NEW ORLEANS — Responding to antitrust actions and investigations by the U.S. Justice Department and Federal Trade Commission over multiple listing service restrictions for a category of property listings, directors for the National Association of Realtors approved policy changes that allow individual MLS participants to decide whether to implement restrictions on the Internet display of property listings.
Laurie Janik, general counsel for the Realtors group, has said that the change is legally significant in that individuals are making decisions rather than MLSs, which represent a group of real estate industry participants. The issue is unrelated to the Justice Department’s antitrust lawsuit filed last year against the association over other policies for online property listings display.
Under the policy change approved Monday at the group’s annual real estate conference, MLS participants may select listings they choose to forward for display — or not forward — to Web sites that are part of a broker-supported cooperative property listing system based on “objective criteria.”
This criteria, according to the approved policy, can be based on factors such as geography, or location, list price, property type, cooperative compensation offered by listing brokers, type of listing (such as properties under “exclusive right to sell” or “exclusive agency” listing contracts), or “the level of service provided by the listing firm,” according to language in the approved policy.
The FTC and Justice Department had engaged in 15 investigations over MLS policies that block exclusive agency property listings from public display on the Realtor.com and some other public-facing property-search sites, such as those MLS participants’ sites that are part of the broker-sharing system known as Internet Data Exchange or IDX. Exclusive agency listings are contracts in which sellers are not obligated to pay the listing broker in a real estate transaction if the seller finds a buyer for the property without any assistance from the listing broker.
The FTC has announced a series of consent agreements with MLSs that settle some of the investigations over the exclusive agency restrictions, and also has announced complaints against two MLSs in Michigan that refused to change their policies. The FTC has also said that other investigations are ongoing.
“Selection of listings to be displayed on an IDX site must be independently made by each participant,” according to the policy adopted by the Realtor group’s directors. The policy adopted by the directors also states that MLSs must, if requested by a participant, “provide basic downloading of all current listings and may not exclude any listings from the information which can be downloaded or displayed under IDX except those listings for which a participant has withheld consent.”
Janik had said in earlier meetings at the Realtors conference that there is no guarantee that the federal agencies will not take action against the revised policy, though she said that there were greater risks in leaving the policy intact.
The association’s board of directors also approved the removal of a section in the policy that stated, “MLSs may, as a matter of local option, limit information which can be downloaded and/or otherwise displayed under IDX to properties listed on an exclusive right to sell basis.” Exclusive right to sell listing agreements, unlike exclusive agency listing agreements, require sellers to pay the listing broker regardless of who locates a buyer for the property.
The federal agencies have charged that exclusive agency agreements are more likely to be used by alternative real estate business models, such as discount or limited-service business models.
Realtor-association directors also adopted a change to MLS that gives MLSs the option to block its transmission of property listings to some public Web sites if the street address or location of the property is displayed to the public and if “a ‘for sale by owner’ or other sign or notice is displayed on the property telling the public the seller is soliciting direct contacts from potential buyers.”
According to a description of the proposed policy, it “establishes that MLSs are not required to transmit participants’ listings to third-party aggregators or to operate publicly accessible MLS Web sites.”
Also during the meeting, Realtor directors approved several new standards of practice for its 1.3 million members. One of the new standards provides that Realtors are obligated “to present a true picture in their advertising and representations to the public,” including the use of Web URLs and domain names that they use.
This standard prohibits Realtors from “engaging in deceptive or unauthorized framing of real estate brokerage Web sites,” “manipulating (e.g. presenting content developed by others) listing content in any way that produces a deceptive or misleading result,” or “deceptively using meta-tags, keywords or other devices/methods to direct, drive or divert Internet traffic, or to otherwise mislead consumers.”
Another change in standards approved by the directors provides that Realtors have a duty “to not knowingly or recklessly repeat, retransmit or republish false or misleading statements made by others. This duty applies whether false or misleading statements are repeated in person, in writing, by technological means or by any other means.”
Directors clashed over an unrelated proposal related to local Realtor associations that adopt alternative business names other than their formal, established names. An association committee’s work group recommended a policy change providing that all associations using these “DBAs” would be required to submit an application for approval by the Realtor group, and requiring these DBAs to comply with the same policies governing the formal names of associations.
The basis for the policy change, according to the work group, was that some DBAs could be “deceptively similar” to formal names already established by other Realtor associations and could mislead people about the geographic coverage area of that association. After some debate and the defeat of a proposed amendment that would have eliminated the retroactive nature of the proposal, a majority of directors approved the change.