Our system of MLS’s is a wonder of businesspeople getting together to expand competition and serve the public, while also serving their own interests. Broker reciprocity is a wonderful idea that has created an enormous real estate industry which, because real estate agents are all independent contractors, also remains vibrant and competitive. So, you’d think that a Republican administration who loves big business would leave us alone, right?
Nah. Not so much.
The FTC has been trying to treat the MLS as a publicly-owned and regulated utility (which, as a stockholder of our local MLS, truly amazes me) by telling these organizations who can be members and trying to have their rules and regulations overturned in court. In October 2006 the government filed suit against a Detroit-area MLS because they had prohibited “exclusive agency” listings from appearing in the database. The current crop of discount brokers love to use these type of listings for a variety of reasons, but to try and get around legal jargon, these type of listings basically turn the MLS into a bulletin board for properties that are glorified “For Sale By Owner” properties. Most of these brokers want you to contact the owner directly to set up showings, and if a buyer contacts the owner directly, that owner has no obligation to pay any commission. Since buyers routinely surf housing sites that pull information directly from the MLS, the possibility that a buyer could contact a Seller directly and completely avoid the services of a real estate agent, or paying for those services, is fairly high.
Now, there are quite a few “FSBO” websites out there, so there really is no reason why the stockholders of the MLS should have to provide another opportunity for Sellers to evade paying for their services. Thank goodness a judge has finally had a chance to look this case over and basically agree with the real estate industry. Judge Stephen J. McGuire found that the government’s assertion that the MLS had tried to “unreasonably” restrain or “substantially” lessen competition had not been adequately proven, since discount real estate services still remained widely available in the region.
The story, in today’s version of the Wall Street Journal, is some good news in the middle of a bleak real estate outlook. The government will appeal the case, unfortunately, but a first round win is a sweet one, indeed.