The Federal Trade Commission has taken enforcement action against seven real-estate listing services in six states, claiming the groups...
WASHINGTON — The Federal Trade Commission has taken enforcement action against seven real-estate listing services in six states, claiming the groups froze out their discount rivals.
The FTC’s action, announced Thursday, accuses the listing services of illegally restraining competition by denying access to regional real-estate listings, controlled by major real-estate companies, to home sellers who use discount brokers. The FTC said that while the agency was announcing actions targeted at regional brokerage practices, it wants the national real-estate industry to alter anti-competitive practices regarding the listing services.
“The rules these brokers made drove up costs and reduced choice for consumers, and they violated federal law,” said Jeffrey Schmidt, FTC competition director. “The problem is the traditional brokerages trying to find ways to disadvantage new competition.”
The FTC said it reached consent agreements with multiple-listing services in Colorado, New Hampshire, New Jersey, Virginia and Wisconsin. Two additional real-estate groups in Michigan were charged but didn’t settle with the agency. Multiple-listing services are made up of groups of real-estate brokers who agree to post their homes for sale to a common list.
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The enforcement action seeks to prevent full-service real-estate brokerages from excluding discount competitors.
In six of the seven enforcement actions, the multiple-listing services allowed the discounters to list their homes on the MLS that brokers could access, but they did not allow those listings to be published on popular real-estate Web sites that consumers use, such as realtor.com, the FTC said.
In the seventh case, a group of brokers blocked discount house listings from inclusion on the MLS itself.
Discounters, some based on the Internet, offer more limited real-estate services and typically charge lower commissions than full-service brokers charge.
The National Association of Realtors estimates that 77 percent of homebuyers start their search on the Internet and then sign a contract with a real-estate agent, said Mary Trupo, a spokeswoman for the Realtors group. There are 900 multiple-listing services in the U.S., Trupo said.
Schmidt said more cases are in the works.
“There are clearly additional … multiple-listing services where we think some of these rules continue to be a problem,” Schmidt said. “We’re continuing to look at those.”
Schmidt said the enforcement actions should send “a clear signal to real-estate groups that they may need to make changes.”
The FTC is working with the National Association of Realtors on how their members can comply with antitrust rules, he said.
Schmidt also said the FTC is not attacking rules that require sellers to work with agents to place their homes on an MLS. Instead, he said, the commission’s target is rules that “dictate to consumers the terms of the contract between the real-estate broker and the consumer.”
“When a group of competitors gets together and attempts to rein in competition, that’s an antitrust violation,” Schmidt said.
The consent decrees require the real-estate groups to halt anti-competitive practices with their multiple-listing services.
The complaints against the two Michigan groups in Detroit will go before an administrative law judge to resolve the charges. Schmidt said the cases should be resolved within a year, although the groups can appeal the judge’s ruling if it goes against them.
Laurie Janik, general counsel for the NAR, said the group has sought to work with the FTC on an “industrywide solution.”
“Although we do not agree with today’s FTC actions, we are happy to learn that the FTC, which does not customarily reach out to industry, is looking to work with NAR on this issue,” NAR President Thomas M. Stevens said.