Antitrust debate gives voice to real estate discounters

Federal agency actions draw attention to new models

Tuesday, August 02, 2005

By Glenn Roberts Jr.
Inman News

Ready Real Estate, a real estate company that offers discounts to sellers and rebates to buyers, is savoring the federal government's scrutiny of possible anticompetitive and anti-consumer practices in the real estate industry.

Last month, the market director of Ready Real Estate in Albuquerque, N.M., launched a company announcement stating in large bold type, "Ready Real Estate Supports Justice Department's Probe of National Association of Realtors. Internet-based company fights for consumers."

The company's announcement relates to a Justice Department investigation of the national Realtor trade group's online property listings policy the federal agency has studied whether the association's policy is anticompetitive. Leadership for the National Association of Realtors have delayed implementation of the listings policy and amended the policy in an effort to avoid an antitrust lawsuit. The Justice Department's investigation has reportedly centered on a provision that would permit brokers to opt out from receiving other brokers' listings on a blanket or selective basis.

Antitrust officials at the Justice Department and Federal Trade Commission also have written several letters opposing Realtor-backed state measures that have sought to ban some forms of limited-service real estate offerings by requiring all companies to perform a minimum set of real estate services for their clients. And the Kentucky Real Estate Commission last month agreed to establish a less restrictive policy on real estate rebates in settling a lawsuit brought by the Justice Department.

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Inman News has contacted several other real estate professionals who have shared insight and information with federal officials about possible anticompetitive real estate practices.

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Ed Davis of Fisher Team Realty, a flat-fee listing business based in Prairie Village, Kan., said he believes the business environment is becoming friendlier to new real estate business models. But still, he said, "You have to have a lot of thick skin, just because most people are not used to the business model." Davis said his company, which operates in Kansas and Missouri, wasn't active in protesting a new Missouri law that requires all brokers to provide a minimum range of services. The Justice Department and Federal Trade Commission had objected to that Missouri law.

"We just kind of found the sidelines. I'm not as radical as a lot of people. I don't have a problem with Realtors wanting to increase standards," he said. "I figured if the Department of Justice was going to fight this battle, go ahead. There was no reason for little-old me to get involved," Davis said.

Fisher Team Realty, as a result of that law, has absorbed the higher cost of providing additional services. "It's going to cause us additional cost but the only way to offset additional costs is to have more volume. We're not going to go away in fact we're going to grow," he added.

Derek EisenbergDerek Eisenberg, AmeriSellRealty

While some companies have shied away from the antitrust debate, others have embraced the opportunity. Derek Eisenberg, an affiliate and partner of AmeriSellRealty, a network of companies offering flat-fee real estate services, said he has supplied some information to federal agencies about real estate practices he has witnessed.

"I am more willing to speak about (antitrust issues). I think others are, too, now that the Department of Justice is willing to listen," he said, adding, "I think the Department of Justice has to start exercising some muscle or they will be viewed as all talk and little action."

Eisenberg said he has seen some resistance to his company's business model, and this is in some cases a result of brokers' lack of understanding about his company. "I am not draining from the pool of traditional-service sellers who would always want to be in an MLS. So I am not a threat to traditional brokers. Some brokers have threatened boycotts but I think it's because they don't understand what I do," he said.

Corey ScholtkaCorey Scholtka, BuyHomes.com

Corey Scholtka of BuyHomes.com, who has advocated for alternative business models in the real estate industry, said that alternative brokers "are definitely more willing to speak out, promote their business, and address consumer and antitrust issues" than they have been in the past. He has worked with his state Realtor Association to educate members about alternative business models, he said, and he expects a growing number of traditional real estate brands to launch new business models.

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Chris Nye of MLS4owners.com said that the Justice Department has contacted his company on several occasions "and we answered their questions and provided documents."

He added, "We have never been shy about defending the right of consumers to have choices, but we would prefer to let the marketplace decide instead of having to continually fend off those who seek to ban us."

While Nye said his company has met some resistance from other industry players, "We stay focused on serving our customers and try not to be distracted by naysayers." The company has worked to find representation for alternative business models as a participant in local MLS and licensing law groups.


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