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Real Estate

REcolorado wants to move past the drama of its sale. Its new participation agreement has reignited controversy

‘The control of getting your listing to every single site may have very well just gone away,’ according to one agent

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Real estate professionals in Denver are unhappy with a new Participation Agreement that could limit their access to data shared with REcolorado, a local MLS (Image generated by AI in Midjourney)

Denver real estate agents were shocked in June when the area’s two Realtor associations fired the board of directors of the local multiple listing service (MLS) and sold it to local real estate businessman Joseph Burks. But the drama around the situation could be just beginning. 

Under its new ownership, REcolorado MLS rolled out a new Participation Agreement. The agreement allows a broker to own the listing contract, but REcolorado will own the listing’s record, potentially giving REcolorado the right to deny an agent’s ability to download and sell their listings.

REcolorado denies that the agreement does either of these things, claiming that the agreement gives it copyright over the compilation of the MLS database.

But with a deadline of Wednesday, Oct. 9, to sign the agreement, agents are scrambling to find out what the agreement means for them. And some major brokerages have had loose conversations about taking legal action or joining a competing MLS.

“It almost creates an uneven playing field for the members of REcolorado because the control of getting your listing to every single site may have very well just gone away,” Denver agent Bret Weinstein said. “I don’t think people are as aware of it as they should be right now. The owner of the data should never be REcolorado.”

Broker ownership of listings data has been a given in the real estate industry since MLSs migrated to the internet in the 1990s. MLSs owned by Realtor associations — which are the vast majority of the roughly 550 MLSs in the country — are beholden to rules imposed by the National Association of Realtors (NAR), one of which is that an MLS cannot limit the use of a member’s data.

But with REcolorado’s sale to Burks, the MLS is no longer owned by a Realtor association and thus isn’t subject to NAR rules. Its new Participation Agreement effectively removes some of the most important protections.

Agents said that REcolorado’s lack of communication has led to confusion among agents and brokerages. They say the MLS has not hosted an event where agents can ask questions. A spokesperson for REcolorado claims they’ve launched “a comprehensive communication and outreach plan.”

Despite giving a short timeline for brokerages to sign the new agreement, which was sent out in the latter half of September, one major national brokerage said that REcolorado hasn’t approached it or its agents. The brokerage added that it has concerns over provisions tied to ownership of the data. Smaller independent brokerages have said the same.

Rather than risk damaging the business of their agents, eXp Realty said that they’ve executed the agreement but are monitoring the situation. And depending on how the situation unfolds, it could result in dramatic action.

MLSs largely operate as monopolies in their respective markets because they contain the historic data that allows agents to create a market analysis, among other things. But the internet has paved the way for MLSs to expand their geographic footprints beyond that of the Realtor associations that own them, whether through consolidation or data sharing agreements.

It’s also allowed for the creation of new MLSs that are privately owned. Decentre Labs founder Rob Hahn has launched MLS called Nexus that would serve all of Colorado, in addition to other states and markets. eXp said it is keeping an eye on Hahn’s venture to see if it is viable.

“There are some things [in the Participation Agreement] that are a slight departure from what we see in other MLSs, and we continue to review it with our legal council,” said Holly Mabery, eXp’s senior vice president of brokerage operations. “But I also want to see what else may come out of REcolorado or in the state, because is there maybe a better solution? We’re always open to having those conversations.”

Hahn has written about the situation with REcolorado on his Substack feed, and this week he hosted a webinar on REcolorado. In an email promoting the webinar, Hahn wrote that he and former RE/MAX CEO Adam Contos “will be laying out short-term solutions for brokerages who need to protect their data first and foremost, and address longer-term solutions.”

The new participation agreement could also impact data sharing agreements that it entered into prior to the sale to Burks. One was with Colorado-based IRES MLS and four others were with out-of-state firms: First Multiple Listing Service (FMLS), MLS Listings, Miami Association of Realtors and Heartland MLS.

REcolorado said that these agreements won’t be impacted, but the sentiment may not be shared by the other MLSs. A Heartland spokesperson said that individual participation agreements have no impact on their data sharing agreement and thus are not a violation of their contract. Whether it’s a violation or not, however, the new agreement could be a source of concern for these MLSs.

“Taking the IP from your own broker members’ listings is a pretty bold move, and if I personally ran a brokerage, I’d not sign an MLS agreement that gave up those ownership rights, but instead I would move my brokerage business to another competing MLS, such as IRES who has the broker’s interest at the forefront,” First MLS CEO Jeremy Crawford said in an email to HousingWire.

“FMLS hopes that REColorado’s new management team will implement the native Datashare which they committed to that will increase market exposure of the broker’s active listings and enhance referral networks between the brokers and agents of the two organizations,” he added. “FMLS is also committed to working with other like-minded MLSs for the broker’s benefit and would be excited to share data with IRES and other MLSs in the Colorado marketplace.”

The situation has generated ill will from agents and brokerages toward REcolorado, and the MLS’s approach to handling it has created what some have said is a public relations disaster.

The South Metro Denver Realtor Association (SMDRA) and Denver Metro Association of Realtors (DMAR) — the two Realtor associations that owned REcolorado prior to its sale to Burks — have told agents not to answer questions from the media and to direct any they receive to them and REcolorado, according to one agent.

Local broker Karen Frisone — a former director of DMAR — told The Denver Gazette in July that REcolorado sent her a cease-and-desist letter for speaking out about the situation, and she doubled down in response.

“I’m glad I got [the letter], because I am not intimidated by a letter from a lawyer,” she told the Gazette. “Send me all the letters they want. I know what my rights are and I’m not lying and I’m not making direct accusations. I am asking questions.”

Questions linger around why Burks bought the MLS and what he plans to do with it. REcolorado’s previous board of directors — which DMAR and SMDRA fired for allegedly breaking a confidentiality agreement by leaking news of the sale to the real estate blog Vendor Alleywarned Denver agents after the sale that their data could be compromised by outside ownership.

The new Participation Agreement appears to be stoking these fears. Burks is the president of Equity Title of Colorado and is affiliated with other real estate ventures. A cozier relationship to REcolorado’s data could potentially be leveraged for financial synergies with businesses he already owns.

HousingWire has made repeated requests to Burks for an interview since the sale of REcolorado in June. He has not responded to any of them.

The extent to which legal action has been discussed by major brokerages is unclear, but Marx Sterbcow of Sterbcow Law Group suggests that any forthcoming lawsuit would have to clear a high bar, whether the nature of litigation is of copyright infringement or antitrust violations.

“As the real estate titans clash over who gets to play gatekeeper with the MLS data, one can only hope the outcome has fewer plot twists than a season finale of a real estate reality show,” Sterbcow said in an email. “Here’s to hoping for a resolution where everyone finds their ‘forever home’ in the data world without needing to flip tables or properties!”

In the meantime, anger from agents toward REcolorado is boiling. When the sale became public, brokerages started creating backups of their data on the MLS, which could potentially be uploaded to another MLS like IRES or Hahn’s forthcoming venture.

While the monopolistic nature of MLSs presents a major barrier to such a move, the continued controversy and drama around REcolorado is causing at least some entities in the Denver area to consider their options.

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