The Denver Metro Association of Realtors and the South Metro Denver Realtors Association boards approved a resolution to immediately dismiss all the board members of REcolorado, escalating a heated dispute among the three groups.
REcolorado, the state’s largest multiple listing service or MLS, called out its two owners in the national trade press earlier this week for selling it to an out-of-state private equity buyer after rejecting a buyout proposal REcolorado had made earlier in the year that would have kept ownership in local hands.
Four of the 11 REcolorado board members resigned this week in protest to the group’s action. On Friday, the two associations fired the remaining seven MLS board members.
“While disappointed, we have come to this decision based on the egregious violation of confidentiality and signed Non-Disclosure Agreement (NDA) carried out by a representative(s) of the REcolorado board of directors,” the two associations said in a statement. “Coupled with the response of the REcolorado board of directors over the past several days we have reached this decision which we believe is in the best interests of our collective membership, our long-term ownership and operational goals.”
DMAR and SMDRA also announced late Friday afternoon that they had signed a letter of intent to sell REcolorado to MAZL LLC, a recently formed company headed by J. Bruks, a 40-year real estate industry veteran.
“With this change in ownership, our commitment to providing a broker-centric platform remains steadfast,” Burks said in a release. “We assure the subscribers that REcolorado will continue to operate as a Multiple Listing Service, maintaining its core mission of delivering exceptional data, tools and resources to Realtors and licensees.”
Members of Realtor associations contribute their listings to a common platform or MLS, which the associations typically own. Brokers have access to that information, and so does the public via online platforms like Zillow and Realtor.com.
Realtor associations, however, are trying to distance themselves from their multiple listing services following legal settlements the National Association of Realtors and several of the country’s largest brokerage firms reached in recent months regarding buyer agent commissions.
Listings can no longer disclose whether a seller is willing to pay a commission to a buyer’s agent, overturning decades of industry practice. Eliminating MLS ownership is seen as a way to counter accusations of improper influence and head off future litigation.
REcolorado said it understood why a separation was needed and that it engaged with DMAR and SMDRA earlier in the year to acquire full ownership of the nation’s 16th-largest MLS, which gathers listings from 26,000 members, according to a statement REcolorado issued on Tuesday.
The two associations cut off communication and REcolorado leaders said they were “blindsided” when they learned DMAR and SMDRA had reached a deal to sell the listing service to a private equity firm.
They allege that the associations acted in “bad faith” given that MAZL LLC formed in January, while negotiations with REcolorado were still underway.
“This was done without our knowledge, without our input, nor were we given the ability to compete,” Shelly Vincent, vice chair of REcolorado and vice president of operations and employing broker for HomeSmart in Colorado, told HousingWire, an industry publication.
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There is no precedent in the U.S. of a private equity firm owning a multiple listing service, and the sale, as well as REcolorado’s reaction, made national headlines in the real estate trade press, according to HousingWire.
REcolorado said selling to a private equity firm raises data security concerns for Colorado consumers, given that an outside buyer may not protect personal information in the same way a service controlled by local brokers would.
Private equity firms also have a reputation for trying to extract the maximum value from their holdings. For an MLS, that would be information in real estate listings, which can be detailed.
REcolorado also argued local owners would be more likely to reinvest in its operations and develop policies that more closely reflect the local market.
“We disagree with their approach and are dedicated to keeping REcolorado a broker-focused business partner and will continue to pursue all options to make certain your MLS remains a locally owned organization that is operated in your and your clients’ best interest,” REcolorado said prior to Friday’s announcement.
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