The U.S. Department of Justice (DOJ) is reportedly demanding that CoreLogic hand over multiple listing service (MLS) data related to buyer broker commissions, any policy or language governing the licensing of MLS data, policies relating to data protection and destruction and datasets on the frequency of searches.
Rob Hahn, founder and managing partner of 7DS Associates, first reported the investigation on his blog. Hahn said he confirmed with multiple clients, contacts and friends that CoreLogic notified its MLS customers of the demand. Other MLS vendors reportedly have received the same request for information, according to Hahn.
“It appears that the U.S. Department of Justice has made a written demand to Corelogic, the top MLS platform vendor, for a whole lot of documents and testimony-under-oath about all kinds of things pertaining to MLS data — particularly cooperating compensation information,” Hahn, an occasional Inman contributor, wrote on his blog.
CoreLogic confirmed in a statement that it received the civil investigative demand from DOJ, but told Inman that CoreLogic is not the focus of the investigation.
“CoreLogic received a [civil investigative demand] from the US Department of Justice relating to an investigation of practices of residential real estate brokerages services in local markets in the United States,” a spokesperson for CoreLogic said in a statement. “CoreLogic is not the focus of the investigation.”
The demand for information specifically related to buyer commissions is particularly of interest in the wake of a class-action lawsuit that accuses the National Association of Realtors (NAR) and a number of the industry’s top brokerages of conspiring to determine buyers’ agents’ compensation.
The lawsuit specifically says the firms and association violate the Sherman Antitrust Act by requiring all brokers to make a “blanket, non-negotiable offer of buyer broker compensation.”
It’s not immediately evident what DOJ is looking for with such a wide-ranging request for information, although judging by the interest in buyers’ agent compensation data, it’s possible that the interest was brought on by the lawsuit.
Russ Cofano, a real estate broker at Windermere Real Estate and former executive at eXp Realty and Real, said in a comment on Inman Coast to Coast that he believed the two are connected.
“Anyone who does not understand that this [civil investigative demand] and the anti-trust lawsuit are inter-connected (and quite possibly orchestrated by plaintiff’s counsel) has their head in the sand,” Cofano said.
DOJ formally declined a request for comment on the matter.
Last summer, the Department of Justice held a joint workshop with the Federal Trade Commission on matters of competition and antitrust in the real estate industry and MLS data was one of the main topics of discussion that day.
Specifically, a panel of real estate leaders discussed publicly publishing commission data, which could theoretically push commissions down and create competition. Art Carter, CEO of California Regional Multiple Listing Service, noted on the panel that currently MLSs only track what a selling office is offering to buyers’ agents.
The workshop was created in the wake of a 2017 letter from the U.S. Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights to DOJ and FTC urging the agencies to update a decade-old report on competition in real estate and to specifically look at, “the availability of listing information to the public and to independent real estate agents, small real estate brokers and limited service brokers.”
MLSs play an important role in the dissemination of information and by reaching out to top MLS vendors, DOJ can get access to a huge cache of information about how these MLS work and operate.
In November 2017, the Information Technology & Innovation Foundation (ITIF), a nonpartisan think tank, published a white paper that called on the federal government to investigate MLSs for restricting property data from third-party websites.
ITIF’s report specifically asked state lawmakers to look into forcing brokers to provide free, unrestricted access to listings through an open application programming interface (API), which would let any random software developer build an app that could search broker property listings.
CMLS meanwhile, published its own report arguing that MLSs are actually a rare instance where cooperation breeds competition.
“Real estate brokers who participate in MLS agree to provide their listing information to the MLS in exchange for the ability to see other participants’ listings,” the report says.
“Furthermore, with each listing, the participating broker offers to any other participating broker a commission if that cooperating broker is the procuring cause of a sale of the subject property. As a hub of thousands of offers to enter such unilateral contracts, the MLS ensures cooperating brokers are paid.”