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Homeowners Praise DoJ for Protecting Competition
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For Immediate Release, May
27, 2008
For more information contact: Bruce Hahn @ 571-214-1013
WASHINGTON — May 27, 2008. The American Homeowners Grassroots Alliance
today praised the U.S. Department of Justice (DoJ) for its proposed
settlement of its antitrust case against the National Association of
Realtors (NAR). The settlement requires NAR to stop denying American
homeowners access to Internet-based residential real estate brokers who
compete with traditional brokers. AHGA agrees with DoJ’s assessment that
the settlement will enhance competition in the real estate brokerage
industry, resulting in more choice, better service, and lower commission
rates for consumers. The longstanding antitrust case against NAR has
been perhaps the most visible of a long series of similar antitrust
violations by real estate institutions, including state real estate
trade associations and multiple listing services (MLS’s).
“This is
a great victory for American homeowners,” observed AHGA President Bruce
Hahn. “This decision will enable technology to deliver the kinds of
economies that it has in many other economic sectors. We hope that other
real estate institutions will see the writing on the wall and forgo
efforts to deny American homeowners unrestricted choice in the selection
of real estate services in the future. The efforts to restrict
competition by NAR and other real estate institutions have not reflected
the views of most real estate brokers and agents and have unfairly
sullied their reputation in the minds of consumers. The vast majority of
very capable real estate brokers and agents do not fear competition from
new business models and do not support restricting them anyway.”
This
case dates back to September 2005, when DoJ filed a civil antitrust
lawsuit against NAR challenging policies and related rules that
obstructed real estate brokers who use innovative Internet-based tools
to offer better services and lower costs to consumers. One way that
brokers use the Internet to provide brokerage services to their
customers is through a type of Internet real estate sites, known as VOWs
(virtual office websites). VOWs allow a broker’s customers to search
real estate listings themselves instead of relying on a broker to
conduct searches for them. Delivering listings via the Internet enables
customers to control their search process and educate themselves about
the real estate market in their area on their own schedule. These VOWs
have allowed brokers to be more productive, and some VOWs have passed
these efficiencies on to consumers in the form of lower commission rates
to home sellers and rebates to home buyers.
One of
NAR’s rules required MLSs to withhold their listings from VOWs. Another
prohibited customer referrals through VOWs. DoJ said that the policies
prevented consumers from receiving the full benefits of competition,
discouraged discounting, and threatened to lock in outmoded business
models.
Under
the terms of the settlement, NAR will repeal its anticompetitive
policies and require affiliated MLSs to repeal their rules that were
based on these policies. Also under the agreement, NAR must enact a new
policy that guarantees that Internet-based brokerage companies will not
be treated differently than traditional brokers. Under the new policy,
brokers participating in a NAR-affiliated MLS will not be permitted to
withhold their listings from brokers who serve their customers through
VOWs. In addition, brokers will be able to use VOWs to educate
consumers, make referrals, and conduct brokerage services. Real estate
brokers may not be excluded from MLS membership because of their
business model.
“American homeowners owe a great debt of gratitude to DoJ for its
persistence on behalf of consumers in this case and in many other cases
at the state level” said AHGA’s Hahn. “Were it not for the efforts of
DoJ and the Federal Trade Commission (FTC), American homeowners would
have far less choice in real estate services today.” More information
on DoJ’s efforts to preserve competition in the real estate industry can
be found on the Antitrust Division’s Competition and Real Estate Web
site at
http://www.usdoj.gov/atr/public/real_estate/index.htm.
AHGA
is an independent,
nonpartisan consumer advocacy organization which focuses on policy
issues that have a significant economic impact on the nation’s 75
million homeowners.
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