DOJ-"opt-out" and a war with a "discounter"

A new Broker opens an office and has no listings yet. He goes to area brokers and asks if he can advertise their listings in his “window” to help get him started. Mostly they say yes. They are not trying to force out the competition and they are more than willing to help him.

Now they walk past his office and they see their listings in his window. No problem. Until they see this big sign on top of the houses for sale, which are their listings. “Our Mission: To reinvent the existing residential real estate business — an ANTIQUATED, INEFFICIENT, and COSTLY system of selling homes!!”

That is an actual statement from a website. It used to be pages and pages of “Help us fight the GREEDY brokers! Join our CAUSE!

Well, do you think the local brokers wanted their listings in that “window”? Would you? So the “window” is the internet, same difference isn’t it? That guy was using their listings to show homes on his site because he didn’t have any listings yet, and badmouthing them at the same time. Does that seem right to you?

The brokers didn’t opt out against this company because he was a discounter. They opted out against this guy because he was advertising their listings (VOW site showing other broker’s listings) while at the same time badmouthing them and calling them greedy SOBs! That’s the kind of “mud” that causes the “opt out” provision to be invoked against a “discounter”.

The local brokers said get my #%$## listings off that guy’s site now!

What do you think? Do you think the brokers should be forced to let this guy put their listings on his site, while he badmouths them on the site at the same time? I don’t think so. But I’d like to know what you think.

This is what the DOJ suit is about. The DOJ is trying to remove that right of brokers to say, OK, you can use my listings. But don’t sling mud at me from behind the picture of my listing! If you do that, I’m taking my picture out of your “window”.

Of course we could break his kneecaps, but opting out seems like a better answer 🙂 The brokers “opted out”. The new company didn’t have any homes to show on his site. He cleaned up the site a lot, though the Mission is still as it appears above without the CAPS, and a compromise was reached. Opting out is a negotiation tool to prevent companies from getting started on other broker’s listings while slinging arrows at them. There is another group involved. Same theory. EBAs. But they are “Johnny come lately’s to the suit”, so let’s stop at this example.

Tell me how you feel about all this.

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ARDELL is a Managing Broker with Better Properties METRO King County. ARDELL was named one of the Most Influential Real Estate Bloggers in the U.S. by Inman News and has 33+ years experience in Real Estate up and down both Coasts, representing both buyers and sellers of homes in Seattle and on The Eastside. email: cell: 206-910-1000

18 thoughts on “DOJ-"opt-out" and a war with a "discounter"

  1. Heck YES the broker should opt out!! And there is NO WAY they should be forced to let this yahoo display their listings.

    I’m not a fan of discount brokers in general, but that’s not what drives my opinion on this.

    The guy puilled a sleezy and unethical trick, IMHO. THAT’S what drives my opinion…

    Jay T.

  2. Let’s see what people who arent’ real estate licensees think about it. Anyone without a real estate license have an opinion on this? Do you need another example?

  3. I’m not familiar with the DOJ case, nor am I familiar with the antitrust laws that probably underlie the case. However, any market is best served by the open and free exchange of information. In your example, it seems reasonable for other brokers to pull their listings. What about other, less clear examples? At what point are brokers in fact pulling their listings because they don’t want to promote the interests of the discount broker, a competing business model, while claiming that their actions are legal and not monopolistic (such as “that discounter is badmouthing me!”)? At the very least, the system that you defend permits illegal behavior (squelching competition to the detriment of the consumer) under the guise of defendable conduct. I would wager that, in the DOJ matter, the prosecutors have determined that the motivation for pulling the listings had more to do with illegal behavior (i.e. controlling the market) than protecting reputations.

    On a related note, there is also an issue about “ownership” of the listings. An argument could be made that the listing belongs to the property owner. The broker/agent has a duty to sell the home on the best terms possible, and an as-wide-as-possible dissemination of the listing furthers that interest. To the extent the broker limits the dissemination of information, it is to the homeowner’s detriment. This, too, may run afoul of laws designed to create and protect a healthy market.

  4. Actually Craig, I would wager that the DOJ’s motives go far beyond the obvious. The DOJ is not using actual cases of the opt out clause being invoked. They are simply fighting the right of brokers to opt out ever, while we are saying, there are cases where opting out is effective control of mud slinging websites.

    The real reason that the EBA model and the Discount model are not taking off as they should, has to do with the fact that neither are effectively addressing the real issue at hand. That issue being the cost of the Buyer Agent fee vs. the seller’s listing fee.

    Everyone wants to look at the fee as one number, when in fact it is two. There are many options in the market place regarding the seller’s portion. It is negotiation of the buyer agent’s portion that has not been affected for the most part.

    There have been many cases around the country regarding REALTOR owned mls systems. All are being lost last I checked. This is the key to NAR’s power, not the opt out clause. But “they” are losing the other cases and so are hanging their hat on this “opt out” provision.

    I think we all know the real reason behind trying to weaken NAR’s power has to do with banks wanting to enter the real estate sales arena.

    Even if the DOJ wins on the opt out provision, all a broker has to do to get around the ruling is cancel their NAR membership. Then the broker is not subject to any of the rules of NAR and hence gets around the DOJ ruling if that ruling prevents NAR members from opting out. If you are not a member of NAR, you are also not subject to the ruling on the case.

    So the real purpose of this suit, and other smaller suits around the Country, is to weaken NAR’s membership and lobbying power. To those of us in the industry, that is fairly obvious.

  5. Interesting take on the “real purpose” of the suits at issue. I’m sure the attorneys prosecuting those matters would disagree strenuously — they believe the law has been/is being broken and they’re working to correct that. While being “in the industry” may provide you with insight and knowledge, it also leads to a biased perspective that influences your perception. What is “fairly obvious” to you may, in fact, be off the mark.

  6. The DOJ is an antitrust suit, which we all know has to do with actions which are in restraint of trade. whether it’s in the form of “opt out-opt in”, the crux is that NAR may be restraining the free trade in real estate, i,e interfering with the meeting of buyer and seller.
    The interest of buyer and seller is at issue, not the broker’s control of a listing.
    The seller needs to have the say on this. And I think that’s where we’re headed—take the choice away from the broker and give it to the seller. Most seller would want widest distribution while other may not (security reasons). But they should decide.
    NAR I think sees this coming becasue they have a trial form whereby realtors have sellers sign a form which supposedly gives them a “choice” concerning online dissemination of the listing, but it is framed in such a way as to allow the broker control.. clever

  7. Real Estate Taxi,

    I think you missed the part where the DOJ says NO! to that. Your response is exactly why the DOJ had to sue NAR in the first place.

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