RealTime IT News

FTC Closes Door on Web Listings Case

The Federal Trade Commission (FTC) approved a final consent order today forcing the Austin Board of Realtors (ABOR) to change a rule barring discount brokers from listing properties on ABOR's public Web sites.

The order prohibits ABOR from adopting or enforcing any rules that treat one type of listing more advantageously than another listing type.

The order also prohibits ABOR from interfering with the ability of any of its members to enter into any type of lawful agreement with home sellers.

In July, the FTC ruled the ABOR policy violated antitrust laws by preventing consumers with potentially lower-cost real estate listing agreements access to the group's public Internet listings.

"ABOR's Web site rules create significant roadblocks for real estate brokers to offer consumers alternatives to full-service brokerage agreements," Jeffrey Schmidt, director of the FTC's Bureau of Competition said at the time.

The commission is not saying that one form of brokerage agreement is better than another. We are saying that the consumer should be able to decide."

The case began early last year when ABOR said it would not post home listings from discount brokers on sites operated by the National Association of Realtors (NAR) or the public site of ABOR.

The ABOR rule allowed only full commission listings on the NAR sites and the ABOR public site.

After the ruling, the FTC said some home sellers switched from a discount broker to a full commission broker, also noting discount brokerage listings on ABOR's public sites fell from 18 percent to 2.5 percent.

The decline in discount listings, the FTC maintained, had an adverse effect on consumers by limiting home sellers' choices of brokerage services.

In addition, the FTC alleged the ABOR rule denied homebuyers the opportunity to use the Internet to see all the listings available in the Austin metropolitan area.

Last year, the Department of Justice sued the NAR, charging it with engaging in anti-competitive behavior against online home brokers.

Concerned online sites competing with traditional Multiple Listings Services might lead to lower commissions for real estate brokers, NAR three years ago passed rules allowing traditional brick-and-mortar brokers to selectively block their home listings to competing brokers using Virtual Office Websites (VOWs).

The DoJ objected to the policy, contending it denies consumers the full benefits of competition, discourages commission discounting and threatens to lock in outmoded business models.

The NAR changed its policy, barring brokers from selectively blocking their listings. Instead, brokers are allowed to block listings, but they must either block all Internet listings or none at all.