into that market, because once a listing is entered into the MLS it gets automatically sent out to Zillow. Zillow has this bright blue "schedule a tour" button, and when a consumer clicks that button, that consumer doesn't get routed to the listing agent anymore. They get routed to some other agent who's paying Zillow a thirty-five percent referral fee in order to work with that consumer, that client.

Nick (41:15): And so what a First Look allows me as an agent to do is say, hey, we're not going to give Zillow and Redfin and Realtor.com the opportunities to capture and monetize those leads. Instead, there's a much higher likelihood now that those buyer leads are going to get routed directly to me. So if they want to buy your property — dual agency is still legal in Washington, and there are many agents who would be more than happy to double-end the deal. That is, capture both the listing side and the buyer side of the commission by being the sole agent representing, in air quotes there, both parties. Or they could take that lead and refer them to somebody else in their office and receive a referral fee of their own. Or maybe it's not the right home for that client, and now that agent has a new buyer lead that they're getting to show. So there are many, many ways that by having more limited and controlled exposure, it is good for an agent's own personal business.

Dave (42:22): Is the assumption that everyone who's doing this is looking to double-end deals, looking to create dual agency, looking to get more business for themselves, or the opportunity to get a referral from somebody inside their network? I guess it's important to distinguish — you're kind of talking about two players, right? You're talking about the brokerage and then the agent underneath them. And some of this is really good for the brokerage and some of it's really good for the agent. Maybe break down: who do we think is primarily benefiting, the brokerage or the agent?

Nick (43:06): Yeah, for sure the brokerage. Because capturing more leads is good for the broker. Even if — let's just say, I'm not trying to pick on Compass here, it's just they're the biggest dog in this fight, and they are the ones who started the lawsuit.

Dave (43:28): They are. They're named in the settlement, so it's fair.

Nick (43:39): But let's just say it's a Compass agent, and let's say they're a highly ethical agent. They don't practice dual agency — of which, candidly, there are many. My friend Will Offhammer up in Seattle doesn't practice dual agency. Compass agent, good dude. Now, if he receives a buyer lead who's interested in a property that he's got listed as a First Look, most likely he's going to refer that lead to another agent within Compass. Which is still a form of dual agency, but candidly, Compass is so big that —

Dave (44:10): Right. This opens another can of worms around the dual agency discussion. But most consumers are comfortable, as long as it's two distinct agents, they're not so concerned. And I think that's fair in most cases with a really big brokerage like that.

Nick (44:37): But the point to your question is that if that lead that got routed to a Compass agent then gets referred to another Compass agent, Compass is the one who the agents are paying their splits to. It increases Compass as a brokerage — their bottom line. Now, if it was a more unscrupulous agent who didn't have the same ethics as my friend Will, then they could absolutely just try and capture both ends of the deal, and then it becomes a very, very lucrative sale for them.

Dave (45:07): Double-ending. Double the money. Or in most cases double, or pretty darn close. Maybe a one percent discount or something. But instead of a three percent payday, five, five and a half, six percent.

Nick (45:32): So I guess the skeptical question then is: well, if I'm a consumer and my agent gets the deal done, what do I care if he did both ends of the deal? What really is the concern with this potential for limited dual agency, or designated dual agency? What's the rub here if the house sells?

Dave (45:55): And this does start to bring the conversation into really a much larger topic of dual agency, which most states now have banned. And so it's kind of crazy that Washington hasn't. Do you know what a rough percentage is? I'm actually not certain.

Nick (46:15): I know I was reading the other day — there are only two states that don't require agents to be fiduciaries. I know that off the top of my head. So forty-eight do require agents to be fiduciaries. And that ties into the conversation about dual agency, because if an agent has a fiduciary responsibility to the client that they are representing — how can one person have, well, not just have, but meaningfully serve fiduciary responsibilities to two competing parties?

Nick (46:49): So in a negotiation, if you're working with a dual agent, how do you as a seller know that the agent who has more insight to your financial position, to your motivations for selling — how do you know that that agent isn't then using that information against you when talking to the buyer about how to structure their offer, or how to negotiate? How can you trust that they're truly being neutral in the advice that they're giving about inspection report repairs or credits? Especially when you factor in the agent's own incentives for the deal to close. So it comes down to the proverbial: a person can't serve two masters. And that's exactly what dual agency tries to do. It tries to serve two masters, and inevitably one party gets the short end of that stick.

Dave (48:04): We should probably try to wrap this up then. We've talked a lot. There's this new option on the table for people in Seattle and greater Washington, this new listing status. If we could maybe do just a couple bullet points of — moving forward, it's important to know that this happened, it's important to know what pitches you may be getting from listing agents if you're thinking about selling your property, and trying to understand what the negatives and the downsides are. So can we maybe do a quick summary of an action point, if you're selling your house? How does this, brass tacks, two-minute summary, how does this really affect you? What do you want to look out for? How do you protect yourself?

Nick (48:55): I think it's asking the agent really good questions — which sounds so obvious, but whenever you're meeting with an agent and discussing strategy, really asking them to defend the strategy. And so if an agent is saying, "Hey, First Look is a great way for us to go" — like, why? What are you actually trying to test for? Is it because the comps are unclear on what the property should be priced at? Is it because things are taking longer to sell? Is it because you need time to prep the home, but you think that there's some benefit to going to the market even before all of the prep work is completed? Just understanding what those motivations are, and how that impacts the strategy, I think is really important.

Nick (49:59): We didn't fully delve into it, but you raised a really good concern — that home buyers and their agents are not dumb. And once somebody sees a property online, or their agent sends it to them, they clock it as, that's the first day that I saw it. And no matter whether days on market or price history are reflected online, people have a memory of those things, and a good agent is going to be able to find what those details are. So I wouldn't want a listing agent to oversell the potential benefits of hiding days on market.

Nick (50:41): That's a piece I'd also encourage sellers to really push their agent on: okay, what are the potential benefits to you in this First Look status, and how do you handle dual agency? How do you handle referrals? Just heading off some of those potential conflicts of interest and making sure that your agent has good responses. And a lot of that is frankly just the feel that you get as you're talking with them. Does it seem like they are being honest with you, or does it seem like they have ulterior motives in utilizing a First Look status because of the potential benefits that it can bring to them and their individual business? What would you add?

Dave (51:35): I'd add just the note that a lot of sellers probably don't get disclosed to them very clearly, which is: you do not have to consent to dual agency. And once again, it gets a little tricky — and maybe this is something worth talking about more in depth in another episode. When you're talking about a brokerage the size of Compass, or any of their other affiliates, or even if you're in a town where one brokerage kind of has the lion's share of the listings — it might be detrimental to consent to what's called designated dual agency, which is you can have two agents, one representing the buyer, one representing the seller, who just happen to be from the same brokerage. If you don't consent to that, you might really limit your options on who can bring a deal forth.

Nick (52:35): But I'd say there's almost no instance where we would recommend people consent to limited dual agency, where you're really asking this person who you came to to sell your house to all of a sudden give you less representation, should somebody show up who happens to be unrepresented and want to buy your house. And now this agent has to try to weigh both parties. It really, in my opinion, kills the whole value of the agent. The whole value of the agent is supposed to be negotiating like a bulldog — the fiercest negotiation possible to get your seller client the top dollar for their house. And there's just no way to do that in a true way.

Nick (53:40): Now, obviously — as we've prefaced everything in this — yeah, sure, there's an instance, like if you're selling your house to your neighbor and you guys have been friends for thirty years and you know an agent who's willing to do the transaction. But it's very important to realize that that person isn't actually really operating as a fiduciary for you anymore.

Dave (53:58): They're just facilitating a transaction. And in certain states and certain places there's a different category for that, right? But that would be my main thing: so many agents are probably pushing that listing contract across the table and not really taking any time to explain, all right, well, what does dual agency actually mean? So press on that, and just know you don't have to consent to that.

Nick (54:20): And there's an easy solution, in that if a buyer comes to your agent and they don't have their own agent, that buyer can remain unrepresented. And your agent can treat them as a customer, while all of their fiduciary duties still run to you as the seller. And I've written about that, and we'll talk about it I'm sure in future episodes. But just know that the unrepresented buyer category is a legitimate category and way to buy a house.

Nick (55:00): That also ties into — this has all been largely about sellers. What does it mean for buyers? You talked about this early on in the episode. But the people who are at the greatest disadvantage as a result of this settlement are the unrepresented and not-yet-represented buyers. Because it does mean that throughout Washington now, there may be a significant portion of available homes that are much harder for you to find. At least, you're not going to find them on Zillow, Redfin, Realtor — most likely. I just don't see any reason why a seller would opt into putting those on the IDX feed in First Look status. It makes it effectively active, right?

Dave (55:44): Yeah, it's just straight out of the redundancy department of redundancy.

Nick (55:52): So as a buyer, there's a very high possibility that if you don't have an agent with MLS access, you're not seeing a full picture of the market in Washington. The consumer advocate in me — and us — sees that as a real issue. But it's also an issue that we've got to keep talking about and writing about and pushing for, because there's no other real resolution other than — one of the benefits now to having an agent early on in the process is getting a look at First Look.

Dave (56:28): And I guess to maybe tease — maybe the next episode we'll talk about the Washington state bill, SB 6091, that kind of tried to address some of that. And it is relevant as it relates to the suit. So maybe — we haven't planned next episode, but —

Nick (56:53): Maybe I've planned what I'm having for lunch today, man.

Dave (57:02): I've foreshadowed strongly enough that maybe that's what we'll just do now.

Nick (57:05): I love it. Any other closing thoughts that you've got? I know this is a heavy one to digest.

Dave (57:11): The closing thought I always want to impart is: an educated buyer or seller is the best. They're the most empowered. They're going to have the most clarity, the most options, and they're going to know if the agent they're interviewing, either to sell or buy their house, really has their best interest in mind. And so the best thing you can do for yourself is, if you're about to sell or buy, engage with as much content from as wide a source as possible — to make sure you're not getting told that "we've got this great plan and it's going to sell your house in a hurry," but it's really just an agent trying to line his pockets.

Nick (58:04): Absolutely. And like everything, the answer isn't "First Look good, First Look bad, do it or don't do it." The answer is it really depends, and it's something to be critically considered. So hopefully this helps with just raising the kind of questions that you'd want to think through before committing to a strategy. I could absolutely see — we're not part of Northwest MLS right now, it's going to be interesting to see if there's greater pull towards joining it, because I could see in certain cases where First Look could make sense for some of our clients. But it's not an absolute.

Dave (58:41): Definitely. It's a case by case.

Nick (58:49): Cool. Well, if you haven't already, do subscribe to the show. And if you can click that five-star button, or leave us a comment, or just something that lets us know that you're there — we certainly appreciate that. If you do want to chat with us further, thetartanteam.com/book, or you can reach either of us: nick@thetartanteam.com, dave@thetartanteam.com. We would love to connect with you. We'll see you in the next one. Thanks, everybody.

Dave (59:10): See ya.