Hat tip to Mike, who sent this from the nytimes – I wish the associations of realtors would be more exclusive, and kick out the scumbags!:
Several Hamptons real estate executives said Tuesday that they had been contacted by Justice Department officials seeking information about a listing service that has been criticized as an effort to keep smaller agencies from having access to the area’s best properties.
The service, known as Realnet, allows members to share their listings with other members. Last year, George Simpson, who runs his own real estate listing company, sued more than two dozen local brokerages and Realnet. Mr. Simpson said that because only larger brokerages could afford the annual fee, which he said ranged from $15,000 to $50,000, those brokerages ultimately controlled “80 percent to 90 percent of the exclusive real estate listings.”
Three brokerages named in the lawsuit — the Corcoran Group, Brown Harris Stevens and Prudential Douglas Elliman — declined to comment or did not return calls. Realnet did not return a call and an e-mail message seeking comment.
By August, Mr. Simpson had withdrawn his lawsuit and said that he planned to refile his case under “different circumstances” and continue “moving forward with the crusade.”
But the original case apparently caught the attention of Justice Department officials. Mr. Simpson said that in the past month, he spoke for 90 minutes by telephone with several department employees about the structure of the real estate industry in the Hamptons and which firms dominated the market.
Members of a multiple listing service post their sales listings for other members to see; nonmembers could be at a disadvantage because sellers generally prefer to have their homes placed on listing services and exposed to as many potential buyers as possible.
John Nickles, a broker based in Southold and the chairman of the multiple listing service for the Hamptons and North Fork Realtors Association, said that he was interviewed on May 5 by two Justice Department lawyers, an economist and a paralegal. Mr. Nickles said that his brokerage could not afford the more expensive system; he pays $160 a month for access to the local multiple listing service that he leads.
Joe Kazickas, owner of an Easthampton real estate company that runs a Web site called Hamptonsrentals.com, said he was scheduled to speak to Justice Department officials on May 24. He said that smaller brokerages that could not pay for the costlier listing database would find it “very difficult to compete.”
I wonder what laws are in place to prevent this from happening. I suspect that, provided anybody could join if they paid the five digit fee, there is no legal case here.
If someone (hint..hint) would create a Craigslist like website where ANYONE could list their property for sale, it would be huge.
Make it free, don’t ask for a lot of sign in/sign up stuff, allow people to upload photos and have a area for property description. Keep the design simple and easy to use.
Pay for it with advertising.
Sellers and buyers would benefit. The losers would be all the gangster listing agencies that only want to control properties and information for their benefit.
Geotpf- You should review some price fixing cases. It always seems that to the uninformed a case could never be proved.
Here is a basic guide published by the Justice Department:
http://www.justice.gov/atr/public/guidelines/211578.htm
“If someone (hint..hint) would create a Craigslist like website where ANYONE could list their property for sale, it would be huge…”
You mean a site like … Craigslist?
If craigslist ever decides to tie it’s “homes for sale” section with google/yahoo/whatever maps the traditional MLS is going to be in big trouble.
I personally believe eventually this will happen to all of craiglist ads. Currently ads are already broken down by area. It just makes sense to break them down even further by exact location on a map.
BTW try searching for a house in SD on craigslist. You’ll notice a lot of overlap between what’s listed on the MLS and ads in craigslist except one difference. Houses on craigslist tend to be lower price than the exact same MLS listing. Interesting…
There’s a reason Ebay is trying to buy craigslist anyway it can.
Doesn’t La Jolla have it’s own listing service that is members only? Or am I confused? (Which is highly probably.)
Don’t really see the problem here.
A seller should only hire agents that get their listings sold. As a seller I don’t care about the marketplace, other agents, etc. Just sell my home.
Thus, a seller should demand the agent put their house in every possible MLS or not hire them.
We don’t need more rules/laws, just logical consumers willing to think and make decisions.
The problem with self-listed sites that are free seem that there is no current way to verify ownership, or the right to sell a property which is compounded with the problems of spam listings. Not that the MLS doesn’t have it too, but realtors can get kicked out of the local association, barred from MLS usage, or fined if they don’t follow the rules of posting. Jim knows about that.
Democratizing listings means placing a whole bunch of restrictions on the system that didn’t need to be in place in a closed system. That means more development time and energy to discover and weed out the problems. That costs money that advertising can’t support.
And, agents currently dominate the selling process in the US (perhaps too heavy-handedly) and they won’t give up control of information that easily (see the justice department’s suit against NAR and their ilk)
It’s a mess, and it’s not getting cleaner. They need a game changer.
In Germany, agent commissions are less than 1% of the total sales prices. Same for most countries around the world. You look at the disparity between that and the standard 5% to 6% split commissions, and you realize why agents have so much money to fight the justice department and hoard information.
chuck
“A seller should only hire agents that get their listings sold. As a seller I don’t care about the marketplace, other agents, etc. Just sell my home.”
If you don’t care, why not hire someone to sell your home for $1?
You need to add:
…and I expect to receive a fair value as well as pay a fair value for the services performed.
JtR- OT, thoughts on s/b 1178 winding through the legislature? Has to do with making refinance loans non-recourse. “To protect the consumer”.
Does this surprise anyone?
Real estate agents collude to keep fees high and money ‘within the family.’
Wasn’t there something like this in the Ranch?
“If craigslist ever decides to tie it’s “homes for sale” section with google/yahoo/whatever maps the traditional MLS is going to be in big trouble.”
http://housingmaps.com
An example from housingmaps:
http://sandiego.craigslist.org/csd/reb/1749725508.html
The problem with an open MLS is the temptation for scumbags to muck it up.
The ad above is a blind ad, which doesn’t advertise a specific property but tries to give you the impression that they are.
Craigslist is a great resource, and I would love to see the MLS as it is go down for the count. But the alternatives have yet to be perfected.
JP2-That’s not what is happening. That would be if a bunch of condo owners all got together and agreed to sell their properties at a set price (higher than if they didn’t collude). This is merely charging a high yearly fee to get on a MLS-like service. That’s not price fixing per se. It’s just a really expensive MLS.
Consultant-As for sites where anybody could list their houses for sale, Zillow qualifies. As for buyers, use Redfin (even if you don’t use their agents). That includes free MLS access, as well as some properties from secondary sources such as Zillow. Craigslist won’t let Redfin display their ads, so that’s the only source of listings not on Redfin.
ok, let’s start an alternative solution. i’m in. i’ll be the project manager. i need money, subject matter experts (ahem, jim), a business anaylst, a few programmers, some testers, and someone in marketing.
this isn’t a hard project if you give me all that.
I’ll take on your marketing if you can make it happen.
Geotpf-
Jax outlined the per se violation elements:
“(a) collusion among participants, and (b) price restraints, you must also have (c) sufficient market power in order to establish a violation of the Sherman Act.”
Collusion? check.
Price restraints? check.
Sufficient market power? sounds likely.
(Ok, so I have made a bit of an assumption about the price restraints, but that’s the gist of the article. The sufficient market power is not as clear, but it sounds likely.)
In any event, the Justice Department normally doesn’t investigate that much over nothing.