inside real estate
Inside Real Estate
Realtors, Regulators Wrangle Over Access To Home Listings
Dawn and Carl Weinberger sold their home west of Portland, Ore., by themselves in the kind of deal that gives traditional, full-service real estate agents indigestion.
Using a discount broker, the Weinbergers paid $295 to put their three-bedroom rancher on the complete, up-to-date, multiple-listing service accessible only to brokers. The listing specified they'd pay a 2.5% commission to an agent who brought them a buyer.
In three weeks the house drew two bidders and sold for $202,000, just above the $199,500 listing price.
Such sales tactics have spread the past few years as home prices have climbed. And they've become a battleground where real estate groups claiming the right to protect their livelihood and sales lists are facing off against antitrust regulators.
Among the skirmishes is a federal suit against the National Association of Realtors under way in U.S. District Court in Chicago.
The suit is over a policy that let brokers pick which competitors could see their listings by limiting access via password.
By suing and scolding local and national realtor groups, regulators aim to force them to accept what appears to be the inevitable dismantling of the commission system that controlled how Americans sold property the last 60 years.
The Weinbergers' sale shows what's at stake. In all, the couple paid $5,434 to sell their house, including the commission, listing fee and $89 for an unlimited number of professional-looking lawn and other signs from the discounter, ForSaleByOwner.com. That was $6,686 less than the $12,120 they would have paid a full-service agent charging the usual 6% commission for their area — and most of the U.S.
The savings were enough, Dawn Weinberger says, to pay for cherry hardwood floors and upgraded appliances in their new home.
Real estate groups aren't happy with such deals. They've tried to enforce rules limiting access to the multiple-listing service. And they've lobbied states, sometimes successfully, to pass laws mandating minimum real estate services or barring commission rebates.
The Federal Trade Commission and the Justice Department took an interest three years ago. Kentucky passed a regulation that kept brokers from offering commission rebates or inducements like gift certificates to woo clients.
The Justice Department sued, charging the rule violated the antitrust Sherman Act and forced consumers to pay higher prices. Kentucky withdrew the regulation, as did other states with similar rules.
From there, the Justice Department took notice of pending legislation in several states that essentially made it illegal for discount brokers to offer minimum services if they put the customer's property in the multiple-listing service.
Various forms of the laws have been passed in 15 states, most recently Texas, Missouri and Illinois.
When such a law came before Michigan's legislature early this year, the Justice Department and FTC pushed to prevent its passage. The bill stalled in committee.
"We see no reason for limited-service brokerage restrictions — no evidence that any consumers have been harmed" by using discount brokers, said Maureen Ohlhausen, director of the FTC's Office of Policy Planning.
Finally, the Justice Department took on rules that the National Association of Realtors created to make it hard for discount brokers to fully use the multiple-listing service. Brokers did not have to tell sellers their listings would be withheld from some buyers. The Justice Department suit called this restraint of trade. "Many brick-and-mortar brokers fear the ability to use Internet technology to attract more customers and provide better service at a lower cost," the complaint in the Chicago court claimed.
As the suit was being filed, the Realtors group did away with selective listings. It set a new rule barring any broker who subscribes to a multiple-listing service from listing homes on the Web without approval of the seller's agent. The rule also forbids Web-based brokers from referring customers to other brokers for a fee.
The Justice Department refiled the suit. On Dec. 6, the realtors filed for dismissal. The government has 60 days to reply.
The National Association of Realtors maintains the government has overstepped its bounds.
"The MLS isn't a public utility and it isn't eBay," said Steve Cook, NAR vice president of public affairs. "The MLS is a private database paid for and maintained by member real estate professionals to provide information to each other."
Out in the trenches, real estate agents are less concerned about matters of principle than they are about preserving a way to make a living.
"When discount agencies get involved, the commissions go down," complained Diane Saatchi, vice president of Corcoran Group, a full-service firm in New York City and the Hamptons on Long Island. "In many cases, the hourly rate would be better if I were cleaning houses rather than selling them."
Other agents say if you can't beat 'em, join 'em. Patrick Whitty has been in the real estate business in Tualatin, Ore., for 16 years. He worked as an agent, then as a broker in a large agency. He belongs to local and national realtor groups.
Three years ago, he idly Googled FSBO, the acronym for For Sale By Owner, and was startled by the number of listings that popped up.
"It blew me away," he recalled. "I said, 'If I don't get ahead of the curve, I'm going to be left behind.' "
Whitty started his own agency, Premier Properties. He offers home sellers various discount packages from as low as $295 to a full-service offering at 4%, still a bargain in a 6% world. Business is brisk. He can afford to ignore the attitudes of realtors who see him as a threat.
"They say to me, 'Pat, why are you doing this to us?' I say, 'I'm not doing anything. Times are changing. People are mad about having to pay $20,000 to $30,000 to sell their house. Either we come up with ways to assist these people, or they will find a way to get around us.
Real Estate
Realtors, Regulators Wrangle Over Access To Home Listings
Dawn and Carl Weinberger sold their home west of Portland, Ore., by themselves in the kind of deal that gives traditional, full-service real estate agents indigestion.
Using a discount broker, the Weinbergers paid $295 to put their three-bedroom rancher on the complete, up-to-date, multiple-listing service accessible only to brokers. The listing specified they'd pay a 2.5% commission to an agent who brought them a buyer.
In three weeks the house drew two bidders and sold for $202,000, just above the $199,500 listing price.
Such sales tactics have spread the past few years as home prices have climbed. And they've become a battleground where real estate groups claiming the right to protect their livelihood and sales lists are facing off against antitrust regulators.
Among the skirmishes is a federal suit against the National Association of Realtors under way in U.S. District Court in Chicago.
The suit is over a policy that let brokers pick which competitors could see their listings by limiting access via password.
By suing and scolding local and national realtor groups, regulators aim to force them to accept what appears to be the inevitable dismantling of the commission system that controlled how Americans sold property the last 60 years.
The Weinbergers' sale shows what's at stake. In all, the couple paid $5,434 to sell their house, including the commission, listing fee and $89 for an unlimited number of professional-looking lawn and other signs from the discounter, ForSaleByOwner.com. That was $6,686 less than the $12,120 they would have paid a full-service agent charging the usual 6% commission for their area — and most of the U.S.
The savings were enough, Dawn Weinberger says, to pay for cherry hardwood floors and upgraded appliances in their new home.
Real estate groups aren't happy with such deals. They've tried to enforce rules limiting access to the multiple-listing service. And they've lobbied states, sometimes successfully, to pass laws mandating minimum real estate services or barring commission rebates.
The Federal Trade Commission and the Justice Department took an interest three years ago. Kentucky passed a regulation that kept brokers from offering commission rebates or inducements like gift certificates to woo clients.
The Justice Department sued, charging the rule violated the antitrust Sherman Act and forced consumers to pay higher prices. Kentucky withdrew the regulation, as did other states with similar rules.
From there, the Justice Department took notice of pending legislation in several states that essentially made it illegal for discount brokers to offer minimum services if they put the customer's property in the multiple-listing service.
Various forms of the laws have been passed in 15 states, most recently Texas, Missouri and Illinois.
When such a law came before Michigan's legislature early this year, the Justice Department and FTC pushed to prevent its passage. The bill stalled in committee.
"We see no reason for limited-service brokerage restrictions — no evidence that any consumers have been harmed" by using discount brokers, said Maureen Ohlhausen, director of the FTC's Office of Policy Planning.
Finally, the Justice Department took on rules that the National Association of Realtors created to make it hard for discount brokers to fully use the multiple-listing service. Brokers did not have to tell sellers their listings would be withheld from some buyers. The Justice Department suit called this restraint of trade. "Many brick-and-mortar brokers fear the ability to use Internet technology to attract more customers and provide better service at a lower cost," the complaint in the Chicago court claimed.
As the suit was being filed, the Realtors group did away with selective listings. It set a new rule barring any broker who subscribes to a multiple-listing service from listing homes on the Web without approval of the seller's agent. The rule also forbids Web-based brokers from referring customers to other brokers for a fee.
The Justice Department refiled the suit. On Dec. 6, the realtors filed for dismissal. The government has 60 days to reply.
The National Association of Realtors maintains the government has overstepped its bounds.
"The MLS isn't a public utility and it isn't eBay," said Steve Cook, NAR vice president of public affairs. "The MLS is a private database paid for and maintained by member real estate professionals to provide information to each other."
Out in the trenches, real estate agents are less concerned about matters of principle than they are about preserving a way to make a living.
"When discount agencies get involved, the commissions go down," complained Diane Saatchi, vice president of Corcoran Group, a full-service firm in New York City and the Hamptons on Long Island. "In many cases, the hourly rate would be better if I were cleaning houses rather than selling them."
Other agents say if you can't beat 'em, join 'em. Patrick Whitty has been in the real estate business in Tualatin, Ore., for 16 years. He worked as an agent, then as a broker in a large agency. He belongs to local and national realtor groups.
Three years ago, he idly Googled FSBO, the acronym for For Sale By Owner, and was startled by the number of listings that popped up.
"It blew me away," he recalled. "I said, 'If I don't get ahead of the curve, I'm going to be left behind.' "
Whitty started his own agency, Premier Properties. He offers home sellers various discount packages from as low as $295 to a full-service offering at 4%, still a bargain in a 6% world. Business is brisk. He can afford to ignore the attitudes of realtors who see him as a threat.
"They say to me, 'Pat, why are you doing this to us?' I say, 'I'm not doing anything. Times are changing. People are mad about having to pay $20,000 to $30,000 to sell their house. Either we come up with ways to assist these people, or they will find a way to get around us.
Real Estate
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