A new private venture capital-backed real estate firm called Home Quarters is testing established and future virtual office - MLS data download advertising restrictions by filing suit against its MLS. MiRealSource cut off HQ's MLS datafeed because it was using the direct MLS data download on the company's virtual office Website instead of the MLS' broker reciprocity solution.

While some are calling the suit a "test case" for the NAR's new virtual office display policy that was voted upon in May and will be implemented by Realtor-owned MLSs as of January 2004, the defendant in the case - Michigan Regional Data Exchange, Inc. dba MiRealSource - is broker-owned, not Realtor-owned, which could skew the outcome.

While that fact may be hair-splitting to some, it could be a core element, and may provide the answers to some questions - why now? Why this broker? Why this MLS?

If a broker-owned MLS could be proven to be anti-competitive with its VOW policy, then the local, state, and national associations which are made up of brokers, would surely be forced to follow.

But wait a minute. Didn't the NAR just vote to allow VOWs to publish MLS datafeeds? This is a tremendous victory for online brokers, who advertise consumer access to the MLS to get business. There's just one caveat - broker opt-out. Brokers will have the choice to allow or not allow competitors to showcase their listings via the MLS feed.

If a broker can win the right via a court case to get the listings without broker opt-out, it could make it more difficult for MLSs to enforce broker opt-out when MLSs begin implementing the NAR VOW policy in January 2004.

According to the complaint brought by Home Quarters (HQ), MIRealSource cut off HQ's MLS datafeed, causing the company to seek "in addition to other relief, preliminary and permanent equitable relief to enjoin defendants' unlawful efforts to prevent HQ from providing to the public an efficient and cost-effective way to buy and sell real estate in the Detroit metropolitan area."

HQ, says the complaint, "provides the same realty services and same information provided by other Realtors in the State of Michigan. It simply does so using a different and more efficient way of doing business, and it passes the resulting cost savings on to its customers."

The suit alleges that MiRealSource terminated HQ's "right to access their MLS data as part of their effort to destroy HQ's innovative business model and to thwart competition."

According to MiRealSource executive officer Virginia Bratt, the case is very simple.

"They didn't ask permission to use the other brokers' listings on their Website," she says.

MiRealSource, says Bratt, already had a way for brokers to share and advertise listings - through broker reciprocity. Broker reciprocity, also known as Internet Data Exchange (IDX), is a voluntary participation program in which the MLS provides a consumer-friendly feed of MLS listing data to brokers using listings that participating brokers have given their permission to share.

"If I am a broker, I own this data," explains Bratt, "and they don't have permission to use the MLS datafeed on their Website. They do have permission if they are using the broker reciprocity datafeed. Nobody has the direct MLS datafeed on their Websites. I have 740-odd offices out there, and none of them are using the data without permission. If that were okay, wouldn't they all be doing it?"

Broker reciprocity is voluntary, which means that some brokers may have already opted out of sharing their listings with competitors. That leaves the MLS datafeed as a more complete source of listings. Even though broker reciprocity was created for advertising the listings among competitors, some competitors feel the whole MLS should be available for advertising. The NAR established that this was true, but with the proviso that MLS listings must have brokers' permission to be advertised by competitors.

Both Bratt and HQ CEO Kyle Hoylman agree that MiRealSource offered the broker reciprocity solution to HQ several times, but Hoylman refused. He believes that having the MLS datafeed is "essential to the business model."

Hoylman says, "We have invested a lot of time and effort in building a technology system and we made a decision that we weren't using the IDX feed because it was for general advertising purposes, and we decided instead that it was an essential part of the business model to get the data directly."

"We are in business to sell homes and because we utilize a little different model and at least with our information, we are capturing a valid e-mail address and we choose to send MLS information to our customer base in a little different manner.

"I hope we can settle this and develop a good working relationship. We aren't going away, so we are going to have to figure out our differences. We can either settle it, or settle it through the legal system."

The issue then isn't about whether or not HQ can have access to display the same data that other MLS members have access to display. They were offered that chance through broker reciprocity and turned it down. What they are seeking is the right to use MLS data, rather than broker reciprocity data, to attract consumers.

Meanwhile MiRealSource has filed a motion to dismiss.

Bratt says, "We are trying to have the suit dismissed as meritless, it doesn't make any sense."

Published: August 28, 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.