Commercial PropertyNAR BOD Votes to Blend Virtual Office and Internet Data Display Policies
National Association of REALTORS® (NAR) counsel Laurie Janik was feisty, but unable to convince the Department of Justice that brokers have no legal obligation to help competitors profit from the advertising of MLS listings to the public without their permission. The trade organization hopes a revised Internet display policy will help the DOJ better understand the competitive issues involved in voluntary listing exchanges.
On Saturday, May 14, the Board of Directors of the NAR voted to fold key aspects of its Virtual Office Website (VOW) policy into its Internet Data Exchange (IDX) policy, and to affirm the principle that brokers own their listings and maintain the right to determine their use.
For those readers who may feel lost and confused, as surely the DOJ is in trying to understand voluntary listing exchanges between competing brokers, the policies were designed to facilitate online listings, not restrict them.
The IDX policy was implemented about four years ago to allow participating brokers to share listings online. The rules say that brokers can not exclude other brokers from participating, but can decline to participate themselves. The DOJ, presumably, has never had a problem with this policy, according to NAR spokespersons, which makes it an ideal foundation for a new blended policy. The way IDX works is that the MLS creates a separate "public" version of listings for online display (the same display that Realtor.com and other partners receive). This display of data is advertorial in nature -- designed to sell the home to Internet consumers. It has pictures, descriptions, and the listing broker"s sales information. It can be framed into a participating broker"s site, or it can be a new feed, redesigned according to local MLS rules to fit the colors and style of a broker"s website, but without altering the nature or expanding the information provided by the IDX rules. If a broker did not want to allow his/her listings to be put on another broker"s website, he or she could decline to participate, but he/she would not be able to put IDX listing on his/her site. Share and share alike, is the rule, or don"t participate.
The VOW policy, on the other hand, was designed to allow any broker to provide electronic access to core MLS listings to online consumers, which would include the sensitive data that many brokers and agents would like to see kept out of the public"s hands.
For example, many MLSs pay for tax roll data and would not like to see other third-parties gain access to that data. A third party could conceivably obtain the tax roll data from a broker"s VOW site, and create a program to "evaluate" real estate that might cut brokers and appraisers out of business. But to satisfy broker demand, a policy was created to allow any broker to operate a VOW, which the NAR felt would be consumer-friendly, but to protect the chain of ownership, brokers would be allowed to opt-out certain competitors from the MLS displays.
Confusion ran rampant as investigators and the popular press were led to believe that certain brokers were being denied access to listings, which was untrue. Access continued. What some were denied, was the right to "advertise" the listing without permission, a right all brokers already have according to state law.
In other words, brokers have to share listings fairly according to MLS rules, but they don"t owe any other broker an advertising advantage, and it was patently clear that advertising was what the VOW brokers had in mind -- to attract new customers, not to service customers they already had.
All consumers have to do is register at the virtual office website, and they are allowed into the MLS to browse to their heart"s content. But some worry that registering a buyer without discussion, without meeting them to determine their needs and motives, is not in consumers or the industry"s best interests. Many consumers would like access to peruse listings without the obligation of registering with a broker they may not know just because he/she has a VOW. The brokers who allow them to register are happy because they have attracted a potential customer whom they can either work or sell as a lead to another broker.
So the issue is really about how far backwards the real estate industry has to bend in order to accommodate customers and new competitors? Many brokers feel that they have already met their obligation to the consumer by making listings available via IDX, Realtor.com, newspaper sites, and their own websites. They owe listings to the MLS, but they don"t owe advertising help to their competitors.
The NAR operates from the belief that the MLS is operated by brokers for brokers. It"s a business-to-business cooperative that is a marketplace for brokers, not consumers. But, just as to-the-trade market centers allow consumers inside to buy dress samples at cost after "market," (effectively undercutting their retail customers) the MLS has also been opened up to consumers via the Internet.
Can the horse be put back in the barn?
The DOJ felt the NAR"s opt-out (VOW) policy may violate antitrust laws, but an enhanced IDX policy is not an admission of guilt, but an attempt to move forward, say spokespersons.
One example of blending the IDX and VOW policies is already being done in data refreshment. The enhanced IDX policy now requires brokers to refresh the listing data on their websites every seven days, and to make appropriate efforts to protect information from data theft; these provisions were parts of the VOW policy that were added to IDX rules.
The NAR and DOJ have said they"re interested in finding common ground rather than face off in an antitrust lawsuit, which the federal department has said it will file if certain aspects of NAR"s VOW policy, including the selective opt-out, stay in place.
"NAR is willing to engage in discussions, reserving our right to disagree," Laurie Janik, NAR general counsel, told the directors before they voted. "We are prepared to go to court to defend the VOW policy if necessary."
In adding noncontroversial VOW provisions to the IDX policy, which the BOD actions do, the resulting "enhanced" IDX policy creates a "conceptual framework for the discussions [with DOJ] using the enhanced, blended policy covering all Internet display of listings," said Janik.
The directors also voted to extend the deadline by which state and local association of REALTORS® must adopt the NAR VOW policy, from July 1 to January 1, 2006, to give time for negotiations to proceed.