Metro Multiple Listing Service, based in Wauwatosa, Wis., has withdrawn a policy that blocked some property listings from display on popular property-search Web sites such as Realtor.com and WiHomes.com, among others.
The Milwaukee Journal Sentinel reported last week that federal regulators contacted MLS officials earlier this year to inquire about the group’s policy for exclusive agency listings — a type of contract in which a seller can seek out a buyer without assistance from the agent. Also, exclusive agency listings provide that the seller is not obligated to pay the agent if the seller personally locates a buyer for the property.
“We decided we didn’t want to take on the FTC (Federal Trade Commission),” Peter Shuttleworth, executive vice president for Metro MLS, told the Journal Sentinel.
On Oct. 12 the FTC announced a nationwide real estate “sweep” that included two lawsuits and five other actions against MLSs related to similar exclusive agency listings policies. While Metro MLS was not named in those actions, several other investigations were pending for other MLSs, the agency also announced.
The FTC has charged that such MLS policies can restrict competition and consumer choice in real estate services, as exclusive agency listings are typically used by alternative business models.
Meanwhile, the MLSs named in the complaints did not similarly impose Internet display restrictions on the more common “exclusive right to sell” listing contracts, which are typically used by full-service real estate companies and provide that consumers must pay the real estate broker a commission when the home sells.
Several of the MLSs that have imposed the exclusive agency restrictions have stated that the policies were intended to eliminate confusion as to who was marketing properties in an exclusive agency listing: the seller or the seller’s agent or broker. MLS officials have also suggested that it is not the role of MLSs to promote for-sale-by-owner properties, and some exclusive agency listings may not fully involve agents and could function as FSBO listings.
Shuttleworth was not available for comment today. Alan H. Deutch, a lawyer representing the MLS, did not respond to Inman News questions about the withdrawal of the Metro MLS policy.
Corey Scholtka, owner of discount real estate company BuyHomes.com, based in Delafield, Wis., said he changed his business model to focus on exclusive-right-to-sell listing agreements because of the restrictions on exclusive agency agreements.
“Because (I’m now) an exclusive broker I have additional responsibilities. I don’t think I’m going to go to exclusive agency even though it’s now permissible. We’re more in control of sellers and we’re more aware of what’s going on in a transaction. Inadvertently, I think (the MLS) helped me create a better business model,” he said.
The restrictive exclusive agency listings policy adopted by Metro MLS was among the oldest in the country, Scholtka said. The MLS’s definitions for exclusive right to sell and exclusive agency listing agreements have been in place since 1985, according to information at the Metro MLS Web site, and the policy that prevented the display of exclusive agency listings from some Web sites has been in effect since 1995.
Under that policy, members of Metro MLS were required to specifically “flag” all exclusive agency property listings that they entered into the MLS. The MLS publishes listings on Realtor.com, a Move Inc. site that is affiliated with the National Association of Realtors, and at WiHomes.com, an MLS-operated home-search Web site. “Exclusive agency contract listings do not appear on either Internet site,” according to the MLS’s former policy.
The FTC announced a complaint and settlement agreement with another Wisconsin-based MLS, the Realtors Association of Northeast Wisconsin Inc. of Appleton, as a part of its sweep over exclusive agency listings policies.
Scholtka said he had anticipated the policy withdrawal by Metro MLS. He said he believes the decision will open the door for more competition in the area. “I think I’m going to see a lot more competition. I’m going to have to work harder to justify my value proposition to the consumer,” he said.
Stuart Meland, owner-broker of Mad City Homes, a flat-fee real estate broker in South-central Wisconsin, said the move by the FTC to crackdown on exclusive agency listings policies has made it easier for his business to expand.
“That policy (by Metro MLS) specifically kept us out of that market,” he said. Moving into the Metro MLS market area would have led the company to change its business model for that area to comply with the exclusive agency restrictions there, which would likely have caused confusion for clients in the company’s other operating area, he said.
The Southcentral Wisconsin MLS has never adopted such restrictions on exclusive agency listings for the company’s core operating area, he said. Meland also said he has spoken with FTC and U.S. Justice Department officials about potentially anticompetitive real estate practices in the region. “I’m very pleased. I think the FTC has done a fantastic job,” he said.
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