POINT OF VIEW: Editor's Note

Enough is enough

The real estate industry has taken a thrashing from the media in recent months for supposedly rampant “anti-competitive” business practices. Call today’s real estate business hot, robust, or thriving, but anti-competitive? I don’t think so.

There are now 1.2 million REALTORS®, more than ever before, vying for business. Many types of brokerage models are available to serve consumers’ varied tastes. Commissions are individually negotiated between REALTORS® and their clients. Plus commissions are facing downward pressure in an era when buyers and sellers are more knowledgeable than ever about the real estate transaction.

None of these facts suggest anticompetitive-ness in the real estate business. Yet, most of them were missing from this spring’s barrage of news reports and editorials about ongoing federal investigations into potentially anticompetitive practices in the business. One investigation involves the U.S. Department of Justice’s 20-month review of the NATIONAL ASSOCIATION OF REALTORS’ virtual office Web site policy. The other concerns the Government Accountability Office’s review of competitiveness in the business ordered late last year by U.S. Rep. Michael Oxley, R-Ohio, chair of the House Financial Services Committee. The news media has reported, almost gleefully, that these investigations signal that REALTORS® are trying to limit competition and drive up commissions.

A May 9 article in The Wall Street Journal reported, “The Justice Department is expected to charge that NAR, in a proposed 2003 bylaw, illegally adopted practices intended to stifle Internet-based rivals and discounters.” The piece quoted unnamed sources and contained no new information—the DOJ has been investigating (i.e., “preparing to sue”) NAR for almost two years.

Yet this article ran on the front page of the newspaper and implied that NAR would be served papers within the week. In fact, as of early June, NAR was continuing to negoti-ate with the DOJ in an effort to resolve the investigation.

The lead of a May 10 article in USA Today characterized NAR’s Internet listing data display policy as part of “the association’s efforts to bar online brokerages from using the REALTORS®’ home listings.” A few days later, USA Today published an editorial headlined “REALTOR® fight cost-cutters with rule to keep fees high.” And an opinion piece in The Washington Post less than a week later was headlined “REALTORS® aghast at notion of competition” and called the DOJ investigation “a laudable campaign to bring price competition to one of the last outposts of cartel-like behavior.”

Clearly, the media opined, the industry that had somehow managed to dodge disintermediation by the Internet because of its “protectionist ways” would finally get its comeuppance. Organized real estate was about to be forced to turn over the keys to its supposed kingdom—MLS listing data—to upstart discount brokers beating at the gates.

Never mind that NAR’s membership has long included brokerages of all types, among them those that offer discount services. And never mind that no broker is denied access to MLS listing data under NAR’s Internet listing display policy. What some are complaining about is that, under the existing VOW policy, listing brokers have the right to choose which Web sites can display their MLS listings. Many of the complainers appear to be those who would like to aggregate listings from the MLS without contributing to the service. But remember: The MLS is a cooperative founded on the principle that its members contribute listings and brokers cooperate to sell those listings; everyone benefits, including consumers.

Still, some say broker members of the MLS should be forced to cooperate with aggregators in the same way they cooperate (i.e., share listings) with those who do contribute to the value of the MLS. I don’t see the logic or fairness of this argument.

Some coverage of the VOW issue has also maintained that organized real estate fears the Internet’s power. Therefore, NAR is creating policies to protect its members.

How is it that this same coverage never mentions that NAR and its members years ago embraced the Internet and created the nation’s largest public listing of homes for sale—REALTOR.com? Or that more than 87 percent of REALTOR® companies today use the Internet as a marketing tool, according to NAR research?

It appears that some media coverage of industry anticompetitiveness has been guilty of not letting facts get in the way of a story. As a former member of the independent press—I spent five years as a daily newspaper reporter early in my career—I’ve been troubled and saddened by the media’s casual attitude toward accurate and balanced coverage of the issues and agendas in this debate. Many have gotten the facts wrong at worst or have told only part of the story at best. Shame on the press for not trying harder to uphold its sacred trust with the public.

To help you and the media get a full picture of the issues and agendas involved in the anticompetitiveness debate, NAR has created a new page at its Web site, REALTOR.org: “Why is the real estate industry under attack?” The page includes news analysis by REALTOR® Magazine editors and contributors of the latest developments in the federal investigations, as well as links to independent news and opinions that present balanced and accurate accounts of real estate industry business practices.

As NAR CEO Terry McDermott told a group of REALTORS® in Washington, D.C., in May, sometimes you just have to say, “Enough is enough.”

For an update on the latest actions taken by NAR’s Board of Directors on the VOW policy, see “Antitrust claims: REALTORS® ready to talk—and fight ,” page 12.

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Why is the Real Estate Industry Under Attack?