Daily Real Estate News  |  October 26, 2005  |   DOJ/FTC Workshop: Real Estate Competition Called Fierce With more than 2.5 million real estate licensees and a wide range of brokerage models working in real estate today, competition has never been greater and consumers have never had wider choice in whom to work with in buying and selling homes, industry panelists said at a public workshop hosted by federal trade regulators Tuesday in Washington. “I’m puzzled by accounts [in the media and among some lawmakers and regulators] that say there’s not a lot of competition in real estate,” Alex Perriello, president and CEO of Cendant Real Estate Franchise Group, told the workshop. “There are no significant barriers to entry or expansion,” and there are “myriad choices for buyers” on models and pricing, he said. About 200 people from the brokerage community, government, and the media attended the workshop, which was hosted jointly by the U.S. Department of Justice's Antitrust Division and the Federal Trade Commission to look at competition in residential real estate. Some of the panelists focused on laws enacted recently by state legislatures setting minimum service requirements for real estate licensees. About 10 states have enacted such laws in the last few years, with others considering similar measures. The measures, which the DOJ and the FTC have called anticompetitive in letters to lawmakers, have been supported by state associations of REALTORSŪ. The laws typically require licensees to present offers, assist their clients with contract negotiations, and be available to answer questions on clients’ behalf, among other things. Industry critics said the laws make it difficult for some alternative brokerage models, such as limited service brokers—who post listings in the MLS for a flat fee but provide little other service—to compete. However, no evidence of any anticompetitive effects was presented. Panelists at the workshop also touched on industry efforts to govern how brokers’ MLS data can be displayed on competitors’ Web sites. That issue is the subject of a lawsuit filed in early September by the DOJ against the NATIONAL ASSOCIATION OF REALTORSŪ. The complaint says NAR’s Internet listing display rules put Internet-based brokers at a disadvantage to traditional brokers. In fact, the rules allow brokers to exercise a blanket opt-out right that prohibits their listings from appearing on any competitors’ sites, not just sites of Internet-based brokers. In exchange, brokers that opt out can’t post other brokers’ listings on their sites. Cathy Whatley, NAR’s 2003 president, said brokerages operating all business models have the opportunity to participate in the MLS and have always and will always have access to the property listing information it contains. “The MLS is a broker-to-broker information exchange” that facilitates cooperation and ultimately helps consumers see more listing data than they otherwise would, she said. For more than four years, she noted, NAR’s Internet data exchange policy has enabled MLS participants to advertise competitors’ listings on the Internet, even though such use by other competitors is subject to the broker’s right to opt out of having his listings advertised by others. That policy, known as IDX, isn’t the subject of the DOJ complaint. Deborah Platt Majoras, FTC chair, opened the workshop. Other officials making remarks included Thomas Barnett, acting assistant attorney general for antitrust at the DOJ; FTC Commissioner Jon Leibowitz; and Susan Creighton, director of the FTC’s Bureau of Competition. Lawrence Yun, NAR's senior economist, presented empirical evidence of the magnitude of competition in the real estate brokerage industry. "Consumers are bombarded with choices on television, radio, newspapers, and the Internet,” Yun said. “They are enticed by offers of flat fees, rebates, and other incentives. In fact, discount brokerages and many innovative business models are doing very well in today's real estate marketplace. Chang-Tai Hsieh, associate professor of economics at the University of California at Berkeley, acknowledged the competitive pressures in real estate today from having such an enlarged field of practitioners vying for business and said commission rates appear to have fallen as a result. But consumers don’t appear to be fully benefiting, he said, in part because increased home prices have caused the total amount paid by consumers to increase. Industry panelists included Aaron Farmer, owner of Texas Discount Realty in Austin, Texas; Thomas Kunz, president and CEO of Century 21 Real Estate; Colby Sambrotto, COO of ForSaleByOwner.com; Philip Henderson, an attorney with LendingTree LLC; Tom Early of the National Association of Exclusive Buyer Agents; Geoff Lewis, senior vice president and chief legal officer of RE/MAX International Inc.; and Steve DelBianco, executive director of NetChoice Coalition. The DOJ and FTC are accepting public comments on real estate competition until Nov. 28. To learn how you can voice your opinions about how competitive the industry is and to obtain some prewritten key point to include in your letters, see the Tell Federal Regulators That Real Estate Is Competitive page at REALTOR.org. NAR would like to receive copies of any letters members submit. E-mail a copy to FTCDOJworkshop@realtors.org. To learn more about competitiveness of the real estate industry, go to the About Industry Competitiveness page at REALTOR.org. —Rob Freedman for REALTORŪ Magazine Online