"The case concerns the fate of a large inheritance, but has dragged on for many generations prior to the action of the novel, so that, by the time it is resolved late in the narrative, legal costs have devoured nearly the entire estate. The case is thus a byword for an interminable legal proceeding."
That’s Wikipedia’s succinct description of Jarndyce v. Jarndyce, the interminable lawsuit that formed the backbone of Charles Dickens’ novel "Bleak House."
Jarndyce may be fictional, yet Wikipedia’s description of it might just as well apply to the very real legal spat between the National Association of Realtors and the U.S. Department of Justice, which also has dragged on for more than a few years.
The dispute concerns whether the U.S. real estate brokerage industry is a hotbed of competition — NAR’s point of view — or a gigantic anti-competitive cartel — the DOJ’s opinion. The question is provocative, but impossible to answer without a basic agreement as to the nature of "competition," a necessary prerequisite that’s been absent in the discussion so far and isn’t likely to be achieved any time soon, if ever.
For its part, the national Realtors group might well argue that:
- there are more than 1 million competitors in the marketplace;
- business is difficult to get because the supply of services exceeds the demand; and
- the industry is therefore highly competitive.
And the DOJ, for its part, might argue equally well that:
- an excess supply of services should result in lower prices;
- prices (i.e., realty commissions) have escalated significantly in the last decade on a real-dollars basis; and
- the marketplace must then be highly anti-competitive.
Both arguments are reasonable and the two points of view aren’t necessarily exclusive or even contradictory because real estate is one of the nation’s largest economic sectors and thus is subject to different trends and circumstances in different segments of the massive national marketplace.
Long memories may recall that the spat originally started when N.A.R. tried to promulgate model MLS rules that would have given brokers a selective opt-out from the display of for-sale home listings on virtual office Web sites. But since then, the debate over ‘competition’ has become so convoluted that the original issue has become not only lost and forgotten, but largely moot as well.
The latest salvo came, rather weirdly, in the form of a Web site designed by the DOJ purportedly to demonstrate "the importance of competition in real estate to consumers." The Web site is obviously biased, but no more so than any of NAR’s propaganda on the same issue.
Worse yet, the only portion of the Web site that’s in any way relevant to the original issue of VOWs and MLS rules is buried two clicks away behind a link that leads to a 33,000-word DOJ report. Skeptics might suggest that consumers are no more likely to read that report than they are to make it through "Bleak House," which runs more than 800 pages in most modern editions.
Given the explosion of real estate listings on the Internet and NAR’s adoption two years ago of an Internet Listings Display policy that does not contain a selective opt-out, is this debate over the inner workings of virtual office Web sites still important enough to merit this much expenditure of time and money?
Consider Dickens’ opening words of "Bleak House":
"Jarndyce and Jarndyce drones on. This scarecrow of a suit has, in course of time, become so complicated that no man alive knows what it means. The parties to it understand it least, but it has been observed that no two Chancery lawyers can talk about it for five minutes without coming to a total disagreement as to all the premises."
Much has been made of former NAR President Bill Chee’s characterization of disputes over online real estate as "a few Chihuahuas fighting over a bone, unaware that a hungry lion is coming over the hill." And the "lion" has been deemed to be Microsoft, "the consumer," or most recently, Zillow, among other perceived threats to entrenched real estate interests.
But today, the fight between NAR and the DOJ looks less like Chee’s warning and more like two Goliaths trying to bash each other’s heads in while David sits on the sidelines and shakes his own head in amazement, dismay and disgust at the Goliaths’ futile behavior. If we extended this admittedly ridiculous metaphor to the point of absurdity, we might make the persona of David representative of NAR’s membership, the public or both. And observers might well take pity on poor David’s lack of any meaningful say in the discussion.
Meanwhile, the real issues are being discussed and played out at the state level with respect to minimum-services laws and the local level with respect to MLS rules and policies. The fight at the national level is indeed over their heads.
Also meanwhile, if we may indulge in a bit of biz-speak, the paradigm has shifted. The housing market has shrunk and the imbalance between the supply of and demand for brokerage services has worsened. Economically, that suggests that either there should be a massive exodus of suppliers from the marketplace or prices should decline substantially on a real-dollar basis due to increased competition for less business. Both of those scenarios may be unwelcome to NAR, but could be positive developments for the public and perhaps even for the survivors who will make up NAR’s smaller membership in the future.
Thus may the sad fate of the Jarndyces prove instructive for the folks at both NAR and the DOJ. While the case continues, little has been resolved and nothing has or ever will come of it. The lesson of "Bleak House" is entirely relevant: The longer the lawsuit drags on, the more likely both sides are to lose. Just like Jarndyce and Jarndyce.
Marcie Geffner is a real estate reporter in Los Angeles.
Copyright 2007 Marcie Geffner. All rights reserved. No part of this article may be used or reproduced in any manner whatsoever without written permission of the author.
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