The VOW debate is back. Like a vampire at daybreak, this is a dispute which should have been finished long ago. Rather than handing out wooden stakes, the federal government is instead continuing a potent consumer nightmare by raising the wrong issue for the wrong reasons.

To understand what's happening, let's return for a moment to pre-Internet times. In 1990, broker Smith would list a home, enter it into the local MLS and then Smith and other MLS-member brokers would market and show the property.

With the establishment of the Internet as a commercial and communication vehicle, the question has been how the old process of local marketing could be expanded online.

One strategy has been to create IDX -- the Internet Data Exchange system. With IDX, MLS member brokers can post listing information and photos online -- but not a lot of information. Like a newspaper ad, the idea is to generate interest in seller properties and encourage consumer contact.

This is an attractive situation for consumers because it means buyers and sellers can go to thousands of websites, not pay a dime, and look at enormous numbers of local homes. There is no requirement to leave a name or contact information and no obligation to engage one particular broker.

Of course, the Internet can be used for more than marketing and communication. It can also be used for commerce and contracting, notions which bring us to VOWs (Virtual Office Websites).

Here we have something which looks like IDX but the rules are different. More information regarding an individual listing is available with a VOW, but to gain access consumers must register. During the registration process, consumers can also be asked to enter into a buyer brokerage and listing agreements online. Given the acceptance of electronic signatures, it's possible to create an instant online contract which may obligate consumers to pay thousands of dollars in commissions.

Under guidelines established in May 2003 by the National Association of Realtors, individual brokers are not required to add their MLS inventory to a VOW system. However, the Justice Department feels that the right of brokers to opt out of VOW systems is unfair and anti-competitive. NAR, at its just-completed meeting in Washington, has now agreed to reconsider its VOW policy and possibly adopt new standards by January 1, 2006.

One debate, as always, concerns money and who will get it under whatever VOW rules are finally adopted. However, rather than deciding whether MLS broker participation is optional or mandatory a more important issue should be this: Is it in the public interest to have executable listing contracts, buyer brokerage agreements and purchase agreements available online?

Binding contracts that can be created instantly and easily with an electronic signature should make everyone uncomfortable. For instance, before completing an online listing agreement can consumers negotiate fees and terms -- or are all terms pre-determined? Can consumers get authoritative information if a broker has not physically seen a property, walked the neighborhood or works 200 miles away? Can consumers ask questions? Is it okay for an online buyer brokerage agreement to have a term of 20 years? Such an Internet agreement was discussed at last year's meeting of the Association of Real Estate License Law Officials in Portland, OR.

Some brokers who now use a VOW do not rely on the electronic forms they receive. Instead they follow-up with traditional paperwork once an online form has been completed. The reason for such prudence is that VOW operators do not want to contract with someone who lacks capacity (such as a minor), completes a form in error or without a spouse, or is the victim of identity fraud.

Of course, if firms are going to follow-up Internet leads with paper, phone calls and personal contact then you have to wonder why an online agreement is needed in the first place.

My wife and I recently decided to list an investment property for sale. To win our business, an experienced local broker provided a pile of paperwork for review a week before our listing appointment and then after two hours of debate, discussion, advice, counsel and haggling we came to terms.

By itself the listing contract in my community ran four pages -- plus two pages for local rules; one page to allow intra-company representation; two pages to explain what a broker is; one page to list fixtures; four pages for a state disclosure form; six pages to address government regulations, easements and assessments; an equal housing brochure; and a lead paint pamphlet as well as other lead disclosure materials.

Does anyone really believe that such paperwork and the associated questions it provokes can be resolved without personal contact? Without exchanging ideas? Without challenges and objections? Without a meandering discussion? Without direct answers from an experienced broker? With the same terms and conditions as other local listings?

VOWs are possible because we can now create online contracts with electronic signatures. However, the Electronic Signatures in Global and National Commerce Act ("E-Sign") does not allow all documents to be signed electronically -- wills and trusts, as examples, must be signed by hand.

The VOW debate can be immediately resolved by amending the e-sign law. Because of the importance of such paperwork, the use of electronic signatures for listing agreements, buyer brokerage contracts and purchase agreements should be prohibited. Like wills and trusts, core real estate documents have enormous financial significance and for this reason should only be signed in person and after considerable thought and debate -- not instantly with the click of a mouse.

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