Editor’s note: See tomorrow’s story on the background of LaLa Wang, the New York real estate figure behind the lawsuit described in this story.
The Real Estate Board of New York has been around for more than a century. The board is self-described as “the oldest and most influential real estate trade association in New York City.” Among its hundreds of brokerage members are such heavy-hitters as Douglas Elliman, The Corcoran Group, Citi Habitats, The William B. May Co., Sotheby’s International and Brown Harris Stevens.
Lan Lan “LaLa” Wang, an advocate of opening up the New York City real estate market and the owner of a real estate services company called BrokersNYC, has accused these powerbrokers of using their market dominance to choke competition and gain a monopoly control over exclusive listings. Earlier this month, Wang launched a lawsuit against the board, several member companies and individual members.
“I think that it should be an open marketplace,” said Wang. “I think the reason consumers don’t always have as much access as they want is because of artificial restraints.”
In her lawsuit, Wang contends that the Real Estate Board has worked to destroy competition by establishing a proprietary property listing service, with access tied to board membership. She also charges that access to these listings are restricted to technology platforms developed by Brown Harris Stevens, which include a data transmission service called ROLEX and a database service called RealPlus.
Wang is no stranger to conflict within the world of New York City real estate. An administrative law judge suspended her real estate brokerage license in 2000 after a dispute over her company’s online listings of rental apartments for a fee. A provision of New York law prevented this service without a specialized license, and Wang has fought unsuccessfully in court to restore her broker’s license.
Steven Spinola, president of the Real Estate Board of New York (REBNY), said in a statement that the antitrust lawsuit appears to be “frivolous and without merit, and (we) have instructed our counsel to vigorously defend the Real Estate Board and its members.”
The lawsuit refers to a 72-hour co-brokerage rule for REBNY members that was enacted in 2003. This rule requires that within 72 hours of receiving an exclusive listing, all members of REBNY’s listing service, called the RLS, must “initiate an offer of co-brokerage of all Manhattan exclusive resale or rental listings to every other member of the RLS system who have expressed in writing an interest in receiving such listings.” This policy for the board does not provide for consumer access to listings.
This 72-hour rule “at face value appeared to take a step toward leveling the playing field for all brokers and upholding their fiduciary obligation to provide maximum exposure for a seller’s property,” the lawsuit states, though the rule allegedly evolved into a listing service and required technology platforms that are anticompetitive because they exclude other listing services that board members previously used.
Wang’s company, BrokersNYC, has provided integrated listing services to its clients, which have included more than 140 companies and about 2,000 real estate agents, and the company stands to lose business if the REBNY listing service members adopt other technologies, the lawsuit alleges. “Should REBNY and the broker defendants be successful in tying access to such listings to the use of prescribed data transmission and its underlying database services, REBNY will be dangerously poised to take complete control of the market for listing services,” the lawsuit states.
Spinola, in a statement, said, “The REBNY Listing Service is designed to help make it easier for New Yorkers to find a place to live by tapping into REBNY’s pool of professional, experienced and highly qualified brokers.” Spinola is also a member of the New York state Board of Real Estate, a government-created board established to assist in enforcing rules and regulations relating to real estate brokers and agents in the state.
REBNY’s service was not the first to establish a 72-hour rule for sharing property information in its listing service. The Manhattan MLS, a subsidiary of the Manhattan Association of Realtors, which launched in 2002, had the rule first, said Laura Rubinfeld, association executive. “It was one of the first things we did when we were chartered is to establish the Manhattan MLS – that was in our rules from the beginning.” Rubinfeld said that most – if not all – of the association’s members are also members of REBNY.
But Wang charges in the lawsuit that some of the largest brokerage firms in Manhattan, “accounting in aggregate for nearly 50 percent of Manhattan’s approximate 8,000 residential real estate agents,” are not members of the Manhattan Association of Realtors, and about 40 percent of Manhattan’s exclusive listings are not exchanged on the Manhattan MLS.
The Manhattan Association “has attracted very few of the largest brokerage firms which continue to be REBNY members,” the lawsuit states, and REBNY members represent an estimated 80 percent or more of the exclusive listings available in the Manhattan market. “Despite the existence of (the Manhattan Association of Realtors), REBNY essentially dominates the market for trade association membership services and is the gatekeeper to thousands of exclusive listings.”
The lawsuit seeks punitive damages of at least $18 million for alleged antitrust law violations, other judgments of not less than $2 million relating to alleged tying of services with membership in REBNY, alleged attempted monopolization, and injunctions relating to technology used by REBNY members to transmit exclusive listings information.
Tomorrow: Learn more about LaLa Wang and the various real estate companies she’s founded in New York City.
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