The NAR-DOJ Settlement: Journey from Chaos to Confusion

I’m seriously up to my eyeballs in my dayjob (plus, I have to go to my second job of raising two little boys under the age of three after my dayjob — this second job is a LOT HARDER than my dayjob, I have to say…) but I had to emerge and say a word about the recently announced settlement between the DOJ and NAR.

Where’s the beef?

From the NAR website, I get this:

The final order expressly provides that NAR does not admit any liability or wrongdoing, and NAR will make no payments in connection with the settlement. The terms of the agreement preserve and strengthen the MLS as a means for broker-to-broker cooperation intended to serve real estate professionals who list or sell property in that MLS. “This will ensure that MLSs are used for what they were originally intended to do, which is help real estate professionals find buyers for people who want to sell their homes,” said Laurie Janik, NAR general counsel.

NAR will be reinstating an updated version of its VOW policy, which governs the use of MLS data for brokers who offer brokerage services online by requiring customers to register with the brokerage before they can search for homes. That policy was rescinded in 2005 when certain provisions were challenged by DOJ. The revised policy continues to protect the rights of sellers who do not want their property or their property’s address displayed on the Internet, and also protects sellers from having false information about their listings appear on the VOWs of a member of the MLS. Among other things, the revised policy requires brokers hosting others’ MLS data on their site to turn off features–such as home value estimates and blogs–surrounding a listing at the request of the seller.

The agreement requires MLSs and local associations that operate MLSs to pass and implement the amended VOW policy within 90 days of the court’s approval of the final order.

The revised policy comes at a time when brokers appear to be moving away from the VOW business model. “The response to VOWs hasn’t been great because consumers can find sites throughout the Internet on which to gather information without having to register their name and contact information,” said Mark Lesswing, NAR chief technology officer.

Okay. So basically, after three years, hundreds of thousands (possibly millions) of dollars in legal fees, and spending thousands upon thousands of taxpayer dollars on DOJ employees… we get… this pale imitation of reform?

Fact is, VOW’s suck for the consumer.  The user is required to register to use a VOW website.  From the NAR website:

The primary distinguishing feature of a VOW is the requirement that visitors register by entering an e-mail address and receive a password prior to accessing MLS listing data. Some MLS participants also post terms of use on their VOWs and require visitors to agree to those terms.

Um, big deal?  Consumers don’t care to use a VOW for the most part, because of the registration requirement.  This might be of some huge importance to the boys and girls at the DOJ, but as Brian Boero writes, “No one cares. The DOJ and NAR “settled” a dispute today that had pretty much resolved itself by 2005.”

Far worse, we have traveled from chaos — when individual rules for VOW’s by MLS created different regimes and different rulesets — to utter confusion.

The rules that were important to the industry was the Internet Listing Display (ILD) Policy that NAR itself said in 2005 replaced the old VOW and IDX policies.  The Proposed Final Order (PDF) of the settlement between DOJ and NAR gets rid of the ILD entirely in Section V(A), and replaces that with the Revised VOW Policy (PDF).  I guess that’s cool, but… where the heck are the rules for IDX display?  All that the Revised VOW Policy says is that “Participants” may use IDX on their websites.

The ILD, whatever its flaws, covered both VOW’s (where the user must register) and plain old websites without registration (where IDX rules governed).  The new Revised VOW Policy only covers VOW’s, which is not exactly where the industry is going.

Unless I’m very mistaken (entirely possible), this means that we are now entirely without direction as to IDX rules and policies.  The ILD replaced the old IDX policies; the new Revised VOW Policy specifically gets rid of the ILD entirely.  There is no Revised IDX policy (yet).  Therefore, we have traveled from chaos to confusion.

Thanks, DOJ!  Our public servants hard at work serving the public.  Sa-weet.

Presumably, NAR will promulgate a new IDX policy soon.  I can tell you the industry will need one in a hurry.  Presumably, that policy will need DOJ and/or court review to ensure that it does not stifle competition.  That’s a lot of presumptions and assumptions, and I am now thinking the medicine is worse than the cure.

More later, as time and duties permit.


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Rob Hahn

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

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