Yahoo! Real Estate has found a way to increase listings on its portal with MLS-supplied listings courtesy of eRealty. The arrangement is exclusive in Austin, Boston, Chicago, Dallas/Fort Worth, Houston, Washington D.C., San Diego, and Los Angeles, making some brokers upset at being shut out of these areas. Sour grapes? Or, has eRealty found the world's cleverest loophole in MLS data display policies?

That raises a number of interesting questions for the National Association of Realtors (NAR) and individual MLS organizations as they review the intent of their data display policies.

eRealty fought this battle two years ago when it was sued by the Austin Board of Realtors for posting MLS listings on its Web site "without permission," said the Realtor organization at the time.

Yet eRealty felt within its rights to offer the same data online that buyers and sellers could obtain from their agents via the fax machine or by looking at a MLS book. Why shouldn't brokers be able to show the same data online?

eRealty was willing to put the question to the test, claiming that it was making MLS listings available to its own bona fide customers and clients via its "VOW" (virtual office website.) According to Capper, a VOW allows entry to MLS listings only to people who sign a user agreement.

Shortly following a statement from the judge that eRealty appeared to be in compliance with the MLSs' rules, the case was abruptly settled out of court with the terms under non-disclosure.

Many industry watchers believed this suit was the reason why the NAR implemented an Internet Data Exchange policy - to give the same lead generation opportunities to brokers as MLSs had given to national aggregators. NAR mandated that MLSs have an electronic 'broker reciprocity' solution in place by January 2002, so that consenting brokers could advertise multiple listings to bring consumers to their company/personal Web sites.

Such industry-changing results were flattering to eRealty, but eRealty says its business model has never included participating in IDX, and that statement may put the company right back in the line of fire.

In its new partnership with Yahoo!, eRealty holds all the listings in eight important relocation destinations. When consumers want to see homes in these areas, they are directed to the eRealty network and met with eRealty's terms of use which include capturing the e-mails of Internet homebuyers and sellers.

Is this the way data display policies were intended to be used?

Steve Cook, spokesperson for the NAR explains, "IDX (Internet Data Exchange) is locally focused, and it is not intended to create regional, state or national aggregations of listings. The NAR IDX policy limits the rights to display other participants' listings in any environment which can't be reciprocated by participants."

But eRealty claims special exemption as a VOW, not an IDX site. While the eRealty/Yahoo! arrangement is an exclusive partnership which shuts other participants out on the selling side, eRealty is able to do so by the NAR's own definition of what a VOW is. A VOW is "the equivalent of a brick and mortar office where potential purchasers enter, describe the property being sought, provide contact information, and receive listing information responsive to their stated needs," according to a NAR white paper.

"This is the way we have always operated," says eRealty's CEO, Russell Capper. "We do not believe in opening the MLS database to consumers, and we work with our attorneys and with Realtor organizations to be certain that we are in compliance with MLS rules and regulations."

Capper's cleverness is impressive, but will it be enough to squash the sour grapes?

"It's possible the MLSs in all eRealty's markets will say what they are doing is OK," acknowledges Cook, "but the intent is not to allow a local broker to create a national aggregation of listings."

Jim Harrison, CEO of North Texas Real Estate Information Systems, Inc., says NTREIS is looking at legal alternatives.

"I want to make sure we approach this carefully as we don’t want to get in the way of brokers' marketing properties," says Harrison, "but Yahoo! is a national listings aggregator, and we don’t authorize our members to take our entire database to give it to any national aggregator or to sell it to them."

Point of clarification, says Yahoo!. "eRealty isn't “sharing” listings with Yahoo!," says Ryan Roslansky, product manager for Yahoo! Real Estate. "Yahoo! is linking to eRealty in the eight markets listed above in a co-branded eRealty/Yahoo! environment on the eRealty servers and the eRealty web site.

"This service provides Yahoo! Real Estate users with access to comprehensive and specific market data and listings from eRealty, a recognized leader in online and offline residential real estate."

Published: February 26, 2002

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