Realtors Settle Listings Battle

By Dina ElBoghdady
Washington Post Staff Writer
Wednesday, May 28, 2008

The National Association of Realtors has agreed to change its policies on Internet home-sale listings to settle a long legal battle with federal regulators who have accused the group of anti-competitive behavior that harms consumers.

The settlement, which awaits court approval, would resolve a 2005 Justice Department lawsuit that accused the association of undermining newer, lower-priced rivals by hampering their ability to post home-sale listings online. The Realtors association, which did not admit liability or wrongdoing and faces no fines, agreed not to treat Internet-based brokerages differently than traditional ones.

The dispute underscores the dramatic changes the Internet has forced on traditional brokerages, which once had a lock on the business of buying and selling houses.

Justice Department officials and others who have tracked the case said the agreement will result in more choices and better service for consumers, as well as lower costs because of competition over commissions. Many online firms offer savings because they provide limited services.

"It's a win for consumers because it's going to eliminate impediments to competition caused by the policies [the Realtors group] had in place, which we were ready to prove would have locked in an outmoded way of doing business," said Deborah A. Garza, deputy assistant attorney general in the Justice Department's antitrust division.

Mike Cowie, an antitrust lawyer at the firm Howrey who was not involved in the case, said the settlement probably will not force commissions down immediately, "but it should contribute to downward price pressures on commissions."

"The settlement advances the Justice Department's objectives," he said.

At issue are multiple-listing services, local cooperatives formed by real estate brokers in which all their properties for sale are lumped together in one database. Most of the nation's roughly 900 multiple-listing services display members' listings on Internet sites.

But a policy adopted by the Realtors association in 2003 would have required the multiple-listing services to allow their members to withhold their listings from the Internet sites of other brokers.

Another policy would have prevented a broker from presenting listings of homes for sale and then referring those customers for a fee to other brokers, who would help customers view homes in person and negotiate contracts for them.

The Realtors group reworked those policies just before the government sued, but Justice Department lawyers said the changes did not go far enough.

Guy Wolcott, co-founder of the online brokerage Sawbuck Realty, said his D.C. firm is based on the referral model and had been worried about the outcome of this case.

"We're happy that once and for all, [the Realtors association] has agreed that those policies are not something they are going to pursue and that our model can go on and expand," Wolcott said yesterday. "We're relieved to have that behind us and not have to worry about it anymore."

The Realtors association also said that it was pleased with the settlement. Lucien Salvant, a spokesman for the group, said the policies the association adopted were never fully implemented and were never meant to stifle competition. Instead, they were aimed at preventing companies from "scraping" listings off the multiple-listing service, posting them online, and then profiting without engaging in buying or selling real estate, he said.

Steve Murray, editor of the trade publication Real Trends and an expert witness hired by the industry in this case, said that the industry's concern was real and that the settlement addressed that fear.

"What the Realtors got from this settlement was a very specific definition of what constitutes a legitimate member or user of the multiple-listing service," Murray said. "They have to be someone who is actually practicing in the business."

The association said it is also satisfied with other provisions of the settlement, including one that would protect sellers who do not want their property or address displayed on the Internet and one that would protect sellers from having false or unwanted information about their listings appear on the Internet.

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