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Realtors Settle Anti-Trust Charges

Settlement opens listing database, may lower commissions

May 28, 2008

In September 2005, the Department's Antitrust Division filed a civil anti-trust lawsuit in U.S. District Court in Chicago, against NAR challenging policies that placed limits on brokers who used the Internet to offer better services and lower costs to consumers.

The government claimed the policies prevented consumers from receiving the full benefits of competition, discouraged discounting, and threatened to lock in outmoded business models.

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 require affiliated multiple listing services (MLSs) to repeal their rules and allow greater access to the database. 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 (VOWs). In addition, brokers will be able to use VOWs 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 anti-trust compliance training programs that will instruct local Associations of Realtors about the anti-trust laws generally and about the requirements of the proposed settlement specifically.

"Today's settlement prevents traditional brokers from deliberately impeding competition," said Deborah A. Garza, Deputy Assistant Attorney General of the Anti-Trust Division. "When there is unfettered competition from brokers with innovative and efficient approaches to the residential real estate market, consumers are likely to receive better services and pay lower commission rates.

"In addition, under this settlement, NAR will foster compliance with the anti-trust laws by educating its members and its 800 affiliated MLSs," she said.

NAR is a trade association of more than 1.2 million residential real estate members who operate in local real estate markets nationwide. In almost every area of the country, brokers have organized MLSs through which they share information about homes for sale in their community.

Brokers regard MLS participation to be essential to their ability to compete, and virtually all brokers participate in a local MLS. More than 80 percent of the approximately 1,000 MLSs in the United States are affiliated with NAR. NAR oversees rules governing how its affiliated MLSs operate.

The Department's 2005 anti-trust lawsuit challenged NAR policies adopted in 2003 and 2005 that obstructed competition from brokers providing residential brokerage services via the Internet. One way that brokers use the Internet to provide brokerage services to their customers is through password-protected Internet sites, known as VOWs.

VOWs allow a broker's customers to search real estate listings themselves instead of relying on a broker to conduct searches for them.

Delivering listings via the Internet enables customers to control their search process and educate themselves about the real estate market in their area on their own schedule. These VOWs have allowed brokers to be more productive, and some VOWs have passed these efficiencies on to consumers in the form of lower commission rates to home sellers and rebates to home buyers.

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