In reading the impassioned reporting by national media about the Department of Justice's anti-trust investigation into the real estate online policies, it's obvious that the newspapers and magazines are getting the identical anti-NAR source - the DOJ.

In each story, the press welcomes the investigation and/or intervention of the federal government into real estate competitive practices, and castigates the NAR and its "traditional" members for standing in the way of the consumer.

This is trial-by-press, which could save the government considerable expense in prosecuting the NAR and its brokers by convicting them in the court of public embarrassment instead. These have-you-stopped- beating-your-wife? story slants show that these national reporters are either willfully ignorant or convinced that the organized real estate industry is trying to freeze out competitors by denying them access to MLS listings. Clearly, the conspiracy is one born of altruistic public service, in which the reporters and their editors see themselves supporting the DOJ as part of something great - tearing down the organized real estate industry.

This misinformation is being repeated over and over like a mantra, when nothing could be further from the truth.

No broker is being denied access to listings in the MLS. Period.

What some are complaining about is being denied the ability to use competitors' listings from the MLS in Virtual Office Websites (VOWs) without the listing brokers' permission. The MLS has the responsibility to set up public displays of listings, but it doesn't have the right to override any broker's decision made with his/her seller about where or how to advertise listings.

It's as simple as that.

This isn't just a nuance of interpretation, or a shade of meaning. Perception, as Realtors are learning, is everything. This rule is as different as a teenager's curfew is from being grounded.

The teenage brokers of the industry are crying that they are being unjustly restrained (grounded) for having to adhere to a few house rules - rules that not just new brokers, not just brokers with 'cool' business models, but all brokers must follow.

But the DOJ's media bullhorns have written their outraged reports so similarly, it's hard to believe that they could each make the same assumptions without identical input. Shocking is the writers' apparent bias. With editorial assumptions that the DOJ is right, they are all too eager to jump on the crush-the-Realtor bandwagon, as these stories, written by one reporter after another, proves:

• 5-2-2005 - The New Republic. Reporter Clay Risen writes, "Under industry pressure, NAR has developed a series of rules designed, at least implicitly, to shut newcomers out of the market and make sure the Internet reinforces, rather than undermines, the status quo."

• 5-11-2005 - The Wall Street Journal - Reporter James Hagerty, who called the NAR within two hours of the DOJ informing the NAR that it will move forward with a lawsuit if an agreement wasn't reached the following day, (which raised suspicions that the DOJ attorneys deliberately leaked the story to the press) wrote, "The Justice Department has threatened to file a suit to block a proposed move by the National Association of Realtors that would erect a new barrier to upstart brokerage firms that rely heavily on the Web to reach customers. Any brokerage firm that is a member of a local multiple-listing service, or MLS, has access to the listings provided to that service by all other members."

• 5-11-2005 - USA Today. Reporter Jayne O-Donnell writes, "Justice Department officials will meet today with the National Association of Realtors to discuss the department's antitrust investigation into the association's efforts to bar online brokerages from using the Realtors' home listings," a spokesman for the group says.

• 5-17-2005 The Washington Post. Reporter Steven Pealstein writes, "...the National Association of Realtors announced a policy at the end of 2003 that would have given traditional brokers the option of withholding their listings on the regional Multiple Listing Services from any brokers they chose (read: discounters). But after more than a year of investigating, the [Justice Department] last week forced the Realtors to withdraw the new policy."

The NAR has repeatedly and patiently tried to explain the virtual office Website policy rules to the DOJ and its media bullhorn reporters, some of whom are so young that they have never bought or sold a home, yet are all too willing to buy into prejudice over an industry they know little to nothing about. They sandbag sources like Steve Cook with the National Association of Realtors, knowing full well that they have no intention of letting him persuade them that the NAR and its leading members just might have a point about how listings should be displayed.

Among numerous explanations made to the DOJ and its press pals that seldom or never seem to make it into the media are:

• Brokers go to considerable time, trouble, and expense, not to mention liability, to represent the seller's listing. That's why listing contracts "give" the broker "ownership" of the listing.

• The broker voluntarily joins an MLS where the listing can be shared with competitors in the hopes of bringing about a quicker, higher offer to the seller. The broker, who is being paid by the seller, agrees within the cooperative environment of the MLS to share part of his/her commission with co-brokers from the sale of the listing. That's the purpose of the MLS - to establish cooperation. The listing is not an advertisement like the DOJ and press would like to believe. It is one piece of inventory in the MLS "stockroom."

• Access to the "stockroom" is a privilege, not a right. While all consumers want to save money, it isn't always practical to accommodate them. For example, would Neiman-Marcus like a federal regulation that requires that the store open its stockroom to consumers so they can try on dresses for less money than if they used a dressing room with a salesperson? What if Neiman's was forced to share inventory with Saks Fifth Avenue and Wal-Mart, and the feds allowed Wal-Mart to not only advertise the luxury stores' inventory at a discount, but to steer consumers away from going to Saks or Neimans directly? Who in their right minds would do business like that? But that's exactly what the so-called discount brokers would like to do to the "traditional" brokers. Why isn't that anticompetitive?

• Because the MLS isn't about advertising, but about cooperation between professionals, participating brokers should not be forced to share listings and proprietary seller information with nonprofessionals. "Agency is why brokers are licensed," says Peter Miller, industry expert. "You don't need a license, or shouldn't, to provide a sign or to sell ads. What distinguishes brokerage is agency and the basic standards of agency should be maintained regardless of what is charged or what services are provided by a licensee."

• Because the MLS isn't about advertising, the broker makes separate advertising arrangements for the listing, which may include an agreement with cooperating brokers to display the listing on their Websites as long as he/she is credited as the listing broker. This is voluntary and mutual, not mandatory. The NAR has already set up an environment in which this can be done called Internet data display, or IDX.

• Brokers, via MLS membership, owe other brokers fair access to listings, for retrieval to show qualified prospects, but no broker owes any competitor content for the competitor's Website.

• Websites are publications. Virtual office Websites are publications of the brokerage. While some commerce can take place online, the virtual office Website is still a Website, and subject to intellectual property rules and laws.

• Issues of competition pale next to real and potential security breaches due to the publication of listing data online. As one expert put it, "The original VOW policy was silent on the procedures for establishing online identity, registration requirements, data integrity standards, non-repudiation controls, privacy disclosures, data rights, etc. They didn't know what they didn't know." Much of this work still remains to be done at the MLS and participating broker level, regardless of any timeline the NAR may lay down for VOW implementation. In short, the industry simply isn't ready.

• Many MLSs pay title companies and other sources for compilations such as tax roll data, which is included in core MLS data. There should be no reason for any broker to share this data in the aggregate with any consumer or other third-party, which a so-called user agreement by consumers or third parties would allow.

• So-called "discount" brokers don't set fees for the marketplace. The only place fees should be set is between a broker and his/her client. Many brokers rightfully do not want their listings placed on other brokers' websites where fees are advertised by the competing broker.

• The MLS, like the NAR, has nothing to do with setting fees. One reason listing-sharing works in the MLS environment, is because MLS rules state that listing data does not include fee competitions. In a virtual office website, a broker can freely criticize other brokers' practices in pricing and services, even if such behavior is against the NAR's code of ethics, because it is an advertising environment and no longer a cooperative environment.

• Consumers have a right to want lower prices and commissions, but the marketplace is responding better than most reporters think. Still stuck on Realtor commissions at 6 percent or higher, many reporters refuse to acknowledge recent data that real estate agent commissions are as much as 25 percent lower than they were five or ten years ago, in response to the current real estate boom. Conversely, whenever real estate busts, commissions go higher again as desperate sellers seek to get their homes sold and brokers expend more money and resources to get those homes sold. This is a natural supply and demand that the market has weathered many times, says Bill Powers, COO of Realty Executives.

• As Pearlstein and others have erroneously written, "The Internet has made it easier for buyers and sellers to go through the process without agents." Is he kidding? Where do reporters think listings come from - listing fairies? It is through technological innovations and agreements with Realtors and their associations that listings are available online. It is Realtors who publish their listings through such sources as MLS sites, Realtor.com, franchise organization sites, third-party referral sites, individual broker and agent websites, and more. Realtors, Mr. Pearlstein, are using the Internet - not the other way around.

• "And it has provided an opening for lower-cost brokers offering limited services," writes Pearlstein, but what he fails to note is that the "opening" is greased with listings that belong to other brokers. Just because certain brokers have created new business models predicated on the use of intellectual property that doesn't belong to them, it does not mean they have a right to complain that not giving them listings to put on their websites is anticompetitive. That's like calling Mom anticompetitive when she asks to be paid for gas that the teenager uses when he drives the car.

• If the use of an MLS repository is voluntary, it stands to reason that brokers could easily withdraw their listings, rather than watch them regulated to their disadvantage.

The bottom line is that this is a conspiracy of disinformation, which is evidenced by the obviously closed ears of the DOJ and its media bullhorns. Without understanding how the MLS works as a business-to-business "stockroom" for listings to be presented to participating brokers' for their clients, the DOJ and its media bullhorns are stuck on the idea that the MLS is an advertising medium that is being unfairly controlled by traditional brokers.

The only way out of this mess is for the NAR, its member associations, and MLSs to delineate a more clear definition and difference in the presentation of listings for advertising purposes, and reserve core MLS data for members only, which they can parcel out to consumer clients on a need-to-know basis, preferably when the consumer has indicated interest in a home or homes he or she is prequalified by a lender to buy.

That would serve several purposes:

1. It would encourage client relationships and discourage non-paying consumers and third-parties from using the real estate industry's resources to buy and sell property without representation.

2. It would restore the MLS as the cooperative it was intended to be among professionals.

3. It would be fair to all brokers, which would eliminate DOJ interest and intervention.

4. It would allow MLSs and brokers better control over many of the intellectual property and data management issues they have.

5. It would force all brokers to compete on their own merits, not the access they have to other brokers' inventories.

6. It would allow the marketplace, as it always has, to determine broker value in the commissions and the home prices it is willing to pay.

Published: May 19, 2005

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