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Inman News
June 17, 2005
Discount listings could get squeezed on Web
6/17/2005
Discount real estate companies operating in the Raleigh, N.C., area have complained to the state Attorney General's Office about proposed changes to rules governing the display of some types of online property listings.
Noelle Talley, a spokeswoman for North Carolina Attorney General Roy Cooper, said the office has received two letters this week "and is still in the process of evaluating those letters."
Glenn Wallace, owner of My Dog Tess, a discount real estate company that operates in the Raleigh-Durham-Chapel Hill area, said he learned last week that a new multiple-listing service policy was in the works, and that the plan was to limit the dissemination of online property listings for certain types of property listings: namely exclusive agency, entry-only and limited-service forms of property listings that are used mostly by discount real estate companies operating in the area.
Such a proposal could put limited-service and discount real estate companies at a disadvantage with traditional, full-service real estate brokerages, he said.
The Raleigh Regional Association of Realtors, a local trade association, operates the Triangle Multiple Listing Service, which manages a property listings database for about 6,000 Realtors working in 22 counties in the region.
Ray Larcher, executive vice president for the local association and president and CEO for Triangle MLS, said this morning that he could not comment about the proposed rule, "under advice of legal counsel." Larcher said the proposed rule is on hold, and that he could not share any details about the proposed rule changes. Members of the MLS board also cannot comment about the proposed changes, he said, in light of the complaint to the Attorney General's Office.
At the national level, U.S. Justice Department investigators have been reviewing a controversial National Association of Realtors policy governing the display of online property listings, and the association has been working to craft a more comprehensive policy and avoid an antitrust lawsuit.
The debate in this national example and the local example in North Carolina is whether online listings policies could be used to block the display of some forms of listings at certain home-search Web sites, which could create an unfair playing field in the industry.
"The Triangle MLS and its directors plan to change the current policy regarding the electronic dissemination of listings," Wallace states in his complaint. "They plan to remove or block the exclusive agency, entry-only and limited-service listing types from reaching Realtor.com (and any national database that draws from Realtor.com) and the local IDX system." IDX systems, short for Internet Data Exchange, provide for the sharing of online property listings among real estate brokerages' Web sites.
"These three listing types have been around for years, and they have been transmitted to Realtor.com and the IDX system by the Triangle MLS for years. Triangle MLS management, the directors, and the firms they represent (all named in the complaint) know that the three listing types that will be blocked are used mainly by discount real estate firms and discount real estate agents," the complaint also states. "I am not a lawyer, I only know that this proposed policy change hurts the consumer and the small discount real estate firm – not the larger firms trying to protect dwindling commissions in a quickly changing industry."
According to MLS information presented by Wallace, 72 percent of all property listings that could potentially be blocked if the proposal is adopted belong to five firms: My Dog Tess, Carolina's Choice Realty, New Castle Realty, Selling Directly and Century 21 Click It.
Larcher said in communications with Wallace that under the proposal, exclusive-agency listings, which include limited-service and entry-only listings, will not be transmitted to the MLS's IDX system, which allows for the sharing of listings among its member brokers. And he said the MLS has also been considering whether to reclassify some other types of property listings as exclusive-agency listings.
In exclusive agency listings, an agent who represents a seller is guaranteed a commission in the sale of that house, and sellers can seek out buyers on their own. Entry-only listings provide that an agent will simply list a for-sale property in an MLS but will not provide other services for the seller in a transaction, and limited-service listings relate to other forms of listings in which agents do not perform a full-range of services in a transaction.
Wallace said he is worried that if some of his company's property listings are no longer accessible on Realtor.com and some other Web sites, it will harm his business because consumers may not be satisfied with a reduced level of online exposure for their properties. He stated in his complaint that he is worried that other MLSs in the state may also move toward more restrictive display policies for online property listings.
Wallace also said his company and other discount companies have been growing quickly in North Carolina, and he believes that may have prompted the proposal for a change in listings policy. "It's an ugly game," he said.
About 30 percent to 40 percent of his company's listings are entry-only listings, he said, and if there is a policy change it will impact consumers. "The consumers should have the right to choose. If they make it less desirable for customers to use entry-only, I'm going to use (another listing type) that is more profitable for us."
Administrators at the North Carolina Association of Realtors and the North Carolina Real Estate Commission could not immediately be reached for comment.
In another example of increasing conflict between limited-service and full-service companies, Realtor associations in a number of states have pushed for legislation or rules to specify which services real estate agents must perform for their clients.
These so-called minimum-service proposals have in a few cases caught the attention of the U.S. Justice Department and Federal Trade Commission, which have cautioned legislators and regulators against the adoption of measures that could be anti-competitive or anti-consumer.
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