Another win in the battle for a new real estate economy!
By Anthony Longo 2 11 2009
Today’s post by Bob Hagery of the Wall Street Journal proved to be another huge blow to the NAR and local trade associations fighting to keep MLS data corralled to select groups (or better said any full-fee real estate brokerages).
view the entire article here.
“The Federal Trade Commission ordered an affiliate of the National Association of Realtors in the Detroit area to end practices that the agency found unlawfully discriminate against discount real-estate brokers.
The unanimous FTC decision, announced Monday, was the latest in a long series of skirmishes over competition issues between federal antitrust regulators and the NAR, a giant trade group. Federal regulators have consistently pushed the Realtors, at both the national and local level, to abolish rules that could thwart discounters.
The FTC case was filed in October 2006 against Realcomp II Ltd., which operates a multiple-listing service, or MLS, covering southeastern Michigan, and is owned by local Realtor organizations in that area. An MLS maintains a database of homes available for sale and enforces rules for the brokers who use that information. Real-estate brokers must belong to an MLS to get the information they need on listings. An MLS provides more detail than do Web sites like Realtor.com that are open to the public.
The FTC challenged Realcomp rules that block certain types of listings of homes for sale from being displayed on Realtor.com and other Web sites used by consumers to search for homes. The listings affected, known as “exclusive agency” listings, often are used by discount brokers who offer limited service and charge flat fees rather than a percentage of the sales price.
In December 2007, an administrative law judge dismissed the original complaint by the FTC staff. But the FTC commissioners voted 4-0 to reverse that decision and order Realcomp, of Farmington Hills, Mich., to amend its rules to eliminate practices deemed discriminatory.
Karen Kage, chief executive officer of Realcomp, said that company’s board will decide at a Nov. 20 meeting whether to appeal the FTC ruling in federal court or sign a consent order with the agency. The NAR has provided financial support to help Realcomp fight the FTC case. Laurie Janik, general counsel of the NAR, declined to comment on the FTC ruling.
Brokers have been watching the Realcomp case because of the potential for a national precedent that would influence Realtor practices across the nation. Albert Hepp, owner of BuySelf Realty, a flat-fee broker based in Minneapolis, said the FTC now has “clearly stated thou shalt not hide the listings of discounters.”
Discount brokerages serve a purpose in our world of real estate, some people see the merit in them. I think most consumer still see value in full service brokerages. Will discounters offer the services and will the public be served however if the practice of limited service becomes stronger. Do you pull your own tooth or do you go to a dentist.
Hey Ken -
I think this is more just about “options” which consumers really have not had up until a year or two ago. Every buyer and seller is different and every buyer and seller is looking for different levels of service. Its not about discounting anymore – in fact we don’t use that word anywhere within our company. Its about providing choice and up until the “unlocking of protected data” consumers did not have a choice.
Step out of the equation and lets pretend you didn’t make a living as a real estate professional. Lets just say you worked for Microsoft and you wanted to purchase or sell a home. How would you feel if the only option you had was to do it by yourself in which you may not have the time or experience to do so or pay a broker 6%? Lets say you are a super savvy individual who enjoys keeping up with the market and you feel that you understand it as good as any agent. Wouldn’t you feel better if you had more than 2 options? Or how about a young, very smart, efficient and tech savvy company who was willing to provide you BETTER “Full Service” service for 5% or even 4% – maybe that would excite you?
There is no question in my mind – in Boston, where we are based – we provide the absolute best “full service” for helping a home-buyer in the downtown market – better than any major traditional broker – and we charge 20% less than them. No fancy office here or massive overhead – therefor no discounting – and we actually have a larger margin than our competitors and we give large cash refunds. How is that for a value proposition?
I think they all serve their purpose and I think there needs to be a choice. And personally I think that most realtors need to bring a heck of a lot more to the table, which is why discounting is probably popular for many people. Why pay a realtor 6% to just toss it up on MLS and pray another one contacts them about it?
Actually I think the entire realtor industry needs an overhaul… and keeping the MLS data proprietary… it doesn’t really matter because once a house is sold that’s public data so you can price a home pretty well based on that and get a fair price… and these days people don’t know what to ask for so that’s really your only gauge.
Tell me more Mt. Pleasant Condos! I like where you are going with this!