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DOJ vs. NAR settlement on VOWs

Consumers may ultimately gain access to a larger and more diverse collection of online real estate information when the proposed settlement between the federal government and the National Association of Realtors trade group is finally approved.

And industry participants and innovators now have some clear evidence that a five-year stalemate over NAR policies in the online sharing and display of property information is nearing an end.

Brian Larson, a real estate lawyer and consultant who has written extensively about the U.S. Justice Department lawsuit filed in 2005 against the Realtor trade group, said he believes the floodgates to more industry innovation will open up with the settlement of the dispute.

"There may be this sort of pent-up desire to innovate that will now be free to express itself in the marketplace," Larson said. "There is a meaningful change in the landscape now and that may be enough to open some doors to innovation."

The proposed settlement amends policies originally adopted by NAR in 2003 in the use of Virtual Office Web sites (VOW). VOWs allow a broker participating in a multiple listing service to display an extensive set of property listings information to registered consumers.

The VOW policy was recalled on the same day that the Justice Department filed its lawsuit in September 2005, and the association introduced a new Internet Listings Display (ILD) policy in its place. But that policy was quickly suspended after the Justice Department amended its original antitrust complaint.

Another brand of data-sharing among MLS members, called Internet Data Exchange or IDX, is a popular data-sharing mechanism for the public display of MLS participants' information -- and the lawsuit does not challenge or change IDX policies.

While brokers have the ability to opt out of sharing property listings with IDX sites, the proposed settlement between the Justice Department and NAR does not allow brokers to prevent their property listings information from appearing on VOW sites but does give sellers the option to withhold listings information from appearing at VOW sites.

VOW sites will generally be more flexible than IDX sites and can display a broader range of data than IDX sites, Larson said, though the proposed settlement also provides for a required e-mail registration and verification process in order for consumers to gain access to property information through a VOW site.

Some brokers may maintain both IDX and VOW sites under the proposal, he said, and may use the IDX sites as a sort of entry point to property searches that could eventually lead consumers to sign up for access to additional information at a VOW site.

One company that offers web site technologies that provide both IDX and VOW features is Texas based 1stOnlineRealty.com. They specialize in the luxury and second home market, where the Internet is especially important, because so many of the buyers are not living in the local area.

VOWs will be able to display information on a range of off-market properties, such as sold properties or expired property listings that not all IDX sites allow, he noted.

The proposed new VOW policy might also encourage MLSs to "make IDX a better took," he said, as IDX sites do not require users any registration and may be less burdensome for consumers to access to immediately view property information.

Some VOWs had previously allowed consumers to register without verifying an e-mail address, though the proposed settlement would make that verification a requirement, he said.

And in general, the settlement provides that there cannot be restrictions on VOWs that don't apply to brick-and-mortar brokerage offices in general, he said. "If the settlement is approved, it does finally give us a firm landscape to operate on with regard to virtual brokerage innovation in the future. We know where we're going -- virtual brokers know where they can go with confidence." Larson said that it's too bad that the industry didn't choose policies five years ago that could have avoided the lengthy and costly federal investigation and lawsuit.

The settlement, in effect "says the Internet and innovation is going to be supported, and you have to allow competition to come into this space," Lashinsky said. "Some brokers don't like the changes and are trying to protect their business. This says you have to compete fairly." NAR did score a victory in the definition of an MLS participant that appears in the proposed settlement, he said.

That definition provides that "mere possession of a broker's license is not sufficient to qualify for MLS participation," and that a participant "actively endeavors to make or accept offers of cooperation and compensation with respect to properties of the type that are listed on the MLS in which participation is sought." Butters said that he has seen a clear adoption of Internet technologies by traditional brokerage companies in the years since the Justice Department filed the lawsuit against NAR.

The settlement agreement is perhaps an indication that "the industry has moved past this to the point that ... members actually want to operate VOWs, and this is not a fight worth fighting." He noted that major companies have already been in a major development push for Web-based functions, “particularly in this market where finding qualified buyers is the key.” And the registration requirements under the proposed settlement could assist brokers in securing more registered users to their Web sites. He noted that “the mere registration at a VOW does not constitute a client relationship -- you’re not able, according to this rule, to create a relationship at the registration level.”

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