Real estate brokers will soon be required to "opt-in" if they want their listings to be displayed on the national websites of real estate franchisors like Century 21, Keller Williams and Re/Max under a rule change approved Saturday by the National Association of Realtors’ board of directors.
The board’s vote, which takes effect in 30 days, follows on the heels of a controversy surrounding the board’s November decision to allow franchisors to index and display Internet Data Exchange (IDX) listings in any market where they had obtained permission to do so from their own franchisees.
Before the rule change was implemented in January, franchisors could display listings represented by their own franchisees, but not listings represented by other brokers.
IDX listings include all listings of participating brokers in a given market served by a multiple listing service. Critics, including brokerage networks The Realty Alliance, and Leading Real Estate Companies of the World, said NAR’s decision to allow franchisors to index and display IDX listings could give franchisor websites an unfair competitive advantage by helping them boost traffic that the companies could then refer to their franchisees.
At NAR’s midyear conference in Washington, D.C., last week, a committee that helps draft policies for MLSs heard commentary from representatives of several brokerages. A representative for HomeServices of America called for a repeal of the rule change that allowed franchisor IDX indexing.
Allowing franchisors to display partial listing information that doesn’t include the listing broker’s name violates laws governing real estate advertising in 38 states, said Robert Moline, president and chief operating officer of HomeServices of America.
Franchisors, including Realogy, Keller Williams and Re/Max, argued against repealing the rule, saying they had made considerable investments in the websites to display IDX listings, and noting that NAR went through an 18-month public process before instituting the change.
Realogy Franchise Group President and CEO Alex Perriello encouraged the committee to consider broadening the rule change to alllow real estate broker networks, regional brokerage firms, or brokers operating in markets served by one or more MLS, to index and display IDX listings.
"The appropriate response to any concern about the merits of the (policy) should be to broaden access, not to restrict it," Perriello told the committee.
The committee voted Thursday to recommend that NAR’s board of directors suspend franchisor IDX indexing until NAR’s annual meeting in November, while a work group studies arguments put forward on both sides.
The board of directors took a slightly different path Saturday, passing a motion that will allow brokers who want their listings to continue to appear on the websites of franchisors they are not affiliated with to opt in to franchisor IDX indexing and display while the work group prepares a report for NAR’s annual meeting in November.
Joe Horning, chairman of The Realty Alliance and owner of Wisconsin-based Shorewest Realtors, said the board’s decision was acceptable, because "It’s no longer a mandate — NAR is not forcing our listings to be transmitted to a nonparticipant site."
Horning and other critics of the policy refer to listing portals operated by franchisors and others who are not MLS members and participants in IDX data-sharing agreements as "nonparticipant sites."
But Horning said he was concerned that after the committee vote, some NAR staff members were advocating for approval of the broker opt-in policy as opposed to the commission’s recommendations to repeal the existing policy.
A NAR spokesman was not immediately available for comment.
The Realty Alliance, Leading Real Estate Companies of the World, and HomeServices of America have all called for a repeal of the rule change that allowed franchisors to index and display IDX listings.
"I’m really hoping the work group takes all the issues at hand, including the legality of it, and comes to the right decision" in its report, Horning said.
For now, franchisor websites may soon have holes in their listings coverage, depending on how many brokerages elect not to "opt in" to franchisor IDX indexing and display.
In a statement, Leading Real Estate Companies of the World said it’s encouraging its members "to proactively direct removal of their listings from franchisor sites" or refuse permission to post their listings.
"We continue to believe that this policy of sharing IDX listings beyond the participating brokers of the MLS further erodes the ability of the broker to manage listings data integrity and minimize their liability," the company said in a statement.
Consumers can already access a "full complement of listings" on "virtually all and many national websites," Leading Real Estate Companies of the World said.
The decision to switch to an opt-in system provides an opportunity "to thoughtfully address the valid objections raised last week and determine if and how this policy can be recrafted to protect brokerage assets and eliminate legal and competitive restraint issues."
In a statement, HomeServices of America said that while listing information should be made readily accessible to consumers, "we believe that where that information is ultimately displayed is more properly left to the informed decision of the brokers who own it and who have ongoing liability for its use under state laws. The opt-in rule meets both of those objectives."
Realogy’s Century 21 franchise became the first to implement franchisor IDX indexing in January. A Realogy spokesman said the company had no comment on the board’s decision.
Mike Brodie, vice president of Keller Williams International, said after NAR voted to allow franchisor indexing and display of IDX listings, Keller Williams had started the process of equipping its website with that capability, but was still in the developmental stages.
"We’re willing to actively participate in additional work groups, and refine the policy," Brodie said. "We want to be good citizens, and find what’s best for all Realtors and ultimately what the best consumer experience is."
Phoenix-based broker Jay Thompson, who serves on the Multiple Listing Issues and Policies Committee, said in a blog post that he intends to allow franchisors to continue to index and display his brokerage’s listings.
"We take listings for one purpose: to sell them," Thompson wrote. "We don’t take listings to ‘generate leads.’ If one of our listings gets posted to C21.com and a potential buyer sees it there and that buyer’s info gets routed to a Century 21 agent, then that’s a good thing."