A San Francisco lawyer, who has engaged in many antitrust lawsuits against Realtor groups over the past 25 years, Monday released an 82-page report that alleges a history of “price fixing, tie-ins, punitive fee splits and trademark fraud” in the real estate industry.
In his report, “Nine Pillars of the Citadel,” lawyer David Barry urges the U.S. Justice Department to bring criminal charges against the National Association of Realtors trade group, which has about 1.3 million members nationwide, and to dissolve the association. He also proposes the creation of a national multiple listing service that would require all real estate agents to submit all of their property listings unless property owners choose not to include their properties in this system.
Steve Cook, a spokesman for the National Association of Realtors, said of the report, “It’s hard to take Dave Barry’s claims seriously,” adding that courts have tossed out some of the same claims in lawsuits brought by Barry. Cook also said that Barry appears to have a “career dedicated to suing Realtor associations, usually unsuccessfully. The simple fact is that real estate is probably the most competitive industry in America. Realtors and Realtor associations bring professionalism, ethics and an entrepreneurial spirit to the field.”
Barry said today he expected a “chilly reception” for the report by Realtor associations. The report, he said, is intended to advise regulators that “they need to be more active in patrolling their marketplaces,” and to present a historical perspective of alleged restraint of trade within the real estate industry. He said the current network of hundreds of local MLS systems across the country is dysfunctional and needs a major overhaul.
There should be a “single, central national MLS, free from every kind of political control and restraint. There deserves to be a fair and neutral marketplace,” Barry said, adding that he envisions an operating structure that is similar to the New York Stock Exchange or the Internet Corporation for Assigned Names and Numbers, which is a private corporation that coordinates some technical management of the Internet.
This new MLS could be created through federal legislation, he said, and he plans to promote this concept to Rep. Michael G. Oxley, R-Ohio, chairman of the House Financial Services Committee and an important opponent of Realtor efforts to block the entry of federally chartered banks into the business of real estate brokerage. Oxley in March requested that the U.S. Government Accountability Office investigate price competition for real estate brokerage services, and in November 2004 called for a GAO report examining other aspects of the real estate industry.
Barry’s “Nine Pillars of the Citadel” is among hundreds of other comments and documents submitted to the U.S. Federal Trade Commission and U.S. Department of Justice that relate to a federal workshop on real estate industry competition, held on Oct. 26 in Washington, D.C. Both agencies have engaged in a series of actions this year against real estate laws, practices and policies that they charge are harmful to consumers and industry competition.
Most notably, the U.S. Justice Department in September filed an antitrust lawsuit against the National Association of Realtors, charging that the group’s policy for the display and sharing of online property listings is too restrictive. The department has since filed an amended complaint that more specifically addresses a new online listings policy adopted by the association, and the association has announced plans to file its legal response in early December.
Also, federal agencies have opposed state measures banning real estate rebates for consumers and state measures that require all real estate brokers and agents to perform a specific set of services for clients that they say have said will restrict some types of real estate business models and limit consumer choice.
Barry’s report calls attention to membership costs and policies associated with the National Association of Realtors and association-operated MLSs. The report cites instances in which Realtor-affiliated MLSs require users to purchase Realtor association memberships in order to receive MLS services, and Barry asserts that this tying of Realtor membership to MLS use should not be allowed. Barry’s report also criticizes real estate commission-setting practices, the trademark of the word “Realtor,” the cost of real estate services and the productivity of agents.
“Only when the Department of Justice began a string of civil and criminal cases in the 1970s did the Realtor associations disavow commission fixing,” the report alleges, citing a number of court cases brought by the federal government against several local Realtor boards.
Real estate agents, brokers, real estate company officials, Realtor association and MLS officials, lawyers, public policy experts and academics are among the individuals who have submitted public comments to the U.S. Justice Department and Federal Trade Commission. The public comment period relating to the federal workshop on real estate competition closed Nov. 28.
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