FTC Targets Home-Listing Limits
Regulators Aim to OpenIndustry Real-Estate DataTo Broader Competition
By JAMES R. HAGERTYJuly 14, 2006; Page A2
As part of a broader push by antitrust regulators to promote competition among real-estate brokers, the Federal Trade Commission is cracking down on rules that prevent data about some homes for sale from appearing on Realtor.com and other popular Web sites.
The FTC and the Justice Department are targeting what they say are anticompetitive practices in residential real-estate brokerage, which generates more than $60 billion a year in commissions.
The FTC action announced yesterday involves the Austin (Texas) Board of Realtors, a local affiliate of the National Association of Realtors, the dominant trade group for real-estate agents and brokers. Like most local Realtor groups, the Austin board operates a multiple-listing service, or MLS, that lets brokers share data on homes for sale.
In February 2005, the Austin board adopted a rule preventing homes listed under a certain type of contract, known as exclusive agency, from being sent from the MLS to Realtor.com and other sites accessible to the public. Exclusive-agency listing contracts often are used by discount brokers charging flat fees rather than a percentage of the sales price.
Under a consent order settling FTC charges that the rule violated antitrust law, the Austin board can't give preferential treatment to any type of listing agreement. The Austin board said in a statement that it scrapped the rule last August and added: "We are disappointed that the FTC's press release implies that we are guilty of wrongdoing."
FTC officials said they are investigating several other MLS operators that have similar rules and hope at least some will voluntarily change them. Justice Department officials also have contacted some MLS operators to inquire about such rules. MLS organizations that block exclusive-agency or limited-service listings from the public Web sites include those in Indianapolis, Detroit, Cleveland and Columbus, Ohio.
Realtor officials in Cleveland, Columbus and Indianapolis said they would review their policies in light of the FTC's move. The Greater Tulsa Association of Realtors in Oklahoma dropped a rule similar to the one in Austin last year after Justice Department officials raised questions.
John Roberti, a former FTC attorney who is now a lawyer at Mayer, Brown, Rowe & Maw LLP in Washington, said some Realtor boards are likely to change rules as a result of the consent order, but the FTC still may have to take some to court. He said the case shows the FTC is putting a high priority on real-estate competition.
A spokesman for the National Association of Realtors said the NAR doesn't have a policy on such rules.
Discount brokers want their listings to be displayed on Realtor.com and other popular sites where many consumers look for homes. Discounters also want to be able to display on their own Web sites listings generated by rival firms, including the traditional, full-service brokers that dominate the market.
Last year, the Justice Department filed a suit alleging that the NAR's national policy on Internet displays of listings data -- which allows brokers to block their listings from being displayed on other brokers' Web sites -- "restrains competition" from firms that rely mainly on Web sites to engage with their customers. The Realtors deny that charge and are fighting the suit.
Over the past few years, about a dozen states, including Texas and Missouri, have enacted laws requiring all brokers to perform certain services, including negotiation, whether or not consumers want to pay for them. State Realtor associations have pushed for these "minimum service" laws. About 15 states ban or restrict rebates, which are offered by some discounters as a way of reducing commission costs for consumers.
Regulators Aim to OpenIndustry Real-Estate DataTo Broader Competition
By JAMES R. HAGERTYJuly 14, 2006; Page A2
As part of a broader push by antitrust regulators to promote competition among real-estate brokers, the Federal Trade Commission is cracking down on rules that prevent data about some homes for sale from appearing on Realtor.com and other popular Web sites.
The FTC and the Justice Department are targeting what they say are anticompetitive practices in residential real-estate brokerage, which generates more than $60 billion a year in commissions.
The FTC action announced yesterday involves the Austin (Texas) Board of Realtors, a local affiliate of the National Association of Realtors, the dominant trade group for real-estate agents and brokers. Like most local Realtor groups, the Austin board operates a multiple-listing service, or MLS, that lets brokers share data on homes for sale.
In February 2005, the Austin board adopted a rule preventing homes listed under a certain type of contract, known as exclusive agency, from being sent from the MLS to Realtor.com and other sites accessible to the public. Exclusive-agency listing contracts often are used by discount brokers charging flat fees rather than a percentage of the sales price.
Under a consent order settling FTC charges that the rule violated antitrust law, the Austin board can't give preferential treatment to any type of listing agreement. The Austin board said in a statement that it scrapped the rule last August and added: "We are disappointed that the FTC's press release implies that we are guilty of wrongdoing."
FTC officials said they are investigating several other MLS operators that have similar rules and hope at least some will voluntarily change them. Justice Department officials also have contacted some MLS operators to inquire about such rules. MLS organizations that block exclusive-agency or limited-service listings from the public Web sites include those in Indianapolis, Detroit, Cleveland and Columbus, Ohio.
Realtor officials in Cleveland, Columbus and Indianapolis said they would review their policies in light of the FTC's move. The Greater Tulsa Association of Realtors in Oklahoma dropped a rule similar to the one in Austin last year after Justice Department officials raised questions.
John Roberti, a former FTC attorney who is now a lawyer at Mayer, Brown, Rowe & Maw LLP in Washington, said some Realtor boards are likely to change rules as a result of the consent order, but the FTC still may have to take some to court. He said the case shows the FTC is putting a high priority on real-estate competition.
A spokesman for the National Association of Realtors said the NAR doesn't have a policy on such rules.
Discount brokers want their listings to be displayed on Realtor.com and other popular sites where many consumers look for homes. Discounters also want to be able to display on their own Web sites listings generated by rival firms, including the traditional, full-service brokers that dominate the market.
Last year, the Justice Department filed a suit alleging that the NAR's national policy on Internet displays of listings data -- which allows brokers to block their listings from being displayed on other brokers' Web sites -- "restrains competition" from firms that rely mainly on Web sites to engage with their customers. The Realtors deny that charge and are fighting the suit.
Over the past few years, about a dozen states, including Texas and Missouri, have enacted laws requiring all brokers to perform certain services, including negotiation, whether or not consumers want to pay for them. State Realtor associations have pushed for these "minimum service" laws. About 15 states ban or restrict rebates, which are offered by some discounters as a way of reducing commission costs for consumers.
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