Editor’s note: Derek Eisenberg, a broker with Continental Real Estate Group in Hackensack, N.J., wrote the following in response to a recent Inman News story, “Online for-sale-by-owner company wins ruling.” The New Hampshire Bank Department commissioner has ruled that a mortgage company that operates a for-sale-by-owner Web site, iSoldMyHouse.com, doesn’t need a real estate brokerage license to advertise homes for sale.
Waters are being muddied between for-sale-by-owner Web sites and real estate brokerage.
I support the recent rulings in favor of ForSaleByOwner.Com in federal court in California and iSoldMyHouse.Com in state court in New Hampshire. However, it should be clear what those cases were about. They focused on the parallels of advertising homes on a Web site and advertising in traditional periodicals such newspapers or FSBO magazines.
However, some Web sites cross the line. Some sites offer MLS listings as well. These sites practice reverse referrals. A traditional referral involves a local broker who shows the seller a disclosure, (fair housing if the state requires it) and typically a copy of the listing agreement before funds are taken from the consumer. With a reverse referral, some sites take funds via credit card for listing real estate in the MLS without first telling the consumer whether they are a seller’s agent, buyer’s agent, disclosed dual agent or transaction broker. They then subsequently refer the seller to a local broker who hopefully makes these disclosures, but only after the seller has already paid.
Many states such as New Jersey where I practice have laws that among other things require agency disclosure before the seller tells his or her motivation to sell. In addition, these laws require licensed individuals to man the phone banks that answer many real estate-related questions, and require the seller to be informed that he or she cannot discriminate for reasons of race, religion, etc.
Is it legal to provide that information after the consumer has already bought the service or must the consumer know that upfront? My guess is the latter.
Furthermore, at least four states (New Jersey, Maine, Wisconsin and North Carolina) require the broker to visit the property (in some capacity) before listing the property. Some Web sites do not publish this before taking funds from the consumer. Some sellers are absentee owners that never knew they would have to open the door for these firms because they were not told before they paid.
I applaud consumer freedom. Web sites that offer new ways to market are not the enemy of the broker. They are the competition that keeps us on our toes to constantly develop new marketing techniques to benefit the consumer.
However, states enact laws to protect the consumer and when Internet advertising mediums cross the line into traditional brokerage, they have to follow the same rules as the rest of us licensed brokers. There should not be a double standard.
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