The Realty Alliance, an association of 45 U.S. residential real estate brokerage firms representing more than 60,000 Realtors®, commissioned a consulting firm to create a report on the NAR's Electronic Data Display (EDD) Policy which the NAR says will be approved after guidance from members by the board of directors at the November national convention.

The Realty Alliance white paper was intended for members of the NAR's Internet Marketing Work Group which was appointed by NAR President Martin Edwards to form a national association EDD Policy. The Work Group put together its findings in a preliminary policy in May 2002, and then asked the general membership for feedback so that it could make a final policy proposal to be approved by the board of directors in November.

With providing feedback to the NAR in mind, Realty Alliance commissioned Tendal-Larson, a consulting firm, to analyze the current policy proposal and its potential impacts on members, to interview Realty Alliance members to determine their views on the issues addressed by the EDD proposal, and to assist The Realty Alliance in developing its own position, says Charles McKee, president and CEO of the Realty Alliance. The result is a 68-page report entitled "Electronic Data Display: Real-world impacts of NAR's proposed virtual brokerage policy."

The report looks into IDX (broker reciprocity or Internet data exchange by participating brokers) and Virtual Office Websites (VOWs) which are characterized by the NAR as the electronic equivalent of a brick and mortar office.

"Our goal in producing the white paper was to inform and educate our membership on what we believe to be a very important issue," explains McKee. "Our intention was not to challenge NAR but to provide them with our view of how we feel the EDD Policy should be written. We hired Brian Larson to do the report because he is recognized as an expert in this field. We have had preliminary discussions with NAR on the issue and we believe everyone will have a chance to share their input prior to a decision being made."

Says Brian Larson, author of the report, "We contacted brokers by phone and e-mail and 15 responded (a third of TRA's member firms). Others responded after the deadline and so their "votes" were not tallied, but they ran consistent with the ones received by the deadline. In all nearly 20 firms responded."

Key points in the white paper are that the NAR's preliminary findings, should they be adopted by the NAR as policy, may "stunt" IDX initiatives and may "decrease the amount of listing data in IDX." The white paper actively discourages that part of the policy that would require "brokers to obtain the permission of their competitors in order to deliver full brokerage services online." Already, points out the report, markets such as Chicago have only about 35 percent of active listings available in its local IDX program. Since IDX is an opt-in or opt-out choice for brokers, this low adoption can only be due to lack of participation by some brokers.

Other MLSs, at no penalty from the NAR, are dragging their feet in implementing IDX policies although they were told to have done so by January 2002. Meanwhile, other MLSs are making it difficult for members to have MLS listings on IDX sites. The report says that a Realty Alliance member told researchers that an Orange County, CA coastal MLS is "making every effort to prevent firms, especially ones that also function outside that area, from putting the MLS's listings up on IDX sites."

Since the report is a study on the possible impacts of the NAR's EDD Policy, there is no question that the report is a challenge to the NAR to do more due diligence before erecting its final policy. The report even takes the NAR's Work Group to task as it claims that the Work Group's proposal was "prepared in haste" during several meetings before the May board of directors meeting. The report goes on to conjecture that the Work Group may be operating with some bias as "we suspect that one or more of the more influential members of the Work Group is strongly opposed to the idea of VOWs."

The white paper provides argument that the Work Group's purposes - to protect MLS data from misappropriation and use by other than brokers and their customers and to allow listing brokers the right to exercise their right to "control how their listings will be used and displayed by other participants" - may be concepts that are ill-conceived.

First, the policy, states the white paper, does nothing to advance data security and could be counter-productive by making listings available to consumers who don't have to identify themselves.

Second, listing brokers should not be in charge of the medium that cooperating brokers use to present listing data. The MLS is already a cooperative and should not be a means for conservative brokers to prevent innovative brokers from delivering listing information in a way that consumers and brokers want, if it is a means where the "listing broker's interests are not harmed in some real way."

The white paper maintains that the Work Group intends to "erase the distinctions between VOWs and IDX" by allowing listing brokers to determine what is a consumer-directed search and retrieval of MLS information. The Realty Alliance members believe that IDX and virtual brokerage are separate issues and should be treated as such.

Realty Alliance members support electronic brokerage and would like to see IDX left "essentially as it is," and any new policy to affect VOWs only. They would also like to see reasonable regulation of VOWs as well as "reliable feeds of all necessary data" from MLSs, including off-market data and identification of confidential fields.

Realty Alliance members were contacted by Tendal-Larson via e-mail to respond to questions. Eleven brokerages responded.

Their conclusions were:

• The Realty Alliance supports the freedom of real estate brokerage firms to deliver via electronic means any brokerage service that can now be delivered via traditional means
• The Realty Alliance recognizes the need of meaningful and reasonable regulation of virtual brokerage, taking into consideration the special problems and risks associated with electronic delivery of data
• NAR and MLS policy should recognize that some regulations of electronic data display should related to virtual brokerage and to IDX; others should relate only to IDX or only to virtual brokerage
• Virtual brokerage requires use of listings of the same statuses that traditional brokerage does. Brokers should therefore be permitted to disclose to consumers through their virtual brokerage facilities all the same data fields and listing statuses they can disclose through traditional brokerage, and under the same terms
• MLSs should not impose limitations on virtual brokerage or IDX unless those limitations have been approved first by the NAR
• MLSs should provide effective data feeds for brokers operating IDX sites and virtual brokerage facilities

Interestingly, in its discussions, all agreed that VOWs should be limited to firms that "actually provide brokerage services," and not available to firms "that are purely referral businesses or focused on other business activities" but this did not make it into Realty Alliance's list of recommendations for the NAR.

Says Larson, "In fact, the policy language proposed to NAR in Appendix 7 (and NAR's existing IDX policy) already address this issue (App. 7 Sec. 6(i)): 'MLSs may prohibit electronic display by Participants who are not engaged in real estate brokerage. A Participant may satisfy this requirement by maintaining an office or Internet presence from which Participant is available to represent real estate sellers or buyers (or both).'"

Published: September 16, 2002

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