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The Honolulu Advertiser
Posted on: Saturday, October 29, 2005

Realtors plan to fight list-sharing lawsuit

By Greg Sandoval
Associated Press

National Association of Realtors attorney Laurie Janik yesterday denounced the federal effort to compel her organization to share listings with nonmembers.

JEFF CHIU | Associated Press

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SAN FRANCISCO — Typically cheery real-estate agents were seething yesterday as they discussed the government's attempts to force them to share home listings — the bread and butter of the realty business — with Web-based competitors.

At their annual conference, executives from the National Association of Realtors, which claims to be the largest trade association in the U.S., said they are planning a vigorous fight against a lawsuit filed last month by the U.S. Department of Justice.

DOJ says the association would stifle competition if it goes ahead with a plan to allow members the option of withholding home listings from competitors' Web sites. Many of those competitors are nontraditional online services, which may "offer better services and lower costs," the agency said in a statement.

"There's not another business that is required to give their product to their (competitor) across the street," said Terry McDermott, the association's outgoing executive officer. "Apparently, the government thinks the Internet is some magical wonderland."

The dispute comes as the real-estate boom that's helped drive the U.S. economy is threatened by rising interest rates. Housing prices in many markets are at all-time highs and some home buyers and sellers have begun looking for ways to avoid real-estate agent fees, usually about 6 percent, by turning to nontraditional brokerage methods.

Most of the government's complaints are focused on the rules governing Multiple Listing Services, which are groups of competing brokers who agree to share real-estate listings. Participation allows a real-estate agent to show customers all the homes for sale in a given market.

Before the Internet, agents mailed or delivered listings to potential buyers. Now, a slew of online companies are offering brokerage services via password-protected Internet sites that allow customers to search databases on their own. When customers find homes they like, the Web site sends them to real-estate agents who then pay the Web site a referral fee.

These Web services cut costs by reducing the time a real-estate agent must spend assisting buyers with house-hunting.

The government maintains that Internet services are more efficient and result in "better service and lower costs to consumers." It also pressures real-estate agents to cut the commissions they charge.

Allowing agents the option of refusing to share listings with everyone is an attempt by the National Association of Realtors to protect commissions, say critics. Such a policy also hurts home sellers because their listings won't be available on every possible Web site, and that means they won't reach every potential buyer, according to the Justice Department.

"NAR's policy stifles competition to advantage some of its members at the expense of home buyers and sellers across the country," Bruce McDonald, deputy assistant Attorney General in the Department's Antitrust Division, said.

But why would any business hand over capital to competitors who don't offer anything in return, asked the association's lawyer, Laurie Janik. Rules for Multiple Listing Services require only real-estate agents who sell or list homes to have access to the listings. Unlike the Web services, traditional real-estate companies work hard to collect listings, often paying agents to hit the streets to find people who are selling their homes, Janik said.