MiRealSource, a broker-owned multiple listing service in Michigan, has agreed to settle a Federal Trade Commission complaint that challenged MLS rules the agency claimed violate antitrust laws.
The FTC last month announced settlement agreements with five MLSs and complaints against two other MLSs related to MLS policies that blocked some property listings from reaching some public property-search Web sites, such as Realtor.com and MLS-operated sites. On Monday the FTC posted a notice stating that the complaint against MiRealSource was withdrawn to allow the commission to consider a proposed settlement agreement with that MLS.
Members of the FTC will consider whether to approve the proposed agreement.
Virginia Blatt, CEO for MiRealSource, which formed in 1966 and has about 7,000 members, said Wednesday that the MLS board voted to approve the consent agreement and MLS managers will “make some modification to our rules as a result of it. We think it will work out in a positive.” The MLS must implement new rules within 45 days of the FTC’s final approval of the consent agreement. Blatt said that the MLS did incur some costs in seeking legal assistance related to the complaint.
She added, “There is no point in spending a significant amount of resources, time and energy to litigate with the FTC. We’d rather spend our energies … in service to our members.” The MLS board had several meetings to discuss the FTC matter, she said. “They gave it a lot of thought, and concluded that resolving the dispute is in the best interests of our members.”
And in a statement Wednesday, MiRealSource officials said, “Finally, and perhaps most importantly, MiRealSource recognized that sweeping changes in the real estate industry, fueled in large part by the widespread use of the Internet and consumer expectations of access to information that the Internet provides, meant that its rules would have to evolve, regardless of the outcome of its dispute with the FTC.”
In its 13-page complaint against MiRealSource, the FTC stated that the MLS “adopted rules and policies that limit the acceptance, publication and marketing of certain properties, based on the terms of the listing contract entered into between a real estate broker and the customer who wishes to sell a property.” The FTC charged that these rules violate federal antitrust laws.
The complaint focuses on rules that blocked a type of property listing from the MLS in which homeowners had entered into “exclusive agency” contracts with MLS members, and also on a rule that required brokers to offer a specific set of services in order for the MLS to accept property listings submitted by them.
Under an exclusive agency agreement, property owners have the right to sell a property on their own and are not required to pay the broker if they directly locate a buyer for the property. The MLSs did not place similar restrictions on the more popularly used “exclusive right to sell” agreement, under which sellers must pay the broker a commission when the property is sold.
These rules were particularly restrictive compared to other MLS rules that the FTC investigated — many of the other MLSs accepted limited-service and exclusive agency listings but had rules that blocked exclusive agency listings from being distributed to certain public Web sites. Several MLSs that adopted exclusive agency restrictions have said that they did not wish to publicize property listings in which houses could be sold directly by the owner, without the benefit of compensation for its members.
The FTC complaint stated that MiRealSource passed a rule in August 2003 that blocked the MLS from accepting any listings other than exclusive right to sell listings, and that year the MLS adopted a “Co-Mingling Policy” that prevented MLS members operating home-search Web sites from combining MLS listings with listings from other sources. Also, the MLS adopted a rule in 2004 “specifying the minimum set of real estate brokerage services that a listing broker was required to offer in order to have a listing on the MiRealSource MLS,” the FTC charged.
Exclusive agency listings “are a means by which listing brokers can offer lower-cost, unbundled real estate brokerage services to home sellers,” the FTC said in the complaint, and limited or “unbundled” real estate services “are lawful arrangements.”
Patrick Roach, deputy assistant director for the FTC’s Bureau of Competition, said that there will be a 30-day public comment period if the commission approves the consent agreement. The proposed consent agreement has not yet been placed on the public record.
The FTC is proceeding in its complaint against RealComp II Ltd., a corporation owned by several Realtor boards and associations in Michigan that has about 14,800 members.