Online realtors will now have the same access to Multiple Listing Service (MLS) data and other services as traditional real estate brokers, according to a proposed settlement reached on Tuesday between the U.S. Justice Department and the National Association of Realtors (NAR).
In September 2005, the Justice Department’s Antitrust Division filed an antitrust lawsuit against NAR charging that its obstruction of Internet based reatlors and its restrictive MLS policies were stifling competition and hurting consumers. The Justice Department said that these policies prevented consumers from receiving the full benefits of competition, discouraged discounting, and threatened to lock in outmoded business models.
The case was scheduled to go to trial in federal court in Chicago in July 2008.
Under the terms of the settlement, brokers participating in a NAR-affiliated MLS will not be permitted to withhold their listings from brokers who serve their customers through virtual office websites (VOWs).
In addition, brokers will be able to use VOWs to educate consumers, make referrals, and conduct brokerage services. Such brokers will not be excluded from MLS membership based on their business model.
NAR agreed to report to the Justice Department any allegations of noncompliance. NAR also has agreed to adopt antitrust compliance training programs that will instruct local Associations of Realtors about the antitrust laws generally and about the requirements of the proposed settlement
You can read the proposed settlement here.
“Today’s settlement prevents traditional brokers from deliberately impeding competition. When there is unfettered competition from brokers with innovative and efficient approaches to the residential real estate market, consumers are likely to receive better services and pay lower commission rates,” said Deborah A. Garza, Deputy Assistant Attorney General of the Antitrust Division. “In addition, under this settlement, NAR will foster compliance with the antitrust laws by educating its members and its 800 affiliated MLSs.”
According to the Justice Department, “the first rule challenged by the Department required MLSs to permit traditional brokers to withhold their listings from VOWs by means of an ‘opt out’ NAR does not permit brokers to withhold their listings from traditional broker members of an MLS. Many local MLSs adopted NAR’s policy before NAR suspended its policy during the Department’s investigation. In one market in which the MLS adopted the policy, all brokers withheld their listings from the one VOW in the community, which was then forced to discontinue its popular website.”
“The second rule prevented a broker from educating customers about homes for sale through a VOW and then referring those customers (for a referral fee) to other brokers, who would help customers view homes in person and negotiate contracts for them. Some of the VOWs that focused on referrals also passed along savings to consumers as a result of increased efficiencies.
“Collectively, NAR’s policies prevented consumers from receiving the full benefits of competition in the residential real estate industry.”
NAR called the settlement a “favorable” conclusion to the Justice Department’s antitrust lawsuit. “This is clearly a win-win for the real estate industry and the consumers we serve,” said NAR President Richard F. Gaylord.
NAR points out that the final order expressly provides that NAR does not admit any liability or wrongdoing and NAR will make no payments in connection with the settlement.
The proposed settlement between NAR and the Justice Department still needs to be approved by a federal judge.