NAR Regulations Allowing Information Data Exchanges

State real estate commissions work with state legislatures to establish the licensing standards and regulations governing real estate transactions. The National Association of Realtors (NAR), a trade and lobbying group for agents and brokers, works to protect the interests of its members at the national level. Even though there is not a national Multiple Listing Service (MLS), NAR plays an active role in setting policies for the MLS that most local associations follow.

As use of the Internet grew in the 1990s, more people began to seek information on the Internet to assist them with the process of buying or selling a home. The MLS includes detailed data about the listed property, comments communicating information about the property and showings between members, and the commission for sale of the property. Information from the MLS was supposed to be reserved for member real estate agents and brokers, but many of them wanted to be able to share portions of that information on their personal or agency web sites. As a result, NAR created regulations for Information Data Exchanges (IDX) to allow a portion of the data contained in the MLS, such as properties a broker has listed for sale, to appear on agent or brokerage web sites.

The growth of the Internet also introduced a new business model into the real estate industry. Now real estate agents and brokers could expand their business from their traditional brick and mortar presence in the community. Some agents and brokers decided to build their business using an Internet-only model. These agents and brokers were not welcomed by the traditional full-service brokerages. Many of these Internet-only brokers would charge a lower fee for simply listing a property for sale on the MLS. One of the ways that traditional real estate agents and brokers attempted to protect the service they provide as well as the value of the MLS was to get NAR involved in changing the regulations about who has access to the MLS data.

NAR attempted to limit access to MLS data with new rules that were aimed at Internet-only real estate agents and brokers. The Department of Justice, however, filed an antitrust lawsuit against NAR in 2005 for unfair and anticompetitive practices related to the MLS. The lawsuit claimed that NAR’s regulations discouraged competition by agents and brokers choosing to operate over the Internet. Furthermore, the lawsuit claimed that by discouraging competition from online agents and brokers was another example of how NAR was perpetrating an anticompetitive practice of price-setting throughout the brokerage industry. In 2008 a final judgment was rendered on this case and set forth certain procedures and prohibitions related to access of the IDX in order to encourage competition within the real estate brokerage industry.

posted by George K @ 3/22/15 - 09:04 AM 0 comments