- The Washington Times - Thursday, September 8, 2005

The Justice Department yesterday challenged a National Association of Realtors policy it said stifles competition from real estate brokers who use the Internet to offer better services and lower costs to consumers.

In a lawsuit filed in U.S. District Court in Chicago, the department challenged the group’s policy of allowing its members to exclude their listings from other brokers’ Web sites.

The practice threatens to prop up an outmoded business model and harm consumers who want to reduce their costs, the suit says.

“The purchase of a home is one of the most significant financial decisions a family can make, and NAR’s policy stifles competition to advantage some of its members at the expense of home buyers and sellers across the country,” said Deputy Assistant Attorney General J. Bruce McDonald. “Consumers benefit when real estate brokers are free to compete vigorously by offering innovative services.”

Although the NAR yesterday adopted a revised policy, the new steps weren’t enough to ward off the lawsuit because the group retained brokers’ ability to discriminate against competitors who post listings online, Mr. McDonald said.

The association said its new policy took into account Justice Department concerns. Initially, listing agents were allowed to withhold information on available homes from specific Web sites. The revised policy says that, when an agent chooses, listings will not be displayed on any Web site.

“The policy does not discriminate against any brokerage model, including discount brokers,” said Al Mansell, president of the association.

In most markets, brokers share information about properties for sale, known as listings, through the local Multiple Listing Service — a joint venture among competing brokers. It said participation in the MLS makes it possible for a broker to provide customers with listings for all properties for sale in the community, which is critical to compete in the local market.

Traditionally, brokers provide listings for properties to their customers in a variety of ways, such as by hand at their offices or by mail, fax or e-mail. Some brokers have begun offering services to their customers over the Internet, the Justice Department said, using office Web sites or password-protected Internet sites that allow customers to search the MLS database on their own.

Delivering listings over the Internet, the department said, gives Web-savvy consumers more control over their search for a home, allowing them to educate themselves about their options at their own pace. It said this allows brokers to reduce the time agents spend searching the MLS database or showing homes the customer dislikes.

In its suit, the department said NAR’s policy restrains competition by requiring NAR-affiliated MLSs to adopt rules that allow brokers to withhold clients’ listings from other brokers’ Web sites by means of an “opt out.”

In essence, the suit said, the policy enables traditional brokers to block their competitors’ customers from having full online access to all the MLS listings.

The suit said the NAR policy significantly alters the rules that govern MLSs by permitting traditional brokers to discriminate against other brokers based on their business model, denying them the full benefits of MLS participation.

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