The U.S. Federal Trade Commission this week announced a settlement with MiRealSource Multiple Listing Service in Michigan over rules that blocked some property listings from the MLS and set restrictions for other property listings based on the type of real estate contracts.
MiRealSource is the sixth MLS to settle similar antitrust allegations brought by the FTC in October — the federal agency is proceeding with an antitrust lawsuit against Realcomp II Ltd., another Michigan MLS, over its listings policies.
In each of the cases, the federal government charged that the MLSs engaged in anticompetitive activity by placing restrictions on a category of property listings that could ultimately lead to reduced choices for consumers in real estate services.
Representatives for MiRealSource, which is a broker-owned MLS with about 7,000 members, announced in November that the MLS had agreed to settle the FTC complaint, and the agreement was subject to review and approval by members of the FTC.
“Under the FTC consent order settling the complaint, MiRealSource has agreed to abandon … collusive conduct and provide its services to all member brokers representing potential home sellers, regardless of the type of listing contract that they choose,” FTC officials announced in a statement Monday.
The FTC complaint against MiRealSource, issued Oct. 10, charged that the MLS violated antitrust law “by adopting rules or policies that limit the publication and marketing of certain sellers’ properties, but not others, based solely on the terms of their listing contracts. Specifically, the FTC alleges that MiRealSource favored exclusive right to sell listings and disfavored exclusive agency listings by, among other things, adopting a rule to exclude the latter entirely from the MLS.”
Under the most common listing agreement, called an “exclusive right to sell listing,” property owners agree to pay a listing broker for representing the sale of the property, regardless of whether the seller or the broker causes the sale.
An exclusive agency listing contract, meanwhile, typically provides that the seller is not obligated to pay the real estate broker if the seller directly locates a buyer. Under this form of agreement, the listing broker “often charges an up-front fee, but may receive a reduced commission or no commission at all, if the owner sells the property without the broker’s further help,” according to the FTC announcement.
The FTC complaint also stated that certain rules adopted by the MLS “limit the acceptance, publication and marketing of certain residential real estate listing contracts, thereby limiting the sellers’ ability to choose a listing type that best serves their specific needs.”
The consent order approved by the commission prohibits MiRealSource “from adopting or enforcing any rules or polices that deny or limit the ability of MLS members to enter into exclusive agency listings, or any other lawful listing agreements, with property sellers,” according to the FTC and requires the MLS to make necessary changes to its rules within 45 days of final approval.
The Commission voted 5-0 to approve the consent order, and the order is subject to a 30-day public comment period, which will expire March 7. After that date, the commission will decide whether to make the order final. Comments can be sent to: FTC, Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, DC 20580.
Virginia Blatt, CEO for MiRealSource, told Inman News in a November interview, “There is no point in spending a significant amount of resources, time and energy to litigate with the FTC. We’d rather spend our energies … in service to our members.” The MLS board made a decision to settle the FTC complaint after meeting several times to discuss the issue, she also said.
The Realcomp II MLS, meanwhile, continues to fight the FTC’s charges. That group has issued a “call to action” at its Web site that asks subscribers to convey their support to the FTC and to members of U.S. Congress for an MLS policy that prevents the MLS from forwarding exclusive agency listings for display on several public Web sites.
“To our knowledge, the FTC has received only a few complaints against Realcomp regarding this specific policy. We now suggest it’s time they hear from Realcomp Realtors who agree with the policy and stand behind it,” according to the announcement.
Karen S. Kage, CEO for Realcomp II, told Inman News that Realcomp and the FTC are taking depositions of potential witnesses and the trial is scheduled for June. “Many of our broker and agent customers have communicated with the FTC expressing their support for Realcomp,” she said, and the MLS has not rescinded any of the challenged rules. She said she could not discuss whether there have been any settlement discussions.
Shareholders for Realcomp II include the Dearborn Board of Realtors, Detroit Association of Realtors, Eastern Thumb Association of Realtors, Livingston Association of Realtors, Metropolitan Consolidated Association of Realtors, North Oakland County Board of Realtors, and Western-Wayne Oakland County Association of Realtors.
It is the largest Realtor-owned MLS, with about 15,000 members in southeastern Michigan.
The federal government is also engaged in a separate real estate-related antitrust lawsuit with the National Association of Realtors — the U.S. Justice Department filed a lawsuit against the trade group in 2005 charging that the group adopted overly restrictive policies for the online sharing and display of property listings information.