Editor’s note: This story has been updated to include a statement by the National Association of Realtors.
Leading Real Estate Companies of the World, a referral network that claims 600 companies representing 150,000 sales associates as members, has added its voice to those calling for the National Association of Realtors to repeal a rule change that allows franchisors to index and display Internet Data Exchange (IDX) listings advertised on their affiliated brokers’ websites.
National real estate franchisors, including Century 21, began indexing IDX listings in January, hoping to boost website traffic by offering a more comprehensive set of listings data to consumers conducting home searches.
Last week, The Realty Alliance — a referral network of 60 real estate companies whose members include HomeServices of America Inc. — sent a letter to NAR asking that the franchisor IDX indexing policy be rescinded.
The rule creates legal liabilities for brokers, The Realty Alliance said, as franchisors are not subject to data quality and usage rules set by multiple listing services.
NAR will revisit the policy, approved in November, when the group holds its midyear meeting next month in Washington D.C.
Pam O’Connor, president and CEO of Leading Real Estate Companies of the World, said the company’s board of directors voted Friday to ask NAR to rescind the policy allowing franchisors to index IDX listings.
The company’s board includes executives from some of the nation’s largest brokerages, including HomeServices of America, Long & Foster Real Estate, Crye-Leike Realtors, Real Estate One, Baird & Warner, and Allen Tate Cos.
"The discriminatory nature (of the policy) gives (franchisors) a competitive advantage," O’Connor said. "The larger issue is: once you start giving listings to (non-MLS members), you are putting the control further and further away from the brokers, who have an obligation to their sellers to protect the data."
Spokesmen for Century 21 and parent company Realogy Corp. did not immediately respond to a request for comment.
Officials with brokerage giant HomeServices of America Inc. this week issued their own statement condemning NAR’s decision to allow franchisors to index IDX listings, saying the policy may violate antitrust law, and contradicts NAR’s historical stance on brokers’ rights to control listings data.
In a statement, a NAR spokesman said the group is "aware of concerns expressed about the policy by HomeServices. The issue is going to be considered by the Multiple Listing Policy Committee at the midyear meetings, and we think that’s the proper venue to address concerns rather than in a debate in the press."
While brokers have long provided their own listings to franchisors and third-party sites like Realtor.com, Zillow and Trulia, IDX listings are a more comprehensive set of listings data shared by participating brokers in a given market.
When brokers who are members of an MLS agree to share listings with other brokers through IDX reciprocity agreements, consumers are able to see not only the listings represented by a particular broker, but all listings of participating IDX brokers on each broker’s IDX website.
By allowing franchisors to index and display IDX listings, NAR also gave the companies the means of displaying summaries of listings represented by brokerages that they are not affiliated with.
Indexing — the process of allowing automated "spiders" to crawl a website to gather information — is commonly employed by search engines like Google to speed up and improve the quality of keyword searches.
In the process of indexing information, Google and other search engines store information on their own servers, and make that information viewable to their own users when displaying search engine results.
In 2009, NAR’s Multiple Listings Issues and Policies Committee recommended that NAR’s IDX policy be updated to make it clear that search engine indexing does not amount to "scraping," or unauthorized duplication of listings data. The recommendation was approved by NAR’s board of directors in November 2009.
In light of that decision, last year Century 21 parent company Realogy Franchise Group asked that franchisors also be permitted to index their affiliated brokers’ IDX websites in order to provide consumers with more comprehensive results when searching for listings on franchisor websites.
That request was eventually approved by NAR’s board, and in January Century 21 became the first franchise to begin indexing IDX listings, at Century21.com.
When presenting IDX listings represented by brokers that aren’t affiliated with them, franchisor websites can only provide summary listing data, such as address, price and square footage.
They must also provide a link-back to a full IDX site operated by a broker or MLS. But as a rule, the link-back is provided to a broker affiliated with the franchisor, regardless of whether that broker is the listing broker or not. Listing details may be provided in a framed results window, keeping visitors on the franchisor’s website.
HomeServices weighs in
In a statement provided to Inman News, HomeServices said NAR’s policy, "completely disregards the proprietary nature of the listing information," and deprives real estate brokers of the right to protect the information and their clients by contract.
"Not only has NAR disregarded the rights of the owners of listing data, it has seriously undermined, if not completely vitiated, its best argument against treating listing information as public and against treating MLSs like public utilities," HomeServices said, pointing to NAR’s testimony at a July 2006 Congressional hearing.
At the time, NAR was battling the U.S. Department of Justice over brokers’ control of listing data, and warning against calls by real estate reform advocates to treat MLSs more like public utilities.
Allowing franchisors to index listings "does precisely what NAR argued should not be done when it testified before Congress," HomeServices said, treating IDX data "as public information and MLSs as public utilities." One of NAR’s fundamental arguments against government regulation of listing data was that it is proprietary, belonging to the real estate brokers who create it, HomeServices said.
NAR has also argued against federal regulation of real estate on the grounds that real estate is a local business and that real estate brokers and agents are governed at the state level.
Allowing franchisors to index IDX data provides ammunition to those who would argue that "listing information is national in character, transcending the boundaries of the laws of the states and … therefore an appropriate subject of federal regulation" under the commerce clause of the U.S. Constitution, HomeServices said.
NAR also risks incurring the wrath of antitrust regulators by allowing one type of company — franchisors — to index listings, HomeServices officials said.
"Any rule which purports to create an advantage for one select group in commerce to the disadvantage of all others needs to be carefully examined for implications arising under the Sherman Act," Home Services said in its statement, referring to federal antitrust law. "It does not appear to us that this examination was done with respect to the franchisor rule."