The online real estate community is peppering a proposed settlement in a years-long legal dispute over a set of property listings policies with a combination of praise, daze, amazement and naysaying. Depending on what section of the industry’s blogosphere you are traversing, the proposed agreement (see proposed settlement document here) between the federal government and the National Association of Realtors is said to have

The online real estate community is peppering a proposed settlement in a years-long legal dispute over a set of property listings policies with a combination of praise, daze, amazement and naysaying.

Depending on what section of the industry’s blogosphere you are traversing, the proposed agreement (see proposed settlement document here) between the federal government and the National Association of Realtors is said to have a profound impact, is completely meaningless or is somewhere in between. Apparently, the truce in the legal fight has triggered a new battle of words.

Justice Department officials have hailed the settlement — which largely revolves around policies that would allow multiple listing service participants to operate password-protected Virtual Office Web sites (VOWs), which are consumer portals loaded with property information shared by MLS participants — as allowing new competition and even fostering lower commission rates by making brokers more efficient.

And Realtor group officials, meanwhile, have said that the settlement ensures that MLSs will remain as powerful tools for brokers who are actively engaged in the business of real estate sales.

Click here to participate in a group discussion about the proposed settlement.

Terry Shortt, a broker and instructor for a Key West, Fla., real estate school, said in a comment at the Inman News site that “consumers probably won’t actually see any benefit from this settlement agreement,” though “it does send a strong message to the real estate industry to stop erecting barriers to alternative business models.”

He added, “The U.S. real estate industry, dominated by the National Association of Realtors and its affiliates nationwide, is still a closed business that is highly resistant to change. Implementing any change that would have a direct impact on consumers (like lowers fees) is like trying to turn the Titanic around in a bathtub.”

And Michael Daly of RE/MAX Beach Properties in Long Island, N.Y., echoed that comment. “I say, let’s get on with it already. This industry must stop building bigger bunkers and bigger walls to innovation. Do it, or be done to.”

Another commenter, Jerry Hoffman of RE/MAX Territory in Elk Grove Village, Ill., stated, “Fundamentally, the MLS is a membership service, not a public utility.”

He added, “Legitimate ‘alternative’ business models are fine. In the guise of ‘alternative’ business models, most of these alternatives just can’t compete in the real world and want to take credit for the work of traditional brokers as well as reap benefits from the efforts of traditional brokers. Basically, the issue was, ‘We can’t compete fairly in your world so you need to change.'”

The real estate antitrust lawsuits by the Justice Department and Federal Trade Commission “have nothing to do with benefiting the consumer,” he also said.

In stark contrast is a comment by Bruce Hahn, who represents an interest group called the American Homeowners Grassroots Alliance: “This is a great victory for American homeowners. This decision will enable technology to deliver the kinds of economies that it has in many other economic sectors. The vast majority of very capable real estate brokers and agents do not fear competition from new business models and do not support restricting them anyway.”

Mike Taylor of Rebate Real Estate in Indianapolis commented at the Inman Blog that the settlement “doesn’t seem that earth-shattering to me. I think most areas of the country already have pretty solid IDX (Internet Data Exchange) solutions with the vast majority of homes listed on the IDX.

IDX sites allow multiple listing service members to publicly display property listings information on the Web that is shared by other MLS participants without requiring consumers to register to view this content. The proposed new VOW policy would require consumers to supply a verified e-mail address in order to access potentially richer MLS data at VOW Web sites.

Geoff Lewis, senior counsel for RE/MAX International, told Inman News that he also believes the settlement will have little effect, given the industry’s wide adoption of IDX sites and consumers’ lack of appetite for registering to view property information online.

Lewis said he doesn’t believe consumers were ever comfortable with registering to receive property information. “I think that’s why IDX evolved well past the VOWs,” he said. RE/MAX’s own IDX search site already provides access to about 4.5 million property listings without registration, he said. “There are just so many places you can go today on the Internet (where property information) is freely available.”

He added, “There is incredible innovation on the IDX side. You read about competition everyday. The consumer just wants to be able to get all the listings and do it as easily as possible. The marketplace has responded to give the consumers what they want.”

IDX innovations likely would have proceeded regardless of the Justice Department’s lawsuit, he also said. “The industry recognized early on that VOWs weren’t practical and moved on, regardless of the litigation. I think it’s time for the industry and the Department of Justice to put this behind them.”

RE/MAX officials had been proponents of a controversial selective opt-out aspect in NAR’s original VOW policy that allowed brokers to choose whether or not to share property listings with other brokers operating VOW sites — the proposed settlement strikes this opt-out provision from the new VOW policy.

Some companies do see major benefits in the proposed settlement agreement. Sawbuck Realty, a company with a referral-based business model that launched earlier this year, fired off an announcement on the Internet hailing the proposed settlement as a victory for the company’s business model.

“Sawbuck’s referral model was specifically outlawed by NAR’s previous policy,” according to the announcement, and “until the Justice Department got involved, our new model was dead in the water.” The company’s co-founder received a subpoena from the Justice Department to testify in the case against the National Association of Realtors.

“In today’s settlement, NAR agreed to allow new business models like Sawbuck to participate fully in the MLS, right alongside traditional bricks-and-mortar brokers,” the company announced.

At the RealtyTimes Web site, writer Blanche Evans suggested that the proposed settlement will actually restrict some activities that industry participants engage in.

“Lead-generation services like LendingTree won’t be allowed to scrape MLS data through broker shell companies like iNest,” Evans writes, “Data mining companies … won’t be allowed to resell MLS data for profit,” and “Real estate communities like Zillow won’t be allowed to put housing value estimates near MLS listings, which will take the zest out of Zestimates.”

A post at the AgentGenius blog site by Bill Lublin, CEO for Century 21 Advantage Gold in Philadelphia, called the proposed settlement “one … for the good guys,” and several commenters credited NAR’s general counsel, Laure Janik, for achieving the settlement.

Some commenters questioned, too, government interest in promoting policies that could lower the cost of real estate services. “What is the government doing trying to raise or lower prices for us agents?” one commenter asked. “I thought this was a capitalist market.”

At the TechCrunch blog site, Jason Kincaid wrote in a post that the proposed settlement “is especially important for disruptive online-only companies like Redfin, which rely on being able to access current home listings.”

Comments at that site ranged from a critique of Redfin’s business model to NAR’s apparent “paranoia.”

Glenn Kelman, Redfin CEO and president, wrote in the brokerage company’s blog that the proposed settlement agreement “did result in a major change — the permanent repeal of the Internet Listings Display (ILD) policy that would have allowed brokers to selectively withhold listing data.” The ILD policy, which NAR introduced in 2005 as the Justice Department announced its lawsuit, was quickly recalled as the Justice Department amended its lawsuit to oppose elements of this new ILD policy.

Also, the Redfin blog states, “So for the consumer (and for Redfin, too) the settlement is good news: an MLS can’t discriminate against Redfin or any other broker because of our business model or our technology,” and “Any information that can be whispered by a real estate agent to his client — such as how long a home has been on the market or how its price has changed over time — can be distributed by Redfin through its site.”

And the blog points to exhibits in the settlement agreement that provide a seller can opt out from allowing “third-parties to write comments or reviews about particular listings” at VOW sites, or displays of an “automated estimate of the market value of the listing in immediate conjunction with the listing.”

Kelman states that he expects “some brokers will include such prohibitions in their standard listing agreements, so that many sellers will opt out,” and concludes, “all in all, we were glad to see that the settlement protected all brokers’ access to data. We just want to make sure we can still do something meaningful with the data, too.”

Check out these links below to view more online discussions about the proposed settlement agreement between the Justice Department and National Association of Realtors:


What’s your opinion? Leave your comments below or send a letter to the editor. To contact the writer, click the byline at the top of the story.

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