In the fall of 2003, eRealty's CEO Russell Capper was invited to present his views on virtual office Websites to The Association of Real Estate License Law Officials (ARELLO) during their annual conference. Taking the opportunity to fight the National Association of Realtors' (NAR) virtual office Website (VOW) policy, Capper presented his argument at round table discussions, supplemented by handouts prepared for him by his attorney Robert D. Butters, that VOWs should be treated by regulators as virtual offices, and not as advertising mediums.

If it's not obvious to some why state licensing officials should care about VOWs, according to Butters, an antitrust and trademark specialist who was formerly associated with the NAR, Capper has good reason to educate them to his point of view.

"Anyone is free to lobby to advocate a policy position and ARELLO members are government agents and enforcement officials," explains Butters, "and these are the people who are going to be making or influencing what government agencies will take on this position. My view is that regulators are more likely than not going to wait for a consensus to form within various industry groups, on the virtual office regulatory front generally. At least NAR has issued a policy position, but that is in some state of uncertainly. There is still a shake-out on the way during which the MLSs are going to be considering adopting the policy, and I would expect to see more experience in the field before state regulators get specific."

What Capper wants is for the NAR to eliminate the broker opt-out provision from the VOW policy. As long as the opt-out provision is present, the industry and the state regulators who respond to the industry's demands for change could be assumed to support the position that VOWs are advertising and therefore brokers should have the option to opt their listings out of MLS datafeeds for publication but not for datasharing among other members.

How VOWs work now is that VOW operators want to use MLS datafeeds to show listings to consumers just as they would use the old-fashioned listing books that were once printed weekly. Regulations require that consumers who are given access to the MLS datafeeds/MLS books have some sort of broker/consumer relationship or a user agreement of some kind. Because some brokers, including Capper, have used the MLS datafeeds in third-party advertising relationships that wouldn't be able to acquire the listings otherwise and that exclude other brokers from participating, other brokers believe that VOWs come under the definition of advertising. If so, they are subject to statutes that dictate that no broker can advertise another's listing without permission.

The debate has polarized many brokers who would like to see the use of Websites and MLS data advance. Others agree but insist on precautions.

According to Butters' notes, given out by Capper, "The NAR VOW policy imposes barriers to a broker's interaction with customers and clients using browser-based communication media that are not also imposed upon those brokers who engage in the same type of interaction through non-browser based communication media."

So far it's not clear what kind of effect Capper's lobbying is having, but in a white paper written in October 2003 for ARELLO by Miriam J. Baer, Attorney at Law, the assistant director of the legal services division of the North Carolina Real Estate Commission, addresses the issue of VOWs as advertising by admonishing the industry to cooperate.

"Rather than attempting to steer around state advertising regulation by classifying VOWs as something other than advertising, the better approach would be for operators, MLSs and regulators to work together to reconcile VOWs and regulations in a practical way," writes Baer.

At least two states, Wisconsin and Arizona, have agreed that VOWs are advertising, but Illinois says they aren't.

As more MLSs adopt the NAR VOW policy, more regulators may be called upon to enforce current advertising definitions or to assist commissions to redefine their definitions of what is and isn't advertising.

Published: January 6, 2004

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