Flat-fee broker seeks expansion of DOJ-NAR settlement
Company issues comments in response to proposed judgment
By Inman News, Wednesday, August 13, 2008.
A brokerage company that offers flat-fee listing services seeks to expand a proposed settlement agreement between the U.S. Justice Department and the National Association of Realtors to cover a popular type of online data-sharing agreement among brokers known as Internet Data Exchange, or IDX.
NAR officials, though, are quick to point out that the proposed settlement agreement does not impact the group's IDX policy, which provides rules for the online sharing and distribution of property listings information among brokers who are members of NAR-affiliated multiple listing services.
The proposed settlement agreement announced in late May focuses on NAR policies for a separate form of data exchange among brokers, known as the Virtual Office Web site, or VOW, policy, and specifically states that the federal government does not allege any antitrust violations with the IDX policy -- though managers at MLS4Owners.com want the court to revisit this issue by striking a brief mention of the IDX policy from the proposed final judgment in the settlement agreement.
That proposed final judgment states, "The United States does not allege that (NAR's) Internet Data Exchange (IDX) Policy in its current form violates the antitrust laws."
Christopher C. Nye, president of Washington state-based MLS4Owners.com, and Kenneth R. Whitney, general manager for the company, state in their formal comments to the federal government in response to the proposed settlement that they believe NAR's IDX and VOW policies "are two sides of the same coin" and that the "IDX policy will harm sellers."
Also, MLS4Owners charges in its comments that the intent of the Justice Department in its lawsuit against NAR was to "enjoin (the association) from maintaining or enforcing policies that restrain competition from brokers who use the Internet to more efficiently and cost effectively serve home sellers and buyers, and from adopting other related anticompetitive rules," as stated in the Justice Department's amended complaint, filed in October 2005.
Nye told Inman News today that by simply omitting the paragraph in the proposed final judgment that makes mention of the IDX policy, he believes that the settlement agreement would have a broader impact and would force NAR to make changes to its IDX policy as well.
But Ralph Holman, associate general counsel for NAR, said that the Justice Department has known about the provisions in the IDX policy and that the proposed settlement agreement "is not a challenge to IDX policy."
MLS4Owners managers, in their comments to the federal government, call attention to a provision of NAR's MLS policy that was most recently changed in November 2006 -- after the Justice Department filed its lawsuit -- which provide that MLS participants may independently "select the listings they choose to display on their IDX sites based only on objective criteria" that can include factors such as location, list price, property type (single-family, condominium or multifamily, for example), compensation offered by listing brokers, and type of listing (such as exclusive right to sell or exclusive agency) or the "level of service being provided by the listing firm."
Nye said an important difference between the proposed VOW policy with existing IDX policy is that operators of VOWs can put all brokers' property listings on a Web site unless sellers specifically choose not to publicly share their home information, while IDX policy allows brokers to "stop my listings from being on their Web site" based on criteria such as service level, which he believes is anticompetitive.
That MLS policy that allows brokers to choose to exclude some listings from appearing on their Web sites, because it relates specifically to IDX policy and does not relate to VOW policy, is outside the scope of the settlement agreement, Holmen noted.
"We're hoping that the judge takes a hard look at this," Nye said. Eliminating mention of IDX policy in the proposed judgment "would save a lot of headaches down the road," he said.
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Submitted by Jed Lane on August 13, 2008 - 1:14pm.
So we are commuting together, going to the same place, trying to sell a home, I'm getting a ride from you, using your association owner MLS, but I only want to pay for the additional gas that my weight uses in the car. Did I get that right.
The Realtor asscoiations built the MLS as a tool for it's members, MLS4Owners.com thinks that it can hitch a free ride!
By the way can I put a sign for my candidiate in your window.
I'm sure that MLS4Owners.com wants all the MLS listings on thier site to benefit the sellers of the homes that are listed with full service brokerages. But wait. If I'm John Q Public and I want to buy from an owner and I go the MLS4Owners.com and it's cluttered with 4 million properties listed by agents. How does that help?
As an agent in California I have to know who represents who. I owe a fiduciary responsibility to any principal in the transaction and I might not want to represent both parties. I need to know if the other side has representation and what kind.
Then if I want to have a segment of the listings available on my site for my clients isn't that the same as MLS4Owners.com showing only listings for owners on theirs.
Jed Lane GRI
Broker, Sales Manager
Star Real Estate Brokerage
http://www.FogCityGuide.com
415.425.9810
Submitted by MLS4owners.com on August 13, 2008 - 2:26pm.
I'm not sure what argument Mr. Lane is making.
MLS4owners.com is licensed and regulated the same as any other real estate brokerage, and we have been for many years. We are members of our local, state and national REALTOR(r) associations, and our customers have sold more than $850 million in listed properties. Agents from more than 300 different brokerages have represented buyers for our sellers, and they have earned millions of dollars in the process. On those purchases it is very clear that the buyer agent represents the buyer, just as he or she does in any other transaction. There is no issue of to whom the buyer agent owes a fiduciary responsibility.
Many of our customers otherwise would be FSBOs and we bring them to the REALTOR(r) community. Far from taking a free ride, we pay the same as any other member, and we do not compete with agents to double-end the sale. Buyer agents never have to worry about having the listing broker snag their buyer and claiming the buy side of the commission.
I don't understand the question about real estate websites being cluttered with listings. We display all listed properties from all brokerages in our geographic market, as do most brokerage websites.
We believe in the value of full service representation for those who want it (both buyers and sellers). We also believe consumers should have choices about the services they want and the nature of the fees they will pay, and there are many good options available.
Ken Whitney
MLS4owners.com
Submitted by Bruce Hahn on August 13, 2008 - 3:14pm.
American Homeowners Grassroots Alliance
We agree with MLS4Owners.com. MLSs have substantial market power. Under antitrust laws they have a responsibility to not misuse that power in ways that hurt consumers.
There is no justification for an MLS to indirectly discriminate against home buyers and home sellers by adopting policies that could drive out of business types of brokerages that don't charge consumers as much money as most of the MLS's other member brokers.
There's nothing wrong with an MLS allowing its members to limit the kinds of properties the member chooses to display on their web site based on criteria relating to location, list price, and property type. However an MLS should not allow its members to refuse to put MLS listings on their websites based on criteria that boils to "the home sellers's brokers don't charge their clients as much as the rest of us".
Submitted by Mott Marvin Kornicki on August 13, 2008 - 4:37pm.
IDX is a wonderful addition to the MLS system- depending on the contact information provided; it can appear that an agent or company controls all the inventory. In our system is South Florida the listing agent/office has the option to include or exclude certain listings.
This is a subject that will continue for awhile.
Mott Marvin Kornicki, Broker
www.WaterwayRealty.com
www.HybridMLS.com
305.935.3533 Main Line
Submitted by Andy M on August 13, 2008 - 4:55pm.
I don't choose to not show your listings because you charge less than I do. I choose to not show your listings on my website because from the countless transactions I've done with discount brokerages, I've always ended up putting in significantly more work the the same, and often for less money. Does that keep me from showing your properties to my client if it fits their needs? Of course not.
Submitted by Anonymous on August 13, 2008 - 7:44pm.
I don't think the issue is one of discount fee or low rates, but more so about representation.
If a brokerage wants to discount services and operate under a business model that is based on low price that's fine. MLS is more than a website that reaches a customer base. If that is all you are looking for and exploiting one area then really they should not be a member. As a broker or consumer I am entitled to make a choice as well full service or not. It seems like a conflicted argument one where they advocate choice but want that same choice removed and a business model forced upon all brokerages.
Anti-trust? With 699,000,000 search results for real estate on google, 363,000 for real estate discount mls, and 795,000 for real estate fsbo. The consumer has plenty of choices and avenues to market their home for sale at a variety of rates and choices whether it be full service or not. Trulia, Zillow, or Red fin are just three examples of sites providing alternatives for consumers outside the traditional MLS.
Patrick Galesloot
www.PatrickGalesloot.com
Submitted by Ted Mackel on August 13, 2008 - 9:40pm.
An MLS is agreement of compensataion between brokers. For a broker to be a member of an MLS that broker agrees to put all their listings in that MLS and compensate other brokers who sell their listings according to the MLS rules.
Why MLS systems are viewed as a "market power" is ridiculous. MLS's exist so Brokers can agree formally how to distribute commissions on the sale of properties where separate Brokerages are involved.
Ted Mackel
Keller Williams Realty
(805) 432-7705 cell/text
Simi Valley, California
Submitted by Deborah Saffell on August 14, 2008 - 8:34am.
I have sold several homes that were listed with discount brokers.
In every case the sellers repeatedly asked me for advice and instruction on what to do. In every case, the seller had no idea what their obligations were, what paperwork they needed or what disclosures/disclaimers they needed. They knew nothing about lead base paint, HOA documents, nothing. They even wanted me to explain the contract.
That leaves me in a very bad position. Do I help my buyers by walking the seller through the transaction? Does this erode the trust the buyers have in me as their Realtor? You bet it does. I had buyers ask me about it.
Not only that, but it puts me in a position where I "could or should" keep my mouth shut, and let the seller make mistakes. If I do this then the sellers think I am sleazy, (which could kill the deal for my buyers). If I help the sellers my buyers question my loyalty.
I don't mind doing all the work but I do mind being put in a position where my license, and/or reputation is on the line.
If you are going to offer discounted services then you need to have a "hotline" and/or "additional" services set up for these situations. You can charge the seller what you want but you need to make sure they have someone to turn to if they have questions. You also need to make sure the person they turn to understands the market and the homes in that neighborhood. Not the state, not the city, the neighborhood.
You need to be clear with your sellers that if they don't know what to do or they don't understand certain documents and/or deadlines it is not appropriate to ask the Buyer Agent. They will have to pay someone for that.
If you have your Realtor's license then you know the bad position you are putting the Buyer Agent in.
Submitted by Stephen Graham on August 14, 2008 - 10:11am.
A discount real estate agent is providing exactly what the seller or buyer is paying for; perhaps, they could hire an attorney with their savings.
However, there are discount brokers and agents who provide very good service for the lower fee.
Submitted by D. Sullivan on August 14, 2008 - 1:10pm.
Question for those who understand the settlement.
Does the settlement allow MLSs to reject listing submissions based on insufficient buyer-side commission offerings? Are MLSs theoretically required to accept $1 co-op listings from broker-members in good standing?
Submitted by Jean Powers CRS on August 17, 2008 - 8:37am.
I agree with the agent who indicated that he has worked with countless discount brokers and wound up doing most of the work to get the transaction closed. I have been in the same situation. I show all properties that meet the criteria of my buyers. I have also worked with For Sale by Owners who for a minimal fee had a broker place his/her property on the MLS. I received 50% of the commission and wound up having to work for both sides because the sellers did not have representation. I not only did all the work but was forced to cross over California'a agency law to get the transaction closed. Our MLS's are in place because that is our contract for payment. We agents who represent buyers should not have to do all the work in order to get the transaction closed because the seller does not want to pay a FAIR commission.
Jean Powers
Broker Associate
Windermere Welcome Home
Alameda, CA
Homes@JeanPowers.com
Submitted by Larry Wright on October 10, 2008 - 10:58am.
I don't really agree that the settlement permits anticompetitive behavior. Inman didn't clarify Chris' and Ken's point very well and many resulting comments provide more emotional ventalation than objective feedback.
I have facilitated closings of numerous "Buyer Controlled Transactions" wher Sellers were represented by both "Full" and "Limited" service REALTORS. Listing agents can't and don't assist "all that much" and on some sad occasions they are even an obstacle to closing.
I own the technology powering Chris' and Ken's operation and have worked with them since their early days. They're both good and honorable guys. Currently I also compete with them as a limited service broker. I provide far greater exposure for substantially smaller fee ... but cannot complain when a Seller chooses the services of one of my customers. Eventually somebody will no doubt offer a better and cheaper service than me ... that's just the way it goes.
"Flat Fee Listing" services are a sign of the times. Many Sellers simply don't have enough equity to pay a traditional listing commission and turn to us with their need of an 11th hour rescue. Because of our service Sellers can afford to sell, Buyer's agents earn commissions, and banks are getting risky loans off their books.
Our business will adapt to market demands and I don't think the DOJ-NAR Settlement will have very much impact on the future.
Larry Wright
www.nwrealty.com
www.nwrealty.net