SAN FRANCISCO — The U.S. Justice Department, among other federal and state agencies, is investigating several multiple listing services around the country over policies that prevent some types of property listings from being displayed on home-search sites such as Realtor.com, a National Association of Realtors official told MLS executives during a meeting here Saturday.
Laurie Janik, general counsel for the trade group, said that there are a “number of MLSs around the country that are currently being investigated.” The national trade group’s stance is to allow Realtor-operated MLSs to place restrictions on exclusive agency property listings, and because of that there is insurance available for those organizations that are sued over the practice, she said.
An exclusive agency property listing is one that allows the seller to attempt to sell on his or her own while also providing an opportunity for a real estate agent to sell the property.
The real estate industry’s property listings policies have been under fire in the wake of the Justice Department’s lawsuit charging that NAR blocks competition with a rule that places restrictions on where home listings can be displayed on the Web.
A state attorney general’s office is involved in at least one of the investigations related to exclusive agency listings, Janik said.
Janik encouraged MLSs to accept all exclusive agency and exclusive right to sell property listings, and to “let participants decide which listings to display on Web sites. Participants can say, at the end of the day, ‘I don’t deal in this type of property. I don’t want exclusive agency listings on my site. Let the participants decide.'”
MLS boards currently can set an exclusion policy at the board level, according to Janik.
The Justice Department, she said, is questioning why the MLS would set this policy if the listing brokers agree to accept exclusive agency listings. But she said it is not a good thing to use MLS resources and Realtor.com to advertise properties for sellers who seek to cut real estate agents out of the real estate transaction by selling their own properties.
“If it is for sale by owner, why should we be promoting that? That is not in our best interest,” Janik said.
Janik updated MLS representatives about the status and likely course of Justice Department’s lawsuit against the association. The trial will be decided by a judge and not a jury, she said. The association rescinded the policy that was named in the initial lawsuit — its Virtual Office Web site (VOW) policy — and adopted a new Internet listings policy but has asked MLSs to suspend adoption of that new policy. The Justice Department opposes aspects of this new policy.
Specifically, federal antitrust officials oppose brokers being able to keep listings from other brokers’ Web sites, rules that restrict referrals, and a so-called clean-page rule related to advertising around other brokers’ listings, Janik said. They also possibly disagree with a rule change that says only brokers who are active in listing properties or representing buyers can be MLS members.
NAR plans to file a motion to dismiss the lawsuit by December 5. The government will have 60 days to respond, and the association will have 30 days to reply, Janik said.
“At that point the judge may wish to sit down and try to resolve (this) through settlement. We are willing to discuss settlement,” Janik said, but the association will not compromise on the key principals at issue.
The discovery phase of the suit could take about a year, she said, and both sides are likely to file motions for summary judgments.
The association has hired the Chicago law firm Sidley, Austin, Brown & Wood to assist with the litigation. “It will not be an inexpensive case to defend,” Janik said.
The MLS committee members during Saturday’s meeting also voted to reconsider language in a NAR policy which states that listing broker owns the property listing and its content. The statement presents a legal problem, according to John Rees, a lawyer present at the meeting. “Given that it’s not true, it’s going to create some real confusion,” he said.
Issues related to the ownership of property listings data are an ongoing source of debate among real estate experts.
Committee members on Saturday also agreed to study ways to curb the misrepresentation of the terms “MLS” and “multiple listing service” by real estate agents, brokers, third parties and MLSs across the country. While the association doesn’t own exclusive rights to the terms, misuse of the terms can mislead the public, said Ann Hale Bailey, president of Pranix, a consulting firm. Bailey presented a report on MLS branding issues at the meeting.
Bailey said the widespread use of the term MLS to generically refer to online property listings information can weaken the true function of the MLS, which she said is “a professional cooperative and not a public database.”
If real estate professionals and others continue to refer to the MLS as a sort of public utility, she said, “the regulators will regulate it as a public utility.”
“The public does not have access to the MLS yet we keep telling them they do,” she said.
Committee members also voted to accept recommendations for an association-produced handbook on multiple listing policy. Among the accepted recommendations for additions to the handbook:
“Where disclosure is authorized, Realtors shall also disclose whether offers were obtained by the listing licensee, another licensee in the listing firm or by a cooperating broker,” “listing brokers shall not misrepresent the availability of access to show or inspect listed property,” and “participants representing buyers or tenants shall submit to the buyer or tenant all offers and counter-offers until acceptance, and shall recommend that buyers and tenants obtain legal advice where there is a question about whether a pre-existing contract has been terminated.”
The groups also accepted recommendations for an addition to the handbook that states, “Nothing in these MLS rules precludes listing and cooperating participants, as a matter of mutual agreement, from modifying the amount of cooperative compensation that will be paid in the event of a successful transaction.”
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