SAN FRANCISCO — The National Association of Realtors has no plans to back down in a legal battle with the federal government over its policies for property listings on the Internet, saying the viability of the nation’s multiple listing services is at stake.
The powerful trade group in early December will file its response to a civil antitrust lawsuit brought by the U.S. Justice Department, according to NAR’s General Council Laurie Janik, who spoke this morning during the association’s annual convention and tradeshow in San Francisco.
“We will be filing a motion to dismiss,” Janik said. The Justice Department then has 30 days to respond, she added.
The Justice Department filed suit in September after a two-year investigation of NAR’s online listings display policy, which enables real estate brokers to withhold their property listings from other broker’s Web sites. Federal antitrust officials claim the policy restricts competition from Internet brokers and harms consumers, and are seeking an injunction to stop NAR from implementing the rules.
One of the issues NAR will defend in the suit is the broker’s right to choose where to display listings on the Internet, Janik said. Without this right, large brokers might decide to pull their listings from Realtor-operated MLSs and create their own, which threatens the viability of the MLS.
“We did it to preserve the MLS,” she said.
When the trade group started crafting a policy for online listings several years ago, some brokers said that if they were required to consent to the use of their listings as a condition of being in the MLS, they would simply pull their listings out and go elsewhere, according to Janik.
Asked whether she believes large brokers indeed would pull listings from the MLS if the Justice Department were successful in the legal battle, Janik said that depending on what the new policy would look like, “we do believe that is a real possibility…we wouldn’t have created this policy otherwise.”
Such actions would harm brokers with smaller market share, new broker entrants who have no listings, and the consumers who do business with them, Janik said.
The other issue NAR will defend in the antirust legal battle is the part of the policy that determines who can participate in the MLS, Janik said. NAR’s new rules say that an MLS member must engage in representing buyers or sellers to be allowed access to the MLS, meaning that companies holding a broker’s license that engage in referral services and not buying or selling would not be allowed in.
“The DOJ believes that the possession of a broker’s license is your ticket to the MLS,” Janik said. “We think that will upset the delicate ecosystem of the MLS.” She said the trade group feels referral companies provide no benefit to the consumer.
Federal antitrust officials have turned a lot of attention to the real estate industry over the last year. In addition to the lawsuit against NAR, the Justice Department has attacked rules in some states that prohibit real estate brokers from offering rebates, as well as legislation that mandates brokers to provide a minimum level of service in real estate transactions, saying these practices restrict competition from discount brokers and limit consumer choice in services.
Amidst a decade-long housing boom that’s netted double-digit home price gains in many markets, industry analysts and observers have started questioning why commission rates on home sales have remained near 6 percent. The Justice Department and Federal Trade Commission this week hosted a public workshop in Washington, D.C., to discuss price competition in real estate services, and Rep. Michael Oxley last year ordered a full report on industry competition.
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