DOJ sues MLS in South Carolina
Complaint alleges anticompetitive rules
By Inman News, Monday, May 5, 2008.Bookmarking Sites
The U.S. Justice Department has filed a lawsuit against a broker-operated multiple listing service in Columbia, S.C., charging that the MLS's rules restrict competition and drive up the cost of real estate services.
The civil antitrust lawsuit, filed Friday in U.S. District Court in Columbia, alleges that CMLS "requires brokers to perform a prescribed set of services, which limits consumer choice, and excludes competitors who might offer innovative options that could provide better services to consumers in that area."
The announcement was released late Friday, and representatives for the MLS could not immediately be reached for comment. The MLS has about 370 broker members that represent about 3,100 agents in the Columbia area.
MLS rules "prevent members from providing a set of brokerage services that includes less than the full array of services that brokers traditionally have provided -- even if a consumer prefers to save money by purchasing less than all of such services," the complaint states, adding that the rules require members to use a standard contract that "prevents its members from offering to a home seller the option of avoiding paying the broker a commission if the seller finds the buyer on her own."
The rules, the DOJ alleges, also "impose unreasonable objective criteria for membership and contain subjective standards for admission to membership that allow CMLS representatives to deny membership to brokers who might be expected to compete more aggressively or in more innovative ways than CMLS's members would prefer," which DOJ asserts could exclude such brokers or deter them from seeking membership.
Antitrust officials at the Justice Department and the U.S. Federal Trade Commission officials have engaged in a series of actions to oppose rules set by other MLSs that they have deemed to be anticompetitive.
The Federal Trade Commission is pursuing a complaint against a Michigan MLS, for example, over policies that restrict the MLS from sharing of broker-supplied property information with a variety of public-facing Web sites. A federal administrative law judge has found in favor of the Michigan MLS, Realcomp II, in that case, though the full panel of the Federal Trade Commission will consider whether to reverse that decision or uphold it.
The FTC has settled similar charges with several other MLSs.
In October 2007, the Justice Department announced an agreement with another broker-owned MLS in South Carolina -- MLS of Hilton Head Island Inc. -- over allegations that the MLS passed sought to regulate the price of brokerage services and passed rules that restricted competition. The MLS of Hilton Head Island acknowledged no wrongdoing in that settlement.
In its lawsuit against the Consolidated Multiple Listing Service in Columbia, the Justice Department seeks to permanently block the MLS from engaging in activities such as those alleged in the complaint, and to eliminate its rules that DOJ deems to "unreasonably restrain trade."
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Submitted by Lenn Harley on May 5, 2008 - 5:23am.
I don't believe that the Justice Department have the foggiest idea what is represented by the "Exclusive Agency" listing agreement. Most of the time it's used as a circuitous way of listing a For Sale By Owner.
Seems to me that if the MLSs wanted to get serious about these matters, they's work to eliminate the "Exclusive Agency" listing altogether.
Lenn Harley
Broker
Homefinders.com
http://www.homefinders.com
Submitted by Rochelle Jonswold on May 5, 2008 - 6:52am.
The DOJ has lost sight of the fact that the real estate brokers own most of these MLS systems and they are not public institutions. As the owners of these private services we should be able to establish a set a rules and guidelines that our membership has to follow.
For the same reason you won't want to represent yourself in court while the other party has an attorney, we should't encourage a seller not to have representation when the buyer has a buyer's agent. Often these unrepresented sellers expect the buyer's representative to help them thru the transaction which could lead to a violation of agency law by establishing an implied agency relationship with the seller and at the same time appearing to not be in the best interest of the buyer.
Submitted by michael blatney on May 5, 2008 - 7:55am.
I have so many issues with the DOJ and so little space in this blog. The DOJ is strong arming all MLS agencies throughout the country and something should be done. Our MLS systems are owned, operated and paid for by the agents and brokers. In my market, our MLS board fears the DOJ and has given way to the requirement of minimum service by the broker/agents. The result is free MLS listings where the sellers represent themselves in transactions. They offer the minimum commission the system will accept in order to eliminate paying an agent and thereby eliminating agent involvement. This is going on while the broker/agent pays for the very tool the DOJ is forcing the MLS agencies to open up to the public. I am a broker and I am now considering not renewing my license. I can get everything I now pay for without paying the expensive fees. My thirty years of maintaining my education and paying expensive dues is being cheapened by a Federal Agency who is reacting and strong arming MLS agencies into submission. Leave it to the federal government to create problem while attempting to resolve an issue. If the public wants to use our MLS then they should pay the same fees I do and be required to have the same knowledge I do.
Submitted by Lawrence Bunnell on May 5, 2008 - 10:08am.
The issue here, and the reason for DOJ interest, is whether or not the MLS is impeding competition by it's rules and regulations. Columbia MLS rules are constructed to keep competition and new models from entering the marketplace in Columbia. For instance, a rule that your licensed real estate, Realtor member company cannot join an MLS because the company's ofice location is not within 50 miles of the city is clearly designed to keep out newer models. The 'old boy' system there actually hurts consumers by not allowing choices in real estate services. The proper way to handle issues like whether or not the seller mistakenly believes that they should get assistance from buyer's agents is through informed consent and disclosure, not imposition of rules designed to protect one class of Realtor or business model over another. Limiting consumer choice by effecting rules that favor one type of model over another isn't allowed in any other professional industry and shouldn't be tolerated in our profession either.
Submitted by Anthony Nichols on May 5, 2008 - 9:39pm.
The DOJ & FTC are just lockstepping with a certain federal administration's hellbent penchant for deregulating anything and everything; pandering to special interest greed at the publics detriment. The limited service model does nothing to protect the peace, health, or safety of Buyers and Sellers and only increases the potential for waste, fraud, and abuse. It's a cut your nose to pad your pocket practice under the guise of giving consumers choice. Oh heck, why worry about a little DDT in the water supply?
There are five elephants in the room that limited service proponets, along with the FTC and DOJ, all seem to be perfectly willing to ignore.
Five Consequences of Limited Service Listings
• Listing Agent is not required to provide their Seller client the benefits and protections of licensing, continued education, and professional codes of conduct.
• Sellers are not bound by licensing requirements, continued education requirements, professional codes of conduct, or other rules and regulations governing licensees.
• Buyers Agent now has the burden and liability of educating and consulting BOTH their Buyer client, AND the Seller, on each and every negotiable point in a purchase agreement, each and every issue of the due diligence period, as well as each and every issue of the escrow process.
• Even with a waiver of liability, a Buyers Agent is still compromised when negotiating with both principals. You can't waive the potential consequences of dual agency; they're inherent.
• With a waiver of liablility, uscrupulous Buyers Agents are free to ride roughshod over an uneducated or inexperienced Seller.
It's a fact that in order for the limited service model to work, two waivers are required; one relieving the Sellers Agent of most of their responsibilities, and one relieving the Buyers Agent of liability when speaking directly with the Seller. Kind of reminds me of one of those hillside mansions resting on two skinny stilts.
So now when a Buyers Agent is faced with answering a Sellers 20 questions or killing the deal; what choice do you think they'll make? And if they choose to answer the Sellers 20 questions; will those answers be in the Sellers best interest, or the Buyers? Remember, the Buyers Agent now has a waiver of liability.
When you go to your dentist, doctor, lawyer, accountant, mechanic or what have you; do you pay them a fee to post your need on some database and then wait for someone you don't know, who doesn't represent your best interest, and who has a waiver of liability (should you be harmed), to service your needs?