Realty Times September 7, 2006

NAR Warns Real Estate Boards What To Do About DOJ/FTC Probes
by Blanche Evans

It's a sad day when a legally run American organization has to resist its own government's interference with its operations, but the National Association of Realtors has to do exactly that.

In a recent press release, the NAR said that the Federal Trade Commission (FTC) may be seeking to wrap up its antitrust investigations of 14 multiple listing services shortly. Each of these investigations focused on the treatment of exclusive agency listings by the MLS, and in particular, whether exclusive agency listings were included in IDX feeds and included in advertising on third party websites such as REALTOR.com. Should the FTC decide to take any action against any of them, announcements will probably have been made either late last week or shortly after Labor Day.

Labor Day has come and gone, and no announcements have been made as yet.

NAR has been informed that at least one MLS has signed a consent order and other MLSs are under pressure to do same, but we all know what happens to MLSs that sign consent orders -- they're pilloried in public by the FTC which uses the one-sided opportunity to make the MLS appear as guilty as sin after they sign with press releases, conference calls with media and interviews with selected members of the press -- as it did to the Austin Board of Realtors following its well-intentioned signing of a consent order.

"In July, the FTC charged the Austin Board of Realtors (AboR) with violating antitrust laws because of an MLS rule initially established to promote listings to benefit members. The board rescinded the rule two months after it took effect because they found it confusing and that it didn't work as the board intended. AboR agreed with the FTC not to reinstate a similar policy," explains the NAR.

"Even though the terms of the settlement had been agreed to months previously, the FTC called a national news conference at its headquarters in Washington, complete with a phone bridge hook-up for reporters nationwide, to publicize its complaint and release the terms of the consent order. This is standard operating procedure, claims FTC watchdog Skip Oliva, founder of The Voluntary Trade Council, a grassroots research and education free market group highly critical of FTC and DOJ (Department of Justice) tactics. "The FTC and DOJ are targeting the online real estate industry for a reason -- to gain control of online access," says Oliva. Real estate listing sites are only the beginning.

"We are disappointed that the FTC's press release implies that we are guilty of wrongdoing -- which the agreement expressly contradicts -- and that the spirit of cooperation with which the FTC and AboR negotiated the consent order did not translate to the FTC's public statement," said AboR President David Foster.

AboR may have signed for the same reason other MLSs may sign -- the threat of having a complaint filed that will be expensive to defend. However, the alternative -- public humiliation and the strong wording of FTC officials that make it appear that defending MLSs are guilty of whatever they are accused of -- may be just as bad as taking the FTC on in court. If it happened to AboR, it's likely to happen to any other MLS that signs a consent order with the FTC.

"We do not have more details to share about the cases at this time," warns a NAR release, "However, it is our understanding that the FTC is pushing for consent orders from certain MLSs, and complaints may be filed if the MLSs do not sign. Boards and MLSs involved in these cases should be prepared for the FTC to seek maximum publicity for its position, even if a case is settled and a consent decree signed. By choosing a slow news time like Labor Day to make an announcement, the FTC is seeking maximum coverage for a story of minimal news value.

Here's what the NAR says that Realtor boards should do in preparation: If your MLS has been involved in the FTC antitrust investigations in recent months, you should:

  • Monitor the FTC's Office of Public Affairs website to see if a news conference or news briefing is scheduled. The agency may give only a few hours notice if it is holding a news event, and no notice at all if it is simply issuing a news release.

  • Touch base with your MLS's legal counsel to ensure that you know as soon as possible if the FTC notifies them of any public announcement.

  • Prepare talking points that anticipate the worst. Be assertive and never defensive. Speak to the real estate consumer's point of view. Use images to make a point ("Because of our policies, people can search for homes in their bedroom slippers," "Our security policies are like identity theft protection for your home," "Their announcement is like flipping the coin for the kickoff after the game has already been played. We've already resolved the problem.")

  • Prepare a draft statement based on your talking points. Don't try to anticipate what the FTC might say. Keep it brief and focused on YOUR message.

  • Be sure you have a spokesperson available for interviews on Friday and Tuesday. Prepare him/her with no more than three key messages that you will want to convey in any interview.

  • Make sure your local press lists are up to date.

  • Should news break about your MLS, BE PROACTIVE. Don't wait for your local media to call you. Call them. Get out in front of the story so that you can get your spin out and influence the direction coverage will take. Your proactivity will be a critical factor in how the news is covered.

  • Only speak to the media, or others, with the advice and approval of your attorney.

  • If your local MLS is not directly involved in these investigations, do not comment and forward the inquiries to NAR.

To assist other MLS executives who may find themselves speaking to the press, NAR recommends the following general talking points on MLSs and competition. Specific details and talking points should be prepared locally by the MLS in question based on its specific circumstances. They should be short and to the point, and be formatted with the advice of your attorney.

  • Multiple Listing Services are a powerful force for competition. The MLS levels the playing field so that small brokerages and new entrants can have the same access to this information as large and established ones. They make it easy for sellers to reach buyers and for buyers to find the right property.

  • The American MLS system is so successful that many foreign countries are now establishing MLS systems based on the U.S. model.

  • In the most recent NAR survey of homebuyers, 77 percent reported that they used the Internet to search for homes. A powerful tool for distributing critical market information, the Internet was rarely used by the general public as recently as ten years ago. In large part, MLSs make this new avenue possible.

  • NAR supports all business models and favors none. Realtors are some of the greatest entrepreneurs in America. We're always looking for innovative ways to provide the services real estate consumers want.


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