Deal on MLS real estate listings
Web Brokerages win full access in U.S — but not in Canada you say.
Online real estate brokers will be guaranteed full access to listings of homes for sale under an agreement announced by American federal officials Tuesday. Under the proposed settlement with the U.S. Department of Justice to resolve a 2005 antitrust lawsuit, the National Association of Realtors agreed to prohibit real estate brokers who use multiple listing services from withholding their property listings from Web-based brokerages such as ZipRealty and Redfin.
Such companies rely heavily on Internet tools to work with their customers, and frequently offer their services at much lower rates than most traditional brokerages.
“Today’s settlement prevents traditional brokers from deliberately impeding competition,” Deborah A. Garza, deputy assistant attorney general with the Justice Department’s antitrust division, said in a statement. “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.”
But Tuesday’s settlement won’t result in sudden changes to what consumers find online when they are looking for homes. That’s because in 2005 the National Association of Realtors suspended an earlier policy that allowed brokers to withhold listings from online brokers’ Web sites - so most sites have had access to all brokerages’ listings for more than two years.
The agreement is quite significant for online companies and traditional ones as well. “We can compete as aggressively as we want without worrying that a broker will decide not to share his listings with us,” Redfin Chief Executive Glenn Kelman said in an e-mail to the Mercury News on Tuesday. “There has been a huge debate in online real estate about whether we could survive working as a broker within the MLS rules, and get access to all the listings for sale. That is now a settled issue.”
Jeff Barnett, of Alain Pinel Realtors and the national chair of a Realtors group called MLS Forum, said the listing-sharing portion of the agreement is a plus for consumers. “It’s in the best interests of the seller to promote their listing on all real estate Web sites,” Barnett said.
Though the agreement will still allow home sellers to opt out of displaying information about their for-sale home online, only a tiny fraction do so, Barnett said.
For traditional brokerages, Barnett said, the most important aspect of the proposed settlement is that it would prohibit companies not actively involved in selling homes from harvesting listing information off of MLS sites and then charging brokers referral fees for those listings.
Tuesday’s settlement will not take effect until late summer at the earliest, or 60 days after it wins court approval. It would be in place for 10 years. It neither imposes a fine on the National Association of Realtors, nor does it force the group to acknowledge any liability.
Hopefully this American decision will prompt the Competition Bureau in Canada to take some action against anti-competitive practices of organized real estate in this country.
Realtors settle Internet Policy lawsuit
The National Association of Realtors agreed to give discount Internet brokers access to its listings of home sales, resolving a U.S. antitrust lawsuit that accused the trade group of trying to restrain competition. The settlement, filed in U.S. District Court in Chicago, calls for the realtors group to revise a policy that let real estate agents exclude their sales information from Web sites. The government said the practice propped up an old-fashioned business model and harmed consumers who can save 1 percent of the price of a home by using a Web-based broker.
“Today’s settlement prevents traditional brokers from deliberately impeding competition,” said Deborah Garza, deputy assistant attorney general in the Justice Department’s antitrust division. “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.”
The agreement comes as the housing market, in the midst of a two-year slump, has showed no signs of recovery. Today, the Commerce Department reported that sales of new homes in April were the second lowest since 1991.
U.S. sales of previously owned homes probably will fall to 5.39 million this year, the realtors association said in a May 15 forecast. That would be a drop of 24 percent from 2005’s all-time high of 7.08 million, making it the worst housing recession since the four-year slump.
On-Line Realtor Pleased
“We are reasonably happy but not completely overjoyed,” Glenn Kelman, chief executive officer of Redfin, a Seattle-based on-line brokerages, said in an interview. “It throws the gate open to all sorts of business models.”
Kelman said the settlement will still allow realtors to bar some on-line comments and price comparisons from firms such as Seattle-based Zillow.Com and Cyberhomes, a service of Fidelity National Financial, Inc. of Jacksonville, Florida.
Richard Gaylord, president of the realtors association, said in a statement that the settlement will let the group focus on “re-energizing the housing market” during a difficult period.
“Competition is alive and well in the real estate industry,” he said. “In fact, the competitive nature of our industry is even more apparent in times of market turmoil like those we are currently experiencing.”
Internet Brokers
Internet brokers, who seek to cut costs by charging only for the services a seller wants, sprung up in the 1990s and now operate in all major metropolitan areas.
Traditional real estate agents for such companies as Coldwell Banker Residential Brokerage and Re/Max International Inc. usually charge a commission of 5 percent to 7 percent of a property’s sale price, while discount brokers charge 2.5 percent to 4.5 percent, or a flat fee depending on the services provided.
In 2006, consumers paid $93 billion in real estate commissions, the Justice Department said.
In most markets, real estate brokers participate in the Multiple Listing Service, which lets them share information about properties that are for sale. By using the service, brokers and buyers can get listings on almost all homes in the market.
About 800 of the listing services across the U.S. are affiliated with the National Association of Realtors, which sets policies governing their use.
Listings
Realtors usually give their clients printouts of the listings and not full access to the database. However, some brokerages that operate online let customers see all the Multiple Listing Service information via the use of a password.
Those sites, the Justice Department said, help real estate agents be more productive and let them pass cost savings onto home buyers with lower commissions or rebates. The agency filed its case in 2005 and it was set to go to trial in July.
The Chicago-based realtors group, which has more than 1.2 million members who work in the residential and commercial real estate industries, didn’t admit or deny the Justice Department’s allegations in settling the case.
The agreement puts the group under enhanced government oversight for 10 years. There was no financial penalty. Garza, speaking to reporters in Washington, said the Justice Department generally doesn’t seek fines when it first tries to halt anti- competitive behavior.
“What we’ve done is achieve a very lasting and important change to the conduct of the realtors association and its affiliated listing services”, Garza said.