A statewide multiple-listing system that offered information to the public could be a good idea.

A statewide multiple-listing system that offered information to the public could be a good idea. But an “open MLS” proposal that’s surfaced in Maine is chock-full of provisions that should give the state’s Realtors plenty of cause to fight it and the state’s voters ample reason to reject it.

The initiative would ask voters whether they “want the state (1) to recognize the operator of a privately operated directory of homes for sale and rent that is freely viewable by anyone and that accepts listings by real estate agents and homeowners and (2) to require agents to list homes in this directory when clients so request.”

Voters may wonder why the state should “recognize” one MLS operator when multiple sources of information about for-sale properties are already available or if so, why the state should create a competitive advantage — the requirement that agents must list homes in this particular directory upon the seller’s request — for the “recognized” operator to the detriment of other competitors. Voters also might question who will own the “open MLS” data and who will pay the costs to operate this “freely viewable” directory.

The answers to those questions aren’t clarified in the complete text of the initiative, which contains a number of very dicey-sounding requirements:

The operator of the “open MLS” would be “recognized exclusively as the open MLS operator for real estate brokerage agencies licensed by the State of Maine” for 10 years, after which the operator would be required to cooperate with others who also wanted to operate an “open MLS” within the same legally dictated framework. A decade is a long time in the information age.

Users of the “open MLS” could “download the entire open MLS database once every 24 hours for free and may redistribute such data without compensation to anyone.” The exclusive operator would be allowed to block crawlers, scrapers and third-party software and “adopt reasonable restrictions … to protect the privacy of subscribers and owners, and to guard against fraud and use of open MLS data for illegal ends.” Presumably, the operator would decide which restrictions were “reasonable.”

Brokerage companies would not be permitted to “collect compensation on any real estate transaction if the offer leading to the transaction was made at a time when the real estate brokerage agency was in violation of its duty to list the property with the open MLS” and any such compensation paid could be “recovered” by the home seller through an action filed within four years. That’s a harsh punishment and an open invitation for disgruntled home sellers to sue the brokerage company.

The operator would be authorized to “charge an initial price to subscribers not exceeding the winning bid price as certified by the competition administrator,” but the “maximum price” could be “adjusted up or down” monthly based on changes in the Consumer Price Index. Together, those provisions leave brokerage companies vulnerable to unpredictable costs that could be passed along to home sellers.

Lastly, the “open MLS operator” would be granted the rights to “offer additional services, features and functions” and “require payment for such services, features and functions,” and “to develop proprietary non-MLS data to be owned by the open MLS operator, accessible upon payment of fees to the open MLS operator, as determined by the open MLS operator, and which may be subject to copyright protection.” Translated, that seems to mean the “recognized” operator could develop and offer other services; brokerage companies would be required to purchase those services at any price; and the services could be based on proprietary non-MLS data that would be owned by the operator and protected by copyright law. Wow.

The chief backer of this proposal is the Open MLS Institute, which initially predicted the initiative would be passed in Maine in November 2007 and would be followed “swiftly by enactments of similar initiatives in about 18 states” in 2008. “By then, the entire nation should have been upgraded to open MLS,” the Institute’s Web site states. So far, no such initiative has qualified for any ballot in Maine or any other state.

A similar initiative in California was withdrawn in August 2006. Organizers said the effort lacked adequate financial support for a costly signature-collection campaign in the large state. Detractors suggested the effort failed because consumer privacy and fiscal accountability issues weren’t addressed. Yet the plain truth may be that voters don’t want, nor does the real estate industry need, a government-recognized “open MLS” with such sweeping powers.

Marcie Geffner is a real estate reporter in Los Angeles.

Copyright 2007 Marcie Geffner. All rights reserved. No part of this article may be used or reproduced in any manner whatsoever without written permission of the author.

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