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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Tradelite who wrote (41069)	9/11/2005 11:47:17 PM
From: Doughboy	Respond to of 306849

Tradelite, does this pique your interest? Antitrust Suit Could Reshape Residential Real-Estate Sector By JAMES R. HAGERTY Staff Reporter of THE WALL STREET JOURNAL September 12, 2005 A Justice Department antitrust suit against the National Association of Realtors raises a tricky legal question: Who controls information about homes listed by brokers as available for sale? The answer is likely to help determine the future shape of the residential-real-estate brokerage business. Buoyed by a booming market for homes, that business reaps more than $60 billion a year in commissions on home sales, according to Real Trends, an industry publication. In a suit filed Thursday, the department alleges that the association's policy on Internet displays of listings data -- which allows brokers to block their listings from being displayed on other brokers' Web sites -- "restrains competition" from brokers that rely mainly on Web sites to engage with their customers. "It is the Web-based brokers who have been the most aggressive about cutting commissions," said J. Bruce McDonald, a deputy assistant attorney general in the Justice Department, in an interview Friday. Realtors say that they aren't thwarting competition but that brokers have "ownership rights" in their listings and should be able to determine how they are displayed on the Web. The trade group argues that the department hasn't fully taken into account changes to its policy that were announced last week in a bid to avert the suit. Justice Department officials "do not understand the real-estate industry," Laurie Janik, the group's general counsel, said in an interview. The policy involves Internet displays of information from multiple-listing services, or MLS, which are local databases of homes available for sale. As revised last week, the policy lets brokers refuse to allow their listings to be displayed on other brokers' Web sites. If they exercise this "opt out," brokers must inform home sellers that their listings won't appear on rivals' sites and get written consent. Geoff Lewis, chief legal officer at RE/MAX International Inc., a major franchiser of brokerage firms, says very few brokers would opt out because their customers would demand maximum Internet exposure. "We intend to share all our listings with other companies," he said. But Robert D. Butters, a Chicago lawyer who represents Internet-based brokers, still sees opt-outs as a big threat. If one or more major firms in a local market opted out from sharing data with rival Web sites, consumers would find they could get more information by going to a real-estate office to meet an agent face to face than they could get by dealing with a Web-based agent. Traditional brokers who refuse to let their listings be shown on rivals' sites still could provide the data to Realtor.com, a site owned by the National Association of Realtors, Mr. Butters noted. By offering to put the listings on that popular national site, the brokers might persuade many consumers that they don't need to be on rival brokers' sites. People looking for homes often start their searches on the Internet and favor sites with the most comprehensive and easily searchable data. Some of those sites pitch real-estate-brokerage, mortgage-lending and other services. The site operators then can collect referral fees from local firms eager for customers. Write to James R. Hagerty at bob.hagerty@wsj.com

To: Tradelite who wrote (41069)	9/15/2005 11:27:04 AM
From: Doughboy	Respond to of 306849

Hey, a pro-NAR op-ed in the WSJ-- Justice v. Realtors September 14, 2005; Page A20 We've been pounding the National Association of Realtors over its anti-competitive behavior, and last week the U.S. Justice Department filed its own antitrust suit charging the Realtors with illegally squeezing low-cost Internet companies out of the market. So why aren't we thrilled? Because this is a case of right target, wrong weapon. Justice is certainly correct that the Realtors have used their political clout to suppress competition in local real-estate markets. One charming legal barrier in about a dozen states -- called "minimum service requirements" -- prohibits such discount realty firms as realestate.com from offering home sellers a flat fee of typically $500 to post their houses on local sale listings. In today's booming market, with the median-priced home now selling at $220,000, the Internet-based firms can save "do-it-yourself" consumers about $10,000 on average in exorbitant Realtor fees. Another Realtor favorite are state laws that prohibit discount agents from providing rebates to home buyers of typically $1,000 or more on their fees. Justice is targeting something different, however. At issue is the Realtor practice of preventing Internet competitors from having access to the properties for sale on the local "Multiple Listing Service," or MLS. The antitrust suit maintains that Realtor "policy prevents consumers from receiving the full benefits of competition and threatens to lock in outmoded business models and discourage discounting." There is little question that traditional high-fee Realtors are as receptive to Internet discounters as horse and buggy sellers were to Henry Ford's Model T. And it's true that Web-based services in other consumer industries -- from airlines to travel agents to booksellers to stockbrokers -- have all slashed costs to the great benefit of the public. The Realtors have acknowledged in internal memos that many of their practices are meant to limit competition and preserve their lofty commissions -- typically 5% to 6% on the sale price. As such, the Realtor response to Justice that denying Internet firms access to MLS listings is "pro-consumer, pro-competitive, and pro-innovation" fails to pass the laugh test. At the very least, these practices violate the ethical and fiduciary duty of real-estate agents to help find the best home at the best price for their clients. Instead, Realtors use their de facto price-fixing schemes to find the best home at the best price -- so long as that home offers the highest commission fee to the agents. A study by the American Enterprise Institute and Brookings Institution estimates that the economic rents that flow from consumers to Realtors as a result of this anti-competitive behavior exceed $10 billion a year. And yet we have to admit the Realtors have a legitimate claim that they created and own the local MLS database of homes for sale. They are thus within their rights to use their private property as they wish, even if that includes denying access to competitors. As an economic matter, there are no natural barriers to entry here; anyone can start a competing listing service if he desires. The Justice Department's lawsuit would require that all homes be listed on the MLS even if home sellers don't want them to be. Another problem with the lawsuit is federalism. Real-estate markets are inherently local, so it's not clear there is any legitimate "interstate commerce" rationale for federal intervention. For years liberals have tried to regulate the marketplace by defining virtually every business transaction as "interstate commerce" -- a clear perversion of the Constitution's intent. The Bush Justice Department shouldn't go down this same hyper-regulatory path. A federal lawsuit seems to be an inferior way to crack the real-estate cartel, especially since it may well lose on the legal merits. Far preferable would be for the states to repeal their laws that sustain the Realtor racket to the detriment of their own citizens and the cause of homeownership.