The War Against The MLS Continues | The MLS Must Fall!
May 6, 2008
As the real estate industry awaits the long anticipated trial pitting the Department of Justice vs. The National Association of Realtors, another Multiple Listing Service has been targeted by the DOJ.
On May 2, 2008, the DOJ filed suit against the Consolidated Multiple Listing Service (CMLS) of Columbia, South Carolina. The suit challenges the manner in which the CMLS operates and governs its members. The lawsuit states that CMLS rules unreasonably restricts competition among real estate brokers and has caused consumers in the Columbia area to pay more for the services of real estate agents and brokers.
The lawsuit alleges in part that the CMLS mandates that real estate agents and brokers perform a myriad of obligatory services, which provides for a reduced level of customer service and limits consumer choice. The suit also states that these mandatory services provides for an exclusion of competitors who might offer innovative options that could provide better services to consumers in that area.
“Buying or selling a home is one of the most significant financial transactions in the lives of most Americans. The kinds of rules CMLS imposes stifle competition to the advantage of its members and the disadvantage of home buyers and sellers,” said Thomas O. Barnett, Assistant Attorney General in charge of the Department’s Antitrust Division.
“Today’s lawsuit seeks to remove unlawful impediments to competition for real estate brokerage services in the Columbia area, so that consumers will benefit from the additional options and reduced fees that competition can bring.”
The MLS in most areas allows for the free exchange of information by and between its members regarding available homes on the market. The efficiency of the CMLS, or any MLS for that matter, can be a benefit to the consumer.
The DOJ contends that certain practices by the CMLS negatively impacts how the real estate industry members can choose to operate their businesses and accordingly adversely influences competition.
Specifically cited are rules imposed by the CMLS wherein its members are not allowed to offer a home sellers the opportunity to avoid paying a broker’s commission if the seller locates a buyer on his or her own.
CMLS rules require brokers to be involved in certain aspects of the real estate transaction, even if the Seller does not want the service or can find a similar service less expensively in order to save money on the fees charged by the real estate agent or broker.
The DOJ’s lawsuit challenges CMLS rules that the Government feels unreasonably restrain trade and competition among real estate brokers and thereby lead to reduced consumer choice and higher fees paid by consumers.
The CMLS in Columbia may not be the last MLS organization in the cross hairs of the DOJ. Justice Department spokeswoman Megan Gerking said the antitrust division has been monitoring multiple listing services in the past few years to ensure they are “competitively efficient.”
As we continue to see these lawsuits filed against MLS organizations and the DOJ’s obvious intent to bring down the MLS, why is it that so many real estate agents are not preparing for the inevitable?
I read stories and write stories about the ongoing assault that the DOJ is waging against the anti-trust laden operations of MLS orgs. These bastions of information, the gatekeepers of what is holy to a real estate agent are truly under attack.
It’s not like MLS operators are not being forewarned. Obviously reading about these lawsuits, MLS operators should be re-assessing how they are conducting business. In fact the CMLS was warned they would be sued on April 17, 2008 and despite meetings to amend some aspects of their operation, they still would not amend their operations to come into compliance.
Who runs these boards and what makes them think it’s okay to spend the members money fighting a lawsuit they have little chance of winning?
I keep reading on blogs in the RE Net from advocates supporting the NAR and its member organizations. I don’t understand how one can support such an obviously misguided and allegedly illegal run operation. It’s one thing to be a team player, it’s another to exist in a state of obfuscation which it seems that blind-following faithful must.
The MLS is not going to survive in it’s present state. Any reasonably thinking adult can clearly see this. The government has made the elimination of the MLS as a private members only discriminatory club a definite priority.
The consumer wants the walls torn down and with the assistance of the mighty hand of the DOJ can it be anything less than a certainty? The first it seems to fall or become insignificant will be the object of the aforementioned flagship lawsuit, the DOJ v. NAR.
Once the head of the snake is removed it will make it much harder, if not impossible, for subsequent MLS lawsuits to be won by the local boards seeking to defend them. Once a precedent is obtained in Federal Court regarding these MLS lawsuits, what will be the outcome?
It is doubtful the MLS will survive in its present form. The prudent agent would be preparing themselves as a mercenary. Ready to go either way.
The application of the Sherman Act has brought down quite a few companies and inflicted huge monetary damages against others. It’s sword is sharp and it’s blade will not dull.
Whether you like it or not, the revolution is truly under way.
For further information see this previous article.
[…] check this update out: Update […]
I think this lawsuit has some good points. This is my local MLS, and I wrote about it last night on my blog (www.IBlogColumbia.com).
I would like to say to my clients, “you find the buyer, you pay me nothing unless you want me to walk you through the transaction”, ie Russel Shaw’s package…but currently we can’t.
I can not add things to the contract I want to…etc. This hits home for me….sometimes its good, sometimes its bad.
I do agree that the MLS will not be the same in a couple of years as it is currently.
The suits that I have seen with regard the MLSs around the country are usually concerned with MLS rules, not the existence of the MLS itself. MLSs that try to institute anti-competitive rules are going to get hammered, that’s for sure. The concept of the MLS, in and of itself, isn’t the target of the DOJ.
MLS systems are a way for brokers to share information and encourage cooperation. While there are plenty of sites out there that aggregate listing data, none of them are as detailed as the MLS. Even as NAR hammers out standards for listings data, whatever information it chooses to make standard won’t be all the information necessary to make an informed decision about a home.
Many seem to have the mistaken idea that MLS members are trying to use the MLS to hide data from the consumer, or have a private “walled garden” designed specifically to keep consumers uninformed. I haven’t really found this to be the case, at least in my experience. My brokerage, and just about every brokerage in the MLS, shares data through IDX across platforms all over the web. We share our listing data with sites like Trulia, Zillow, et al (although it isn’t automated for us, so we don’t do it as much as we would like to all the time). I don’t see the MLS as being inherently anti-consumer in either concept or practice. The original idea behind the MLS was not to create a consumer tool, it was to create a way for brokers to share information. How they use it is up to them.
Like I said, if an MLS makes a rule that members must follow that is anti-competitive or anti-consumer, it is the result of people making rules, not an inherent flaw in the operation of an MLS.
For me, the MLS is still, by far, the most effective way for me to find reliable property data and conduct business. If I had to try to use the general Internet to try to find and sell property, it would be a mess. Now, if someone can come up with a viable alternative, I’m all for it.
Daniel..read the suit and you tell me where future lawsuits are going to come from. Look beyond the obvious and see what holes in the armor get blown open for future suits to follow. It’s how anti-trust suits work
[…] today’s show we talked about the latest Barry C blog post regarding a recent DOJ lawsuit again the MLS board in Columbia South Carolina that alleges […]