Editor’s note: This article has been updated to include additionally comments by Alex Perriello, president and CEO of Realogy Franchise Group, who suggested that the franchisor IDX policy could be broadened.
WASHINGTON — An influential committee that considers policies for multiple listing services has voted to recommend that the National Association of Realtors suspend until November a recent rule change that allows franchisors to index and display Internet Data Exchange (IDX) listings in markets where they have obtained permission to do so from their franchisees.
Before the rule change was implemented in January, franchisors were limited to displaying listings represented by their franchisees. IDX listings include all listings of participating brokers in a given market served by a multiple listing service.
A number of brokerages who belong to two brokerage networks — The Realty Alliance, and Leading Real Estate Companies of the World — have objected, saying that franchisors are not participants in multiple listing services and should not have the right to display IDX listings.
Critics have said the rule change puts small independent brokers at a disadvantage by giving the biggest national franchisors the ability to create national listings portals with comprehensive and up-to-date listing information rivaling or bettering third-party sites like Zillow and Trulia.
After hearing from franchisors and representatives of brokerages including HomeServices of America, NAR’s Multiple Listing Issues and Policies Committee voted to recommend that the rule change — approved by the committee and NAR’s board of directors last November — be suspended until NAR’s annual meeting in November.
If NAR’s board of directors approves the recommendation when it meets Saturday, that would give a work group time to study issues such as whether the policy could be expanded to allow brokerage networks, regional brokerage firms or others to index and display IDX listings.
The work group will also consider whether brokerages might be granted the ability to "opt out" of having IDX listings they represent displayed by non-brokers.
Franchise companies, including Realogy, Keller Williams and RE/MAX International, voiced their opposition to a suspension of the rule change, saying NAR went through an 18-month public process before it was approved. Now, they say, they’ve made considerable investments in their websites in order to display IDX listings and provide consumers with the information they want.
"The process should not be taken lightly," said Mike Brodie, vice president of Keller Williams International. "To respond so quickly after such a thorough process would, I think, dismantle trust."
Brodie, who said he also spoke for RE/MAX, said repealing the policy would be seen as "an attempt to restrict our brokers from growing their business," stifling innovation to the detriment of consumer satisfaction.
Alex Perriello, who as president and CEO of Realogy Franchise Group was involved in the process that culminated in NAR allowing franchisor indexing of IDX listings, said indexing benefits small brokers when their listings are exposed on franchisor’s national websites, which link back to local IDX brokers.
"What concerns them is that it could make a national site operated by franchisors more appealing to consumers than their own websites," Perriello said. Opponents of the policy have "banded together," Perriello said, rejecting a proposal on Wednesday that they be granted an opt-out provision.
He said Realogy supports a broadening of the rule "beyond Franchisors. We encourage the MLS Policy Committee to consider adding parties such as real estate broker networks, regional brokerage firms, or brokers operating in market served by one or more MLS. The appropriate response to any concern about the merits of the (policy) should be to broaden access, not to restrict it."
Robert Moline, president and chief operating officer of HomeServices of America, said if HomeServices accepted the rule and tried to compete with franchisor websites, its brokerages — which are members of 87 of the nation’s roughly 900 MLSs — could index only about 10 percent of listings nationwide.
"The largest franchisors could have it all," he said, because they have brokers participating in IDX in all or nearly every market. With the top listing portals capturing most traffic, "Who’s going to carry the day? This is (creating) very big winners and losers."
Moline also said an opt-out provision does not address allegations that allowing franchisors to display partial information — that doesn’t include the listing broker’s name — violates laws governing real estate advertising in 38 states.
Moline hinted that if the rule is not repealed, HomeServices was prepared to break away from NAR, saying the company is "approached frequently about forming a national, private MLS."
Although "we don’t want to go down that path," Moline said, the day may come where "the economics will favor that, especially if we can’t keep control of our data."
While HomeServices supports NAR for the influence it has in politics, and for the role it plays in providing education and ethics, "what really holds NAR together is the glue — the MLS," he said. Many brokerages are members "because they have to be" to access the MLS, he said.
Joe Horning, chairman of the Realty Alliance and owner of Wisconsin-based Shorewest Realtors, sounded a similar note of discontent.
"It’s ‘game over’ for the MLS when protection of brokerages stops," he said. Under the franchisor IDX display policy, the only way he can keep Shorewest’s listings off franchisors’ websites is to withdraw from IDX altogether, Horning said.