Settlement reached for online real estate agents
WASHINGTON -- The Justice Department gave a boost today to online real estate brokers -- and potentially their clients -- by forcing new industry policies that give Internet-based agents access to home listings they were previously denied.
The tentative settlement, which still requires court approval, could save consumers thousands of dollars when buying a home.
Online real estate agents often charge discounted commission fees and let buyers review listings at their own pace.
For years, however, Internet-based brokers were blocked from accessing more than 800 multiple listing services nationwide affiliated with the National Association of Realtors. An MLS is a database of properties for sale.
In a September 2005 lawsuit, government lawyers said such policies discriminated against online brokers. The settlement, filed in U.S. District Court in Chicago, opens the MLS databases to online and traditional residential property agents.
"It really does free brokers generally to engage in whatever they feel is the most efficient and effective way to compete," Deputy Assistant Attorney General Deborah A. Garza of the Justice Department's antitrust division told reporters.
She said the settlement "should lower the cost of the transaction for buying a house."
In 2006, for example, consumers saved up to 1% on the price of a home by using an online broker, Garza said. That year, the median home price amounted to over $225,000, with median commissions of over $11,000.
Real estate agents earned $93 billion in commissions in 2006, she said.
In a report last year, the Justice Department and Federal Trade Commission found limits on discount brokers' access to Web listings of properties for sale prevented consumers from getting the cost savings and other benefits online competition has brought other industries.
The report found that more consumers use the Web when house hunting than rely on "For Sale" yard signs.
Even so, online brokers who were locked out of the MLS databases were unable to compete with real estate agents, government attorneys said. In at least one case, in Emporia, Kan., an Internet-based agent was forced out of business after the local MLS denied his access to any property listings in the local market.
Glenn Kelman, chief executive of Redfin, an online real estate brokerage based in Seattle that operates in 20 large metropolitan areas, said the settlement came as a relief for executives at the company, which bills itself as a lower-cost alternative to traditional real estate agents.
