By Paige Tepping
RISMEDIA, June 2, 2008-The Department of Justice (DOJ) and National Association of Realtors® have reached an agreement to resolve the litigation concerning NAR and its challenging policies and rules for real estate brokers who use Internet-based tools to offer better services and lower costs to their consumers. What started with NAR passing new rules and regulations that blocked-Internet based real estate companies from accessing Multiple Listing Service data, the DOJ responded by filing a complaint as they believed these restrictions were not in the best interest of consumers. The real estate industry as a whole is encouraged by the settlement of allegations of anti-trust violations against NAR, although many believe that NAR can do more to encourage the consumer experience.
The lawsuit challenged NAR’s policies and rules that deal with broker’s use of Internet-based tools to offer their consumers better service as well as lower costs. Brokers use the Internet to provide brokerage services to their customers through VOWs (virtual office websites). VOWs allow a broker’s customers to search real estate listings on their own, instead of having to depend on a broker to conduct the search for them. Delivering listings through the Internet allows customers to control the search process as well as educate themselves about the real estate market in their area, allowing brokers to be more productive. Some VOWs have even passed these efficiencies on to consumers by offering lower commission rates to home sellers.
The litigation was originally filed in September 2005, and the government has been investigating NAR’s policies for the past two years. With an agreement now in place, NAR will not be responsible for paying any fines or fees, and the settlement doesn’t include anything about the occurrence of a wrong-doing. Nearly all of the NAR policies will remain intact. “I would have to conclude that this settlement is very favorable to the real estate industry,” said Dave Liniger, Co-Founder and Chairman of RE/MAX International.
What is seen as a win-win situation by NAR, the settlement also gives the DOJ what they want: real estate companies who wish to do business primarily over the Internet have access to MLS data. Mary LaMeres-Pomin and Lyle Martin, co-founders and co-chief executive officers of Assist-to-Sell Inc. believe that the settlement is a positive step in the right direction, and one that the industry can build on in the years to come. “We are encouraged by the broader implications of this settlement. We believe it demonstrates that the industry is at least willing to acknowledge that how we buy and sell real estate is changing. We hope this will encourage further innovation and wider acceptance of alternative business practices.”
The settlement terms required NAR to repeal its anticompetitive policies as well as require affiliated MLSs to repeal their rules that were based on these policies. With more than 80 percent of the approximately 1,000 MLSs in the U.S. affiliated with the NAR, brokers regard MLS participation to be essential to their ability to compete in the marketplace. NAR must also put a new policy in place that will guarantee that Internet-based brokerage companies will not be treated differently than traditional brokers. The new policy will allow brokers who are participating in a NAR-affiliated MLS to use VOWs to educate their consumers, make referrals and conduct brokerage services.
While it is a positive step forward, the impact of this settlement on the real estate industry is not likely to be significant. “While it’s true that the real estate industry has grown technologically over the last five years, despite the ongoing litigation, much more can be done, say Assist-to-Sell’s LaMeres-Pomin and Martin.