Fight erupts over online
real estate listings
When you fish the Web for
a house to buy, are you casting a wide net or merely dangling a hook? It's hard
to know, and the National Association of Realtors has adopted a policy that keeps
it that way.
Department of Justice's antitrust division has sued the Realtors over the policy,
calling it anticompetitive. The Realtors counter that the rule protects their
This complex issue exerts a multitude
of effects on buyers, sellers, brokers and the agents who work for them. The impact
on buyers can be boiled down to this: "You couldn't go anywhere online and
see all the homes that are available," says Patrick Lashinsky, marketing
director for ZipRealty, a discount online broker based in Emeryville, Calif. It
makes home buyers "beholden to the agent to see that property," he says
-- just as in the days before the Web.
estate companies say you should be able to conduct an online search of all of
the properties in the local Multiple Listing Service. The Justice Department agrees.
The National Association of Realtors says listings shouldn't appear on the Web
if home sellers and their brokers don't want them there, for any reason.
meets the Web
A Multiple Listing Service, or MLS, is a database of
homes for sale. There are about 850 local MLSs. Only Realtors can add listings
to the database, so it doesn't include homes for sale by owner. For decades, consumers
couldn't search the MLS; Realtors did it for them. Along came the Web, and a new
business model was born: discount real estate brokers who gave their clients password-protected
access to the local MLS on the Internet.
Web brokers encourage
home buyers to research homes on the Internet and drive by the properties they're
interested in. This is intended to cut down on agents' workloads and reduce costs.
If the client is still interested in a house after driving by, the buyer's agent
arranges a visit. At settlement, the buyer's agent collects the commission and
returns a portion of it to the buyer in the form of a check or a contribution
toward closing costs.
According to the Justice Department's complaint,
traditional brick-and-mortar brokers worry that "these Internet
sites would inevitably place downward pressure on brokers' commission
rates." The Realtors responded with two sets of rules governing
Web listings. One policy would have allowed brokers to withhold
their listings from selected rivals' Web sites and allow them on
approved competitors' Web sites. The feds threatened to sue on antitrust
grounds, and the two sides negotiated for a few months.
out, opting in
On Sept. 8, the Realtors announced yet another set of rules called
"Internet Listing Display," or ILD. The ILD policy doesn't
let brokers selectively withhold listings from competitors that
they dislike. But it does allow brokers to withhold listings from
all rivals' Web sites. This rule, called "blanket opt-out,"
has been in effect for three years, without a peep from the Justice
Department. But the ILD policy adds a twist: Even when a broker
uses the blanket opt-out, a seller can ask to have a home listed
on competitors' Web sites. That's called "selective opt-in."
Hours after the Realtors announced the new policy,
the Justice Department filed the antitrust lawsuit in a U.S. district
court in Chicago, where the Realtors association is based.
"NAR's revised policies continue to discriminate
against brokers who use the Internet to more-efficiently and cost-effectively
serve home sellers and buyers," the government alleges in its
lawsuit, explaining that "the opt-out provisions provide brokers
an effective tool to individually, or collectively, punish aggressive
competition by any Internet-based broker."
The Realtors say they're not punishing anyone; they're protecting
home sellers from prying eyes. Listings still appear on the MLS,
just not necessarily on Web sites that consumers have access to.
The ILD policy "maintains the right of a homeowner not to have
a property displayed, and to have it listed on the MLS," says
Steve Cook, spokesman for the association. "A lot of people
are concerned about privacy, about security." He says rich
people and celebrities don't want information about their homes
all over the Web, and neither do some elderly homeowners or parents
of young children.