Several other multiple listing services face the same slap on the wrist that the Federal Trade Commission gave to the Austin Board of Realtors earlier this month for blocking sellers from marketing their listings on sites which offer discounted services.

The FTC "is in the process of investigating other multiple listing services in different regions of the country," says Jeffrey Schmidt, director of the FTC's Bureau of Competition, noting that the consumer watchdog agency has "a long history of challenging questionable conduct in the real estate industry" that dates back to the 1990s.

The agency tagged the Austin realty association with violating anti-trust laws, and prohibited the group from adopting or enforcing any rule that treats one type of listing differently from any other type of listing.

ABoR voluntarily agreed to the FTC's order. But it had long ago rescinded the rule in question. Actually, it recalled the rule on its own volition three months after it was put into effect on May 31, 2005, nearly a year before the FTC announced its action. Consequently, the board's president, David Foster, says the press conference called by the agency to announce the case and the press release it issued "misrepresented the purpose" of its rule.

According to Foster, the rule was "initially established to ensure that our consumer website (AustinHomeSearch.com) was used to promote listings to benefit members." When it became evident the rule was "confusing and did not work as well as we intended," it was rescinded, he said.

Foster says his 5,000 members are unhappy with the FTC for painting them as anti-competitive. "As an association that supports members of all business models, we feel the approach outlined by the FTC is correct," he says. "But we are disappointed that the FTC's press release implies that we are guilty of wrongdoing, which the agreement expressly contradicts, and that the spirit of cooperation with which the FTC and ABoR negotiated the consent order did not translate to the FTC's public statement."

Whether that's the case or not, what is evident is that the FTC wants to level the real estate field for all players, from discount brokers to firms which charge full commissions. One sure clue is the way the agency hurriedly called for a press conference to announce the enforcement action, a step it rarely takes. Another is the strong stance taken during the briefing and in the press release.

While the realty group did not admit any wrongdoing -- defendants facing such charges rarely do -- Schmidt said the association was guilty of committing a form of restraint of trade the FTC condemned more than two decades ago.

And Maureen Ohlhausen, director of the agency's Office of Policy Planning, said the order is one of a number of enforcement tools available to the agency, tools it intends to use, if necessary. "We are taking a global, coordinated approach," she said.

In coordination with the Department of Justice, the FTC has written "advocacy letters" to a number of states (including Texas) which have enacted or are considering rules that require realty agencies to perform a minium number of services. The rules, for the most part, are designed to make sure clients aren't short-changed. But the FTC and DoJ maintain that they also prevent agents from offering fewer services for a lower price and allowing the consumer to make the choice.

"We're not trying to say what the best choice is" for consumers, said Schmidt. "We're simply saying consumers should be allowed to make that decision for themselves."

Schmidt said ABoR's website rules "created significant roadblocks for real estate brokers to offer consumers alternatives to full-service brokerage agreements."

Specifically, the FTC said ABoR, which operates the Austin/Central Texas Realty Information Service, the only multiple listing service in the area, refused to allow exclusive agency listings from being included among those made available to public websites, including Realtor.com, the official website of the National Association of Realtors, where consumers often start their search for a home. Under Austin's rule, only exclusive right to sell listings could be made available to public sites.

Under an exclusive right to sell agreement, the seller lists the property with a broker for a set period of time and agrees to pay a commission when and if the property is sold. Under an exclusive agency agreement, the listing broker often charges an upfront fee, but agrees to take a reduced commission -- or maybe even no cut at all -- if the property sell's without the broker's further help.

By jointly acting as a group of competitors to withhold listing information from publicly accessible websites unless sellers are contracted with in the way ABoR dictates, the FTC says, the association acted to restrain trade.

Austin's website policy had the effect "of discouraging the use of exclusive agency listings, which often are used to offer lower-cost, unbundled real estate broker services to consumers," the agency said. "The policy caused some home sellers to switch away from exclusive agency listings to traditional forms of listing agreements," thereby forcing to pay higher commissions.

After the no exclusive agency policy was put into place, the number of such listing fell from 18 percent to 2.5 percent of total listings, the FTC said. "Denying home buyers the opportunity to use the Internet to see all the houses listed by real estate brokers in the Austin area" had an adverse impact on both sellers and buyers, it said.

The resolution of the Austin charges is the first active FTC case involving the real estate brokerage business since the mid-1990s.

Published: August 2, 2006

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When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.