The recent virtual office Website (VOW) policy approved by the NAR board of directors at the mid-year meeting a little over a week ago is going to create more work for state regulators as they pore over the VOW policy and its directives regarding advertising and broker relationships.

Teresa Hoffman, president of The Association of Real Estate License Law Officials, (ARELLO) says, "Our law committee is studying the recent actions by NAR regarding VOW's, and I expect a written report soon."

Hoffman says she won't assume any position until she has that analysis, and it is her expectation that a report will also be made available to ARELLO members from that research.

The reason ARELLO is concerned with state interpretation of the VOW vote is their members responsibilities as enforcement officers for state laws with regard to licensing. If a licensee were to violate state law, such as operating a VOW with listing data from the MLS without a valid real estate license, or without adhering to state policy on the proper display of listing brokers' data or agency disclosures, then ARELLO members' enforcement would be needed.

Among the issues concerning the regulation of VOWs is the different interpretations by each state of what is and what is not advertising. In California, for example, VOWs are considered advertising, which means that they require the brokers' permission to be used in third-party advertising arrangements.

June Barlow, general counsel to the California Association of Realtors told Realty Times, that the VOW issue is sensitive because it requires "recreating rules that are understood and easy to implement, and reflect the business practices of our members and are flexible enough to foresee electronic models of the future. With electronics, we were able to do things never before imagined, so our rules must coincide with the fast pace of technology. That's why flexibility and broad-based rules are easier to manage."

What kinds of rules would regulators like to see? Another purpose of licensing officials is to protect consumers.

Sandy Taraszki, last year's president of ARELLO and current board member of the Pennsylvania Real Estate Commission, says, "We will have to study the changes that were passed and see how they impact things, and not just look at advertising, but broker relationships. In Pennsylvania, we have all types of agency and nonagency relationships, but we have full disclosure to consumers. We have to look at if these disclosures can be accomplished online and do they have to be validated at a face-to-face meeting.

"I think it is very complicated, and I think my concern is that even though what is passed says there is no click-through situation where the consumer can't just click-through in order to get through to the information and while they click to obligate themselves financially, we need to look at what that really means. When we click 'I agree', and that is a little scary when it takes into account a financial obligation."

Taraszki says, "I'm really hoping that the regulatory bodies across the country look at some conformity with this. I think we can find some conformity. Every state has agency laws, and it has been long enough that we are all on the same page about what a buyer's agent, transactional broker, and dual agent are."

She also points out concerns with referral fees. "You can pay a referral fee to someone who is licensed in another state. How much disclosure is needed for referral fees? Only a few states require disclosure of referral fees, and that may be something that comes out of this VOW policy is clear disclosure of referral fees. Financially, some things should be disclosed, and referral fees should be up there."

Some states such as Louisiana, Alaska and Kentucky don't allow consumer incentives or sharing of real estate commissions with consumers. In other states, consumers can receive incentives on the selling end but not on the buying end. "There may be some pressure by consumers to put pressure on the states to change that. As you deal with more referral fees, the consumer may ask more often 'What is in it for me?'"

Another reason disclosures are important to the consumer is that many online consumers are relocating from another area, and may have company benefits. "You might run into problems in relocations where an employee, in order to be eligible needs to affiliate with a broker that their corporation or management company has on their short list, and those relationships include a referral, so if the employee goes online and obligates with another broker, they could be jeopardizing their relocation benefits program.

"Unless it is disclosed very clearly on VOWs, I think it could create consumer problems from a relocation or affinity perspective, unless these disclosures were very clear up front," she says.

From a regulatory position, Tarazski says that the states should move cautiously before passing any laws. "You could see things jump up. This is new, and it needs to be addressed in a uniform way. We need to look at license laws. Agency laws were intended to protect consumers, and if you don't have disclosure on VOWs, you are taking a step backward. Consumers need to know what they are signing away."

Published: May 27, 2003

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.