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DOJ vs. NAR: Point2 Agent Weighs In

by Jay Thompson on June 22, 2007 · Comments

Something that should be of great interest to both real estate professionals and real estate consumers is the ongoing lawsuit between the Department of Justice (DOJ) and the National Association of Realtors (NAR).

For those not aware the DOJ has filed suit against the NAR alleging that they have established policies and pratices that are potentially anti-competitive. The DOJ complaint specifically states that some NAR policies regarding the use of the Internet:

…constitutes a contract, combination, or conspiracy by and between NAR and its members which unreasonably restrains competition in brokerage service markets throughout the United States in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. (link to complete DOJ complaint)

Jason Golding, CFO/General Counsel of Point2 Technologies, a provider of web site services and technological tools to real estate agents, has penned a blog post linking to a "White Paper" that nicely summaries some of the DOJ vs. NAR issues. It also presents how Point2's National Listing Service (NLS) can be utilized by agents regardless of the outcome of the DOJ's suit.

Personally, I'm not a big fan of the NAR (gasp!). My wife and I both pay our dues because our broker mandates that we do so. What do we get for our money? Basically, the right to call ourselves REALTORS. The NAR is does spend a lot of time lobbying "on our behalf" and supposedly has the best interests of all its members in mind. But the simple fact is, in an organization of 1.5 million people, no single entity can keep the best interests of all members in mind. I get a relatively useless magazine (actually we get two copies – there is no way to opt out of receiving multiple copies if multiple Realtors are at same address — Hello??), and I get a Code of Ethics I'm sworn to uphold (I really don't need an organization to tell me how to be ethical. And if someone does, then odds are overwhelming they won't understand a tenth of the Code they are swearing to).

But, I'm even less of a fan of government getting mixed up in free enterprise. You can't legislate common sense or good business practices. The free market in a capital society is, over time, incredibly efficient and effective.

As Russell Shaw pointed out in a fantastic post on this subject, the Multiple Listing Service (MLS) is misunderstood by many — by the DOJ, by consumers, and by many real estate agents and brokers. The MLS was never designed as a marketing venue for homes. It is simply a broker-to-broker offering of compensation.

As a marketing tool, quite frankly my MLS sucks. It allows me to upload six tiny pictures and about three sentences of description. I can't link to anything. It doesn't force the lazy (but ethical!) agent to even complete all of the available descriptive fields such as room dimensions. Hell, an agent can (and many do) put a listing in the MLS with NO pictures, NO description, NO square footage, basically no nothing. How is that a viable marketing tool? It's not, and it was never intended as such. It's a tool to let Broker A tell Broker B, "Sell this listing of mine and I will pay you X". Period.

I can (and do) put my listings on hundreds of web sites. With the capabilities that Point2 Agent provides me, I can put up to 36 large hi-definition photos in a listing. I can have paragraphs of descriptive text. I can attach listing brochures and other files that an interested buyer can view on-line and/or download. I can add soothing and peaceful background music or a voice-over of property features. I can gather viewing statistics. My seller can log into their listing and add their own information about the property. And I can easily syndicate that listing to 23 national real estate web sites and hundreds of local agent sites. THAT is a marketing tool!

The government needs to bug out,and MAYBE the NAR can assist with that. Maybe not. Time will tell.

[tags]NAR, DOJ, MLS, real estate disintermediation[/tags]

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Tom Mitchell

Thanks for the great post Jay. I agree fully and find it ironic that those opposing the "Closed MLS" that REALTORs use are mostly the FSBOs that don't want to pay a commission to a REALTOR to sell their house. Leave it to the Government to jump on their side without an understanding of what an MLS is. What's next, letting non-licensed people run a Real Estate brokerage. DOJ needs to do its homework.

Anonymous

You always seem to get the inside scoop from Point2. Is that why your web site is #1? Whose ass did you kiss to get all the inside information?

Jay - The Phoenix Real Estate

I always love it when I get an email that "Anonymous" has commented. You never know what kind of treat is in store.

Let's break down this Mr/Ms Anonymous' comment:

"You always seem to get the inside scoop from Point2."

Not sure what other "scoop" you may be referring to. This "scoop" was posted on a public blog on Tuesday, June 19. Today is Friday, June 22. I'd hardly call that scooping inside information.

"Is that why your web site is #1?"

Is what why my website is #1? You're trying to say my site is ranked well because I supposedly get inside info from Point2? To that, about all I can say is, "Huh?".

I assume you are referring to my website's ranking based on the Point2 Performance Index. First, I'm now #2, not #1. And second, whatever ranking I have is based on hundreds of hours put into working on my site, not on who I know at Point2 or whose ass is kissed (not that I kiss anyone's ass mind you).

"Whose ass did you kiss to get all the inside information?"

Again, what "inside information" are you referring to? The same info posted 3 days ago at Real Estate Alchemy?. Here's a tip -- get a feed reader. Keep up with the P2 blog feeds and you could have referenced this "scoop" long before I did.

Any more questions? Thanks for visiting!

Athol Kay

Sounds like something worth angling for would be a change in MLS platform. In Connecticut we have MLXchange, and overall I'd say it's very "marketable" and also comprehensive about the property stats.

99% of realtors here just use direct from the MLS print outs for open house flyers etc. It's not "OMG!" beautiful, but visually functional and information filled.

Danny

It may not have been originally designed as a marketing tool, but I think the MLS does serve as a marketing tool, just the fact that properties are databased lets you know what's for sale. When a buyer
ask for a certain type home you pull it up easily. The only time I'll do a search is when I've got a buyer looking. I don't know many Realtors that pull up homes just to know what the co-op split is.

Chris Lengquist

The KC MLS is lacking. Heck, Tulsa has a better MLS database system. Having said that it is very much a marketing tool from an agent to all the agents. It makes for a lousy public marketing tool. Never intended to be as such, as you point out.

A National MLS would be fine with me. Our current system is fine with me. The public just needs to stay the heck out of it. It really doesn't concern them. Why do they want access to it, anyway? If you are working with a REALTOR they can get you what you need. If you are FSBO you are in competition with the people who own and run the MLS and so why should they share that with you. It's not like the governement had anything to do with MLS development, right?

This came about because of the huge run up in prices over the past 10 years when everybody wanted a piece of the action. My guess is that some people may not be so eager to jump in, now. Let them go to day trading seminars on stocks. That should keep them occupied.

Sorry this turned into a blog...feel free to delete!

Norm Fisher

It has always amazed me that the DOJ can't understand that the MLS is an asset which was developed by REALTORS for REALTORS. If I made a big stink because a car dealer wouldn't allow me to sell my car privately from his or her car lot they'd think I was crazy, and they would be right.

We are facing similar problems with the "Competition Bureau" in Canada. I suppose our biggest mistake was building a public interface which essentially turned it into an advertising vehicle.

Tim Fennell

Well-stated, my friend.

It is seldom that I can say that I agree with someone else 100% but this is one of those times. (Actually, I tend to agree with your assessments close to 100% of the time anyway - you know, that thing about 'brilliant minds...' LOL)

Back to topic... there is definitely a disconnect between reality and the DOJ's perception of what we do as real estate agents. There is a huge disconnect between what we do and the public's perception as well - I imagine we can thank (blame) the media for a portion of that but I think that a larger part of the blame lies within ourselves for having a disproportionate number of agents who have little concept of 'professionalism' or 'business management'... when coupled with a consumer who doesn't do his due diligence in locating a high quality agent to hire and then blaming the entire industry for the poor service received from the inept agent we are all left in a quandry.

Hopefully, together, we who are committed to the highest levels of professionalism in our industry can educate the public one consumer at a time and, in time we can shift the faulty perception to a more realistic one.

As always, my friend, thanks for all that YOU do for our industry.

Tim Fennell

Kaye Thomas

Well thought out post.. DOJ has a lot of axes to grind about real estate and I suspect that their ultimate goal is to regulate and determine commissions.. The MLS system is set up as a private arrangement for brokers who pay a fee to join and monetarily support the system. Rules are pretty clear.. to join you must be a licensed Broker/Agent. If I want to join the Bar Association I have to an attorney who passed the bar.. if I want to be a member of SAG I must have some tie to the entertainment field and credentials to prove it.. I can't just pay a fee and get a card..Same with real estate.. you want to be part of the MLS get a license and join.. it's not a public entity.
Also by going after REALTORS® it takes the heat off other areas DOJ should be investigating.. like why all the small cable TV companies are being gobbled up by one or two big companies.

Chris Burdzy - Staten Island R

I agree that DOJ should not dictate NAR and Realtors how to share their listings. I do like the Realtor Magazine though - always something worth reading.

My 2 cents...

Anonymous

I believe the DOJ problem was caused by NAR's freaking out about internet marketing.

At the time, some of the big wigs at NAR were ticked off the discounters were 'stealing' their listings via the IDX to under cut the big wigs commission.

(I believe both companies that were the focus of their anger no longer exist. They were bought out by larger real estate companies that wanted their technology. I think Prudential was one buyer.)

So, the NAR hotshots like the founder of ReMax pushed a policy that said each company could specifically designate which firms can NOT display their listings. The purpose, of course, was to prevent their listings from being shown on discounters IDX web sites thus benefiting the discounters.

NAR might as well have said to DOJ, "Please investigate my entire indusry for the next decade."

Gaye Fox

I think a response from one of my customers, now a client summed it up. He said that he had a written agreement with my company, not with other brokers and that he said I and my broker were responsible for the marketing of his listing and unless someone other that us has a written agreementwith him ( co-listing),our company and only our company had permission to market his property. Period!!

scotty

I'm a member of the public and as all these posts indicate, don't understand the MLS. If anyone can give me an explanation a 4-year old can understand, it would be great. I've read the DOJ complaint and some of the realtor perspective. Here's a question; As a homeowner I work with a realtor to create a listing agreement. He contracts with me for a commission if the house sells. First, isn't the data populating the listing still my intellectual property? Second, doesn't the agent have a fiduciary duty to create the widest possible net of buyers for my home, regardless of the agreement (exclusive agency, limited service etc.) we sign? If yes, and MLS is the central medium of communication for 95% of all brokers, doesn't MLS have an obligation to distribute my listing information throughout cyberspace? If not, how can I be sure the broker is acting in my best interests?

Nikki

I'm not even sure if anyone will read this as I'm posting months later.

However, the biger question here isn't if the DOJ is right, but why is the NAR wrong? NAR has the monopoly on the MLS. They created it, yes. But over the years they have made it next to impossible for Real Estate Agents NOT to join their "voluntary" Association of Realtors.

When you are licensed in one State - Say Florida for example - you are legally able to sell Real Estate in the entire state. From the Panhandle to the Keys. However, as a Realtor, you are required to join the National Association of Realtors (NAR) the Florida Association of Realtors (FAR) and what ever Local board you happen to reside in to get the MLS. Not 1, but 3 boards!!!! If you want access to any other MLS in the State, you must join each and every Local Board for that area. Example. You live in Miami. You join the Greater Miami Dade and the Beaches board. Say you want to sell Real Estate in Broward (Ft. Lauderdale) Legally you can, but you can't access their MLS unless your Broker belongs to that board, and you join as well.

The NAR has now made it mandatory that if you, the Broker are a NAR member, then all your agents must be too. Oh, they can be exempt,but the Broker has to pay a percentage to keep them exempt. And the bill comes right to the Broker. It's up to the Broker to collect the dues and MLS fees and in turn collect them from their agents.

Voluntary Association? Not really. And if you ask the average Real Estate Agent why they join the Board - they'll tell you, either cuz my broker said I had to, or becuase I need the MLS. And NAR knows this. $120.00 for the NAR for 2008, $110.00 for the FAR for 2008 and anywhere from $100.00-$500.00 for the local boards. Depending on if you pay monthly for your MLS or one time fee to the Board.

I'm thinking someone should be looking at the monopoly of the MLS from the poor Real Estate Agents perspective, not the consumer. Just my 2 cents.

samq

Nikki you hit my soap box on the head. What we need is more competition in the form of alternatives to NAR and MLSs. As a real estate agent I was told by a Broker who was a Realtor that I could not take listings on behalf of my broker (we were both non-Realtors for the sake of this argument) as this would be a violation of my fiduciary duty to the client in not marketing their property effectively. Really? Last time I checked I could list on Trulia, Postlets, Craigslist, and a host of other sites that get eyeballs. But the power of the local MLS and the ignorance of the general public is astounding. Combine these two factors and you have a very powerful monopoly. That broker had some valid points. People do not necessarily go to those sites that I mentioned, they start by searching major searchable home sites, like local Board of Realtor sites. The argument that an MLS is simply an innocent information exchange between brokers for commission rate is invalid. If this were true then stop publishing listings via IDX feeds on Realtor websites and stop making listings searchable on Realtor Board websites. Realtors and NAR can not have it both ways. If I am violating my fiduciary duty to my clients by not joining the Realtor organization then I'd say that's tantamount to extortion and way to much power for one organization to wield. I will be caving however because I want to practice residential real estate, but to join will cost me $597 in Realtor Membership fees, over $700 in MLS fees and Supra Key services. Total is just over $1400.00. Then I get to pay MLS and Realtor Membership fees ever Sept. and March.

I want the choice to join another group that has access to the same or similar information. I also do not see why I can not just be a real estate agent, but the reality is to practice residential real estate requires access to comparable data for comps to determine a potential list price, especially if you are in a non-disclosure state.

Anonymous

"The National Association of Racketeering" NAOR

When a member Realtor does not pay the annual board of Realtors dues by a certain date, in turn the Mid-Florida Regional MLS privileges are shut down , even all well knowing that the MLS/ Supra fees are paid up until March 2008 ? Correct..

Do you not feel that by these actions that the general public and the listings that have been effected By these actions now creates a hardship to the home sellers listings on your Mid-Florida Regional MLS system and the Realtor/Client fiduciary to there client has been affected in a monetary manner.

This action also has a large effect to home sellers and potential home buyers through out you entire MLS coverage areas, from what I have been reading in the news that about 10% of the greater Orlando Realtors have not renewed there board membership, so having said that all of 10% have been shut down from using your Mid-Florida Regional MLS system.

Another effect of this shut down of MLS to it agents, you are taking away there right to work ! As the listing agent, and to allow the listing agent access add new clients listing into your system knowing that the MLS dues are paid up..

Do you offer a refund of the MLS members dues back to the Board of Realtor members that you have shut out of the Mid-Florida Regional MLS?

Please tell me how any of this benefits the consumer especially in todays market and my last question is this.

"Why is it, the Mid-Florida Regional MLS has shut our Non-Realtors/Real Estate Agents, from participating in the Mid-Florida Regional MLS" it would seem to me as a unfair trade practice.

http://www.usdoj.gov/atr/contact/newcase.htm

Included links

Http://www.mfrmls.com/

http://www.orlrealtor.com/Main/Main.asp

Wait until the news media picks up on that e mail they will have a field day with it

I must admit I love the title, and the letter make some very good valid points

Anthony - Staten Island Real E

MLS was never really a marketing tool. It was really meant to be a tool allowing commission splits with other real estate companies/brokers. Yes, it has to a significant degree it has been more emphasized as a marketing tool, espeicially in the Internet arena. The issue is this, if there is no regulation on the specific responsibility of how real estate listings are advertised and presented to the general public there will be significant issues with the accuracy, timeliness, which adds to the confusion and frustration on the part of the consumer. Personally, that has been my largest issue with user provided content on many websites. Many clients have pulled up listings that were sold, and in some cases over 2 year ago. In my view DOJ is opening a pandora's box, because mls listings require and mandate specific maintenance of listings. Something not required by many other websites. If their is no governance, there's ambiguity, if there ambiguity there's misinformation. Misinformation leads to distrust and ultimately bad business. not a big fan of DOJ's take here.