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Home List Services Charged by FTC

Seven regional systems illegally barred discount brokers, regulators say. Five cases are settled.

October 13, 2006|From the Associated Press

WASHINGTON — The Federal Trade Commission on Thursday announced enforcement actions against seven real estate property listing services in six states, saying the groups froze out discount brokers.

The regulatory actions accuse the listing services of illegally restraining competition by denying home sellers who use discount brokers access to regional real estate listings controlled by major real estate companies. Although the cases target regional practices, the FCC said it wanted the national real estate industry as well to alter its practices regarding listing services.

"The rules these brokers made drove up costs and reduced choice for consumers, and they violated federal law," said Jeffrey Schmidt, director of the FTC's Bureau of Competition.

The traditional brokerages, he said, had tried "to find ways to disadvantage new competition."

The FTC said it reached agreements with multiple listing services in Colorado, New Hampshire, New Jersey, Virginia and Wisconsin. Two real estate groups in Michigan also were charged but didn't settle.

A multiple listing service is run by brokers who agree to post homes for sale to a common list.

In six of the seven enforcement actions, the listing services allowed the discounters to list homes where brokers could access them, but did not allow those listings to be published on popular real estate websites that consumers use, such as realtor.com, the FTC said.

In the seventh case, the discounters' listings were barred from the multiple listing service as well.

The National Assn. of Realtors estimates that 77% of home buyers start their searches on the Internet and then contract with a Realtor, Mary Trupo said. There are 900 multiple listing services in the U.S., she said.

Schmidt said actions against other multiple listing services were possible.

"We do have additional investigations underway," he said.

The FTC official said the enforcement actions should send "a clear signal to real estate groups that they may need to make changes."

The agency is working with the national Realtors group on how its members can comply with antitrust regulations, he said.

Schmidt also said the FTC was not attacking rules that require sellers to work with Realtors to place their homes on a listing service.

Thomas M. Stevens, president of the Realtors association, said the organization disagreed with the FTC's actions but was pleased that the agency had reached out to the group on the issue.

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