July 27, 2006
Federal prosecutors are closing in on the real estate industry for alleged anti-competitive practices that restrict home buyers' and sellers' effective use of the Internet, the National Law Journal reported.

Regulators and consumer advocates claim that consumers are being denied access to all the homes listed for sale on public Web sites, such as Realtor.com, and that firms trying to offer cheaper services on the Internet are facing restrictions.

The regulators' concerns echo the findings of a USA Today report and a Consumer Federation of America study, which found that real estate interests control the state regulatory agencies that are supposed to ensure consumer choice and competition.

Most recently, the Federal Trade Commission filed a complaint on July 13 against the Austin Board of Realtors in Texas for allegedly violating antitrust laws by preventing certain sellers from marketing their listings on public Web sites.

The FTC is also reported to be looking into similar practices in Detroit, Indianapolis, Cleveland and Columbus, Ohio.

Also, a lawsuit against the National Association of Realtors is continuing to unfold in a federal court in Chicago, where the U.S. Department of Justice claims that NAR policies obstruct real estate brokers from offering better services and lower costs to online consumers.

The FTC is focusing on operators of multiple-listing services, which let brokers share data on homes for sale and list home sales on Web sites.

In the Texas case, the multiple-listings services operator was the Austin Board of Realtors (ABOR), which prevented certain homes from being listed on public Web sites. Those homes were owned by sellers who entered into nontraditional agreements with brokers who offered cheaper a la carte services, rather than the traditional full-service deal.

Such agreements, known as exclusive agency listings, offer sellers the option of selling their home themselves.

The ABOR policy, which has since been rescinded, had the effect of forcing consumers to list their homes with full-service, full-fee Realtors.

"We are disappointed that the FTC's press release implies that we are guilty of wrongdoing," David M. Foster, president and CEO of the Austin Board of Realtors, said in a statement.

In a proposed settlement of the case, ABOR is prohibited from adopting or enforcing any rule that treats one type of real estate listing agreement more advantageously than another, and from interfering with the ability of its members to enter into any kind of lawful listing agreement with home sellers. The settlement is still awaiting final approval.

The real estate industry has brought much of its trouble on itself by adopting "protectionist" measures, said, attorney Mike Cowie, a former assistant director at the FTC, in the National Law Journal's report.

"There likely will be litigation by smaller Internet-based retailers ... [who] would say they're being driven from the marketplace," said Cowie, now an antitrust lawyer in private practice.