Laurie Janik, general counsel to the National Association of Realtors says changes to the trade organization's online listings policy should ease federal scrutiny from the Department of Justice (DOJ) and the Federal Trade Commission (FTC).

State laws allow brokers to advertise listings where and with whom they wish, but the DOJ and FTC are of the opinion that if a broker puts a listing into the MLS, and that MLS distributes the listings online, that brokers should not have the right to limit competitors from displaying the listings.

There are several kinds of listing agreements between brokers and sellers that allow the seller's home to be featured in the local multiple listing service (MLS,) but lately, some brokers have complained to the DOJ and FTC that sellers have a right to be in the MLS even if their intention is to sell their own homes without paying an agent. Those agreements are called exclusive agency agreements, which means that the broker is the agency of record, but if the seller brings a buyer without the broker, the seller does not have to pay the listing broker a commission.

Far more typically found in the MLS database are listings provided by brokers through exclusive right-to-sell agreements. These agreements mean that no matter who brings the buyer, including the seller, the listing broker will receive a commission.

The reason behind this is that the MLS was never intended to be a free advertising medium for sellers, particularly once listings began to be distributed free to consumers on the Internet. If the MLS were to become a public utility for sellers, and lose its historical charter as a business-to-business cooperative for compensation, the MLS would collapse. Broker after broker would have no choice but to withdraw from the MLS out of self-preservation.

Yet a few brokers, intent on capitalizing on the DOJ's and FTC's desire to break up MLSs as broker cooperatives, have created business models that allow them to sidestep the fiduciary responsibilities of brokerage and allow sellers who clearly intend to carve brokers out of their deals into the MLS.

The NAR didn't believe this was fair, but with lawsuits looming against approximately 35 MLSs, NAR attorneys and leaders banged out new terms for the national IDX policy. IDX stands for Internet Data Exchange; it means that brokers can agree through their MLSs to allow competitors to display their listings, but the caveat is that they must display all members' listings regardless of the types of listing agreements they were originated under. This is what allowed exclusive agency listings into IDX feeds broadcast to other members' sites, Realtor.com and other partners. Once MLSs realized that the policy was upsetting some members, who had no desire to pay dues to an MLS that was enabling FSBO sellers, they tried to institute restrictions on listings originated under exclusive agency.

"We had a policy that told the MLSs that if they didn't want to put exclusive agency listings in their IDX feed they didn't have to," explains Laurie Janik, general counsel for the NAR. "We've changed that to say the MLS doesn't decide, the broker decides. Each broker decides whether they want to exclude listings on the basis of whether they are exclusive agency or not."

The shift puts the decision back on the part of the broker, which is supported by state laws.

"I think most are putting all the listings on their site anyway, but if they want to put less than all, they are entitled to do so," says Janik.

Even better, the DOJ says they are fine with the change to the IDX policy.

Another change is slightly more controversial. MLSs, under NAR's online listings policy, could exclude exclusive agency listings from feeds to public websites like Realtor.com. NAR had said the decision was up to local discretion.

"Now we say you must send all listings to third parties, but with one exception," explains Janik. "MLSs can exclude the location and property address of exclusive agency listings if the seller has a for-sale-by-owner sign in the front yard."

She says, "The reason for that is if the consumer can see the street address and identify the property and see the for-sale-by-owner sign without involving a real estate broker, we don't think MLSs should give the seller a free ride. And, the FTC agreed that is inappropriate use of the system. That's what leads to the abuse. There is no problem if they see the property with no mapping and no address, otherwise, the seller should not have that privilege."

MLSs like the changes, and also like the prospect of getting the justice police off their backs. Others have never restricted exclusive agency listings from data feeds, so the changes don't affect them.

"Our policy says any listing where these two factors are present does not have to be included in data feeds," says Janik. "If I want to convert an exclusive agency listing into an exclusive right to sell listing by agreeing to pay the listing broker $5, well, that's just a cute way to circumvent the process."

Meanwhile, the DOJ and FTC have told Janik they are willing to see how this plays out. "Our goal is to see that the rule is applied properly," she says.

Published: November 16, 2006

Use of this article without permission is a violation of federal copyright laws.

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. For more articles by Blanche, click here.