The Justice Department decreed ten years ago that the National Association of Realtors could enforce this common set of standards for every agent, broker, and MLS. Now, that policy is approaching its ten-year expiration date, and industry professionals are considering the consequences of withdrawing, or maintaining, the decade-old decree.
- New technology has changed the landscape of real estate in the past decade
- Vested parties are already contacting the Justice Department and FTC about the policy
- A NAR spokesperson said the association would consider carefully modifying the policy
As new technology enabled entrepreneurs to set up new types of online marketplaces, the issue of access to listings also became important.
Realtors depend on what’s called the Multiple Listing Service, a system that gathers all available data on properties that are for sale. NAR describes it this way: “The MLS is a tool to help listing brokers find cooperative brokers working with buyers to help sell their clients’ homes. Without the collaborative incentive of the existing MLS, brokers would create their own separate systems of cooperation, fragmenting rather than consolidating property information.”
(Complicating the issue is that there is no single MLS. Instead, there are more than 800 throughout the country, each with their own data, their own practices and their own leadership.)
‘Changes at the margin’
In the mid-2000s, a new company called Redfin, which offered a steeply discounted model for sellers, was “particularly threatening to traditional brokers,” said Stephen Brobeck, executive director of the Consumer Federation of America, an advocacy group that investigated real estate brokerage practices in the early 2000s. Its CEO told Congress in 2006 that competitors had threatened his agents with violence, intimidated their customers and tried to block their offers.
But 10 years on, those worries have abated. “The traditional brokers thought that the technology was going to be extraordinarily disruptive, but it hasn’t,” Brobeck told MarketWatch. “The Redfins of the world do not pose an existential threat to the traditional industry. That’s the surprise.”
In some ways the player that’s been more unsettling, if not outright disruptive, to the real estate market isn’t a real estate company at all. Most analysts call Zillow ZG, +2.76% a media company, offering housing market content and trends over hard-and-fast figures. The company describes itself this way: “Zillow Group is committed to empowering consumers with unparalleled data, inspiration and knowledge around homes, and connecting them with the right local professionals to help.”
Over the past few years, Zillow has pushed back against regulator attempts to block it from allowing real estate professionals to jointly market their services, a campaign many housing experts interpret as the company doubling down on traditional models that benefit realtors, rather than innovating new ones.
Real estate agent Aaron Farmer described Zillow’s presence in the market this way: Local brokers form relationships with homeowners who want to sell their property. They ready the home for selling, stage it for appeal, photograph it and create a listing. Then Zillow aggregates that listing into its web site, and tries to sell leads of interested buyers back to the listing agent. What’s worse, at least according to Farmer, is that Zillow’s information about what’s actually available for sale isn’t always accurate—sometimes skewed by nearby, but otherwise not comparable, listings—and leading to buyer (and seller) confusion.
One of the Justice Department lawyers deeply involved in the mid-2000s real estate antitrust enforcements, David Kully, thinks it’s only natural for companies like Zillow and Redfin to be concerned about what comes next.
“Given what happened in the past, I’m sure that those who have built businesses around the internet display of listings might have some concern about what might be around the next corner,” Kully told MarketWatch.
For its part, NAR says the lessons of the settlement have been taken to heart. “I know there’s been a lot of speculation about how the world’s going to turn upside down [as the deal sunsets] and MLSs will do all kinds of wacky things,” the group’s acting general counsel, Ralph Holmen, said. Holmen has spent the past 10 years traveling the country to coach MLSs on the provisions of the settlement.
“If we think some modifications to the policy embodied in the decree are helpful and lawful, we may consider implementing them, but we’ll do that carefully and lawfully,” Holmen said. “If we think a change is important but it’s not as clear that it’s lawful, we may go to the Department [of Justice].”
View the original article at MarketWatch