Hard to believe but until today most Internet-based real-estate brokers were considered second class citizens and clients were left in the cold. But perhaps with today’s news that the Department of Justice has reached a proposed settlement with the National Association of Realtors (NAR) that requires NAR to let Internet-based residential real estate brokers compete with traditional brokers that will change.
The idea of course is to enhance competition in the real estate brokerage industry, resulting in more choice, better service, and lower commission rates for consumers. NAR has agreed to be bound by a 10-year settlement to ensure that it continues to abide by the requirements of the agreement. NAR is a trade association of more than 1.2 million residential real estate members who operate in local real estate markets nationwide.
A little background: In September 2005, the Department’s Antitrust Division filed a civil antitrust lawsuit in U.S. District Court in Chicago, against NAR challenging policies and related rules that obstructed real estate brokers who use innovative Internet-based tools to offer better services and lower costs to consumers. The Department said that the policies prevented consumers from receiving the full benefits of competition, discouraged discounting, and threatened to lock in outmoded business models. The case was scheduled to go to trial in July 2008. If approved by the court, the proposed settlement would require NAR to change policies and adhere to certain conduct remedies to resolve the Department’s competitive concerns.
Under the terms of the settlement, NAR will repeal its anticompetitive policies and require affiliated multiple listing services (MLSs) to repeal their rules that were based on these policies, the DOJ stated. Brokers regard MLS participation to be essential to their ability to compete, and virtually all brokers participate in a local MLS. More than 80% of the approximately 1,000 MLSs in the United States are affiliated with NAR.
NAR oversees rules governing how its affiliated MLSs operate, the DOJ stated. With the settlement, NAR will enact a new policy that guarantees that Internet-based brokerage companies will not be treated differently than traditional brokers. Under the new policy, brokers participating in a NAR-affiliated MLS will not be permitted to withhold their listings from brokers who serve their customers through virtual office websites.
In addition, brokers will be able to use their Web sites to educate consumers, make referrals, and conduct brokerage services. Such brokers will not be excluded from MLS membership based on their business model. NAR will report to the Department any allegations of noncompliance.
NAR also has agreed to adopt antitrust compliance training programs that will instruct local Associations of Realtors about the antitrust laws generally and about the requirements of the proposed settlement specifically.
The proposed settlement will be published in the Federal Register, as required by the Antitrust Procedures and Penalties Act. Any person may submit written comments regarding the proposed final judgment within 60 days of its publication to John R. Read, Chief, Litigation III Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, NW, Washington, DC 20530, 202-307-0468.
At the conclusion of the 60-day comment period, the court may enter the proposed final judgment upon a finding that it serves the public interest.
Of course with the condition most real-estate markets are in throughout the country traditional and Internet brokers don’t have much to look forward to.
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