The U.S. Justice Department and National Association of Realtors have at last settled their long-running dispute over the competitiveness of virtual office Web sites. The settlement is good news for real estate, but VOW innovations may yet play out in surprising ways that neither the DOJ or NAR could have anticipated, and the settlement itself still leaves plenty of intriguing questions to ponder.
In case anyone’s still confused, a VOW is a Web site that functions like a "virtual" real estate brokerage office in the narrow sense that registered users can use the Web site to access just about the entire MLS database of for-sale homes. Only selected information that’s protected for business or privacy reasons is excluded. These Web sites enjoyed some popularity as new innovations some years ago. But the extended controversy over their use and allegations of anti-competitive practices stalled the VOW revolution in its early days.
The settlement involves wins, losses and compromises on both sides:
The biggest win for the Justice Department is the demise of NAR’s "opt-out" rule, which would have allowed brokers to withhold some or all of their listings from other brokers’ VOWs. This misguided rule was at the center of the controversy and its demise should be cause for celebration.
The biggest win for NAR was the DOJ’s concession that MLS members must be actively engaged in real estate transactions, though that requirement is defined broadly enough to include brokers who make an effort to be engaged in real estate transactions, but fail to close any deals over an extended period of time. That said, however, anyone who wants to use the MLS for any primary purpose other than brokering real property may be out of luck.
Another NAR win is a registration requirement that will restrict access to VOWs and enable brokers to keep records of VOW-registered e-mail addresses, which must be confirmed before the registrant can access the VOW.
Home sellers scored two wins: An "opt-out" that allows them to remove their home from VOWs and the ability to insist that comments or blogs be disabled. Both rights are reasonable protections for people who are concerned about personal privacy or don’t want to give Lookie Lous a public forum to criticize their home. Typical sellers may be mystified by the idea that they wouldn’t want their for-sale home to be displayed on as many Web sites as possible, however.
And yet, many questions remain:
? Will NAR’s new VOW policy be implemented in a spirit of openness or mere compliance?
? Will MLSs that aren’t affiliated with NAR implement similar rules?
? Will brokers launch new, more innovative VOWs?
? Will brokers permit agents to operate their own VOWs?
? Will VOWs result in lower realty commissions as the Justice Department has suggested?
? How will MLSs monitor and enforce VOW rules?
? How much will MLSs charge VOW operators to download the data?
? How much slack will MLSs grant brokers who barely meet the standard of being actively engaged in the business?
? Will the new VOW rules encourage innovation or only block competition?
? Will VOW operators find new ways to exclude discount brokers’ listings?
? Will brokers or agents use unreasonable fear tactics to convince sellers that they should opt out of VOWs?
? Will VOWs help brokers generate more business and close more deals?
? Will buyers be turned off or turned away due to the VOW registration requirements?
? Will VOW registration requirements create procuring cause disputes?
? How will brokers protect the privacy of registrants’ e-mail addresses?
? How will brokers use registrants’ e-mail addresses?
? What will happen when the e-mail addresses are pirated and sold to spammers?
? Will fake VOWs be used for phishing schemes?
The answers to these and many other questions may be apparent long before the proposed settlement expires in 2018, but why not mark your calendar now?
And lastly, here’s one more question:
? How will MLSs survive the onslaught of innovation that, with luck, will take real estate well beyond VOWs, which may seem almost quaint compared with newer business models?
Critics already have suggested that parochial MLSs are themselves outdated or broken. And plans for new national, statewide and broker-owned property information services are already in the works. With those trends on the way, VOWs may be just the beginning.
Marcie Geffner is a freelance real estate reporter in Los Angeles.
Copyright 2008. 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.