Editor’s note: In this two-part series, Inman News looks at difficulties flat-fee brokers who offer limited services have faced in getting their listings published more widely on the Web. Part 1 highlighted one Wisconsin-based full-service broker’s decision not to display limited-service or exclusive-agency listings, and the National Association of Realtors policy adopted by other multiple listing services that could lead other brokers to do the same. This final segment, Part 2, examines why the U.S. Federal Trade Commission and limited-service brokers have viewed "MLS approved" Web sites, including brokerages’ Internet Data Exchange (IDX) sites, as an important source of information for consumers.
When Shorewest Realtors, one of Wisconsin’s largest real estate brokerages, stopped information for listings under contract with limited-service brokers from appearing on the company’s public-facing Web site, the local multiple listing service stood behind the company’s right to do so.
The MLS, Multiple Listing Service Inc., last year signed a consent order with federal regulators in which it agreed not to block the publication of "exclusive agency" listings represented by limited-service brokers.
But MLS Inc., citing rules taken directly from a National Association of Realtors policy handbook, says its member brokers have the right to decline to publish other members’ listings on a case-by-case basis, based on criteria like geographic location, list price, broker compensation, listing type, and level of service (see Part 1).
Some limited-service brokers question whether, by adopting rules that seem to allow Shorewest to block their listings from appearing on Shorewest’s Internet Data Exchange (IDX) site, MLS Inc. has violated the spirit, if not the letter, of its consent agreement with the Federal Trade Commission (FTC).
"The agreement with the FTC says all listings have to be treated equally and fairly," said Paul Liebe, broker-owner of Redefined Realty, an Oconomowoc, Wis.-based brokerage offering flat-fee services to clients. "If you call the MLS, they will tell you Shorewest can do whatever they want."
Among other things, the consent order prohibits MLS Inc. from taking any action to "restrict or interfere with the ability of (members) to enter into exclusive-agency listings or other lawful listing agreements."
"Exclusive agency" contracts are often used by brokers offering flat-fee services at a reduced cost, providing a discount to sellers who want their property to appear in an MLS but are willing to take on some of the work usually performed by real estate agents — such as marketing and negotiating.
Because of Shorewest’s dominant position in the market, sellers who want to list with a limited-service broker may consider themselves to be at a disadvantage if their home does not appear on Shorewest’s IDX site, said Corey Scholtka, broker-owner of Waukesha, Wis.-based BuyHomes.com LLC.
When Shorewest stopped publishing limited-service and exclusive-agency listings, Scholtka said some of his clients were upset.
In the greater Milwaukee area, he said, "People perceive Shorewest to be the MLS. It’s not, but I have to be proactive in telling my clients they will not be getting this (exposure on Shorewest’s IDX site)."
Although it’s too soon to say with certainty, "I think this is costing me money," Scholtka said of Shorewest’s decision to stop publishing limited-service and exclusive-agency listings.
To address his clients’ worries that real estate agents working for full-service brokers might choose not to show prospective buyers homes represented by limited-service brokers — and because those listings are no longer being published on Shorewest’s IDX site — Scholtka said he’s introduced a new three-month listing program as an alternative to the 12-month program he has typically entered into with sellers in the past.
The shorter listing program — which carries a $333 flat fee instead of the $555 Scholtka charges for a 12-month listing — gives sellers a chance to see how their listing will be received. If, after three months, they think they would be better off with a full-service broker, they can make the switch, Scholtka said.
Liebe agreed that Shorewest’s IDX site "is a very important site" to consumers. "I know a lot of people say they use Realtor.com, and I think those are the two biggest sites people go to" when looking for homes for sale in the area, he said.
Scholtka and Liebe’s concerns about access to full-service brokers’ IDX sites sound much like those voiced by the FTC in a 2007 complaint against MLS Inc.
The FTC said it objected to restrictions on the publication of exclusive-agency listings, because consumers weren’t able to see those listings on "approved Web sites" — including MLS Inc.’s public-facing site, WiHome.com; Realtor.com; and the IDX sites of participating brokers like Shorewest.
"Consumers are harmed by this rule because it inhibits a lower-cost option to sellers and increases search costs to buyers," the FTC alleged in its complaint. MLS Inc.’s rule "constitutes a concerted refusal to deal except on specified terms with respect to a key input for the provision of real estate brokerage services." …CONTINUED