CHICAGO – A battle appears to be heating up between Realtors, who want to be able to block access to listings via the Internet, and the U.S. Justice Department, which regards the practice as anti-competitive.
Consumers shopping for property as well as sellers have major stakes in the issue.
The National Association of Realtors, the 1.2 million-member trade association of full-service agents, wants to allow brokers to limit listings on the Internet and therefore access to those listings by online brokers, who often charge less than the traditional full-service 6 percent commission.
“The Antitrust Division is investigating the potential competitive impact of certain rules involving the display of residential real estate data over the Internet,” Gina Talamona, a Justice Department spokeswoman, said Monday.
The NAR plans to implement its new rules via a change in its bylaws that would go into effect in July.
The Justice Department also has sent warnings to state legislatures this spring not to pass bills that would squeeze out low-cost brokers by changing requirements for holding a brokerage license. And Justice has sued a real estate regulatory agency in Kentucky for prohibiting rebates on sales commissions.
“The antitrust question is whether the NAR’s policy keeps real estate commissions higher,” said Steve Bochenek, legal counsel for the Illinois Association of Realtors.
NAR, Bochenek said, contends that its members have the right to protect their property, the listings. “That may have to be decided in court,” he said.
One online firm, Zip Realty, promises to cut commissions up to 25 percent by relying on an Internet-based approach. “It’s all about the interest of consumers,” said Pat Lashinsky, vice president for marketing at the California-based discount brokerage. “I’m glad the Justice Department is stepping in to represent the consumer.
“NAR wants to allow brokers to pick and choose which listings will go on the Internet. But consumers want to see all homes on one site,” Lashinsky said Monday.
“Sellers want their home to be seen by the most potential buyers in order to get most for their home,” Lashinsky continued. “Consumers lose if the listing is not shown everywhere. I think consumers will take an interest in this NAR bylaws change.”
Real estate listings used to be closely guarded by agents, who had a near-monopoly in uniting buyer and seller.
The Internet promised to make house hunting easier and faster. That has happened. The NAR reports that more than 70 percent of buyers use the Internet in their home search.
Ed Watts, an agent at Prairie Shore Properties in Wilmette, Ill., said he can flag a listing so that it does not go on the Internet. “But I don’t know why any agent would not want a listing on the Internet. There’s no such thing as bad exposure.”
But some brokers, especially smaller ones who don’t want to risk losing part of the commission on a property, want to protect their listings.
One issue is the usual commission charged by traditional brokers, usually 6 percent of the sales price.
“We’re not against discounting. This is America. It’s commerce,” said Judy Gardner, president of her own real estate firm in Plainfield, Ill.
“I’m the queen of tech, but real estate sales require a high degree of the human factor in negotiating. Online discounters say they are going to help you sell your house. But most people need a guide, a professional on their side,” Gardner said.
“As far as online listings, the genie is out of the box. Most listing information already is out there on Realtor.com,” Gardner said.
Marie Fitzpatrick said she and her husband, Brian, used the Internet extensively in a home search in Chicago. “Everyone should do it. You can access it 24/7. We found that 99 percent of listings are available on the Internet, but sometimes there is a 24- to 48-hour lag in the time the broker took the listing before it was posted on the Internet.”
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AP-NY-05-09-05 1952EDT
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