DOJ and NAR could get back into the ring over commingled citations
According to the second amended complaint, NAR at the time had a policy that discriminated against brokers who “operated secure, password-protected Internet sites that enabled the brokers’ clients to search for and receive real estate listings over the Internet.”
The DOJ claims that NAR has developed regulations for VOWs, which the working group head recommended that NAR should quickly adopt because “browsers using VOWs were ‘capturing market share just under the radar.'” Additionally, some brokerage executives expressed concern that VOWs could drive down agent commissions.
According to the DOJ, these concerns led NAR to adopt its Initial VOW Policy, and ultimately its Modified VOW Policy, which the trade group issued after the DOJ notified NAR of its intention to file a lawsuit.
In the complaint, the DOJ states that the policy “significantly changes the rules for multiple advertising services” and may allow brokers to withhold sellers’ listings from VOW operators by giving them the right to opt out of digital marketing.
By doing this – which the DOJ alleges brokers do without the express consent of sellers – the DOJ alleges that traditional brokers are “blocking the clients of Internet competitors from using the Internet to view the same set of MLS listings that the traditional brokers provide to their clients ”. customers” through a paper listing book kept in the broker’s office.
Before any of the VOW policies went into effect, NAR “would not allow a broker to withhold his or her clients’ listings from a rival.” But the new opt-out feature in the VOW policy made it possible to keep or hide Internet company listings.
“Applying this provision would prevent a broker from providing the same MLS information over the Internet that brick-and-mortar brokers can provide in their offices,” the DOJ’s amended complaint states.
The department also noted that the policy exempted Realtor.com (which was still owned by RIN) from the opt-out provisions.
After nearly three years of litigation, the DOJ and NAR reached a settlement in May 2008. As a result, NAR agreed to implement another modified VOW policy. The policy went into effect in November of that year after receiving final approval from U.S. District Court Judge Matthew F. Kennelly. In his final ruling, Kennelly noted that as part of the settlement, NAR agreed that it could not change the policy “without obtaining prior written approval from the Antitrust Division of the United States Department of Justice or an order of the Court.”
Included in the changed policy is Section 19.23which states: “A participant shall ensure that any listing on his or her VOW obtained from other sources, including from another MLS or from a broker not participating in the MLS, is searched separately from the listings in the MLS. ” The policy notes that the rule is optional and that adoption is “at the discretion of the MLS.”
A similar optional policy, which was last modified in May 2017, was later added to the NAR Multiple Listing Policy Handbook. Section 18.3.11 states: “Listings obtained from Internet Data Exchange feeds [the successor of VOWs] of Realtor Association MLSs in which the MLS participant holds participation rights must be displayed separately from listings obtained from other sources.
With these rules, NAR has cemented an optional but long-standing practice of not mixing MLS listings with listings obtained from non-MLS sources, such as for-sale-by-owner or builder listings. Furthermore, based on the fact that the DOJ had signed off on the amended VOW policy in 2008, the department—at least at one point—agreed to the rule.
Since then, however, the DOJ’s position has clearly changed.
Friends in the REX suit
In June 2024, the DOJ filed an amicus curiae brief with the police department Ninth Circuit Court of Appealswhich is overseeing REX’s appeal of its antitrust case against NAR and Zillow. After losing at trial in September 2023, REX filed a motion for a new trial in November. In its motion, REX argued that it was unreasonably prevented from presenting testimony about broker commissions to the jury. Judge Thomas Zilly, who oversaw the original trial, denied REX’s request for a new trial.
In the middle of the pack was Zillow’s decision to post non-MLS listings, including those of now defunct discount brokerage REX, on another part of the website. REX claimed that this caused Zillow to engage in false advertising.
Zillow created its two-tab design, with one tab displaying MLS listings and another tab showing non-MLS listings, after the listing giant joined NAR so it could access Internet Data Exchange (IDX) feeds to view MLS listings on his site. Some MLSs to which Zillow belonged had a no-commingling rule, so the company was forced to comply.
In its amicus brief, the DOJ argued that the court relied on the optional nature of the rule – and NAR’s lack of an enforcement mechanism for MLSs to adopt the rule – to conclude that there was no concerted action from Zillow. NAR or the MLSs.
“But the court did not consider other factors – such as NAR’s role in promulgating the rule to segregate listings and prohibiting changes by MLSs that adopt the rule, the effect of an MLS adopting the rule to make it mandatory for its members, and the role of MLSs. in enforcing the rule on their members – suggesting that NAR has proposed a common plan to MLSs and their members to segregate and demote non-MLS listings,” the filing said.
“If the court’s incomplete approach is not corrected, there is a risk that associations like NAR could avoid antitrust scrutiny for many anticompetitive arrangements by using optional rules.”
Despite the belief that concerted action may have occurred, the DOJ maintains that Zillow was not part of the rule when it was created. But the DOJ also said Zillow “allegedly joined this common scheme when it joined NAR and affiliated MLSs and complied with the no-interference rule despite opposing it.”
The DOJ concluded its brief by recommending that the Ninth Circuit reverse Zilly’s ruling and reopen the case for further review at the district court level. The Court of Appeal has yet to rule on REX’s appeal.
In addition to filing an amicus brief in REX’s call for a new trial, multiple sources have confirmed this HousingWire that the DOJ has sent Civil Investigative Demands (CIDs) to at least ten MLSs across the country as it investigates the optional no-commutation rule.
In an email sent to members in mid-August and obtained by HousingWire, NAR said it is “engaged with DOJ in discussions regarding data aggregation and other practices in the real estate industry.”
“As chairman [Kevin] Sears recently said that NAR leadership met in July with DOJ Antitrust Division leaders, including Assistant Attorney General for Antitrust Jonathan Kanter,” the letter said.
NAR would not comment on the contents of the letter, which was written by Katie Johnson, the trade group’s former chief legal officer, but did confirm the authenticity of the email.
From quiet to controversial
The DOJ’s attention to this optional rule has put it in the spotlight and made it a point of contention for some. Klein of the San Diego MLS is one of the few people who will talk openly about his support for the no-mingling rule.
“There’s a long history of how this happened. These weren’t treacherous things people did; this made perfect business sense,” Klein said. “If you’re a content provider, which these brokers are for the MLSs, you want to protect the content you offer and you want to use that content to your advantage. Today, content providers on the Internet are typically compensated in some way, and one way to do that is to protect the content they provide.”
Zillow, on the other hand, as it has said several times during its legal battle with REX, does not support the optional rule. Since 2021, Zillow has filed four requests with NAR asking the trade group to eliminate the rule.
“Fundamentally, it comes down to the fact that we believe in transparency in real estate,” said Errol Samuelson, Zillow’s chief industry development officer. “We believe consumers should have access to all their housing options in one place and be able to see their options side by side.”
In one Consumer survey 2023Research from Zillow found that 91% of buyers believe they should be able to see all their housing options in one place for free and without barriers. Samuelson said he believes good agents and brokers feel the same way.
“When you’re working with a buyer, you want to make sure he or she is aware of all their options,” says Samuelson. “If the buyer comes to you with an ad that suits them and asks why you didn’t show it to them, that can actually undermine trust and your relationship.”
But Art Carter, CEO of the California Regional MLSis indifferent to the optional rule. CRMLS is one of the companies that never implemented it.
“It has never been a point of contact for our real estate community,” Carter said. “I’ve never had anyone call me and ask why we don’t have it. It’s just something that, for whatever reason, when the policy was first presented, our board of directors decided not to implement it.”
Carter said CRMLS reopened discussions about the rule with membership about five years ago. Ultimately, the board felt that members did not want CRMLS to change.
“I don’t understand why there’s such heat right now,” Carter said.
As controversy over the rule has grown in recent months, some MLSs have decided to withdraw the optional rule. Clear MLS was one of the companies that made this change.
“It may have been useful in the early days of the Internet, when there were concerns about the way data was accessed and displayed,” says Rene Galicia, executive vice president of customer advocacy at Bright MLS. “These rules were created when IDX was still in its infancy more than 20 years ago and no one knew how listing display would evolve.”
While Bright MLS declined to discuss in detail the decision to eliminate the rule, Galicia noted that Bright regularly reviews the rules based on subscriber feedback.
In contrastREcolorado – the first MLS to rescind the rule – had a lot to say about its decision. In August 2022, when the rule was rescinded, it was said that the decision was based on the evolving role of the consumer in the real estate transaction due to improving technology.
“Through IDX websites, you can now find more listings – and stay up to date on properties not currently on the MLS,” REcolorado wrote in a blog post quoted by Inman News. “You may also be able to increase your revenue by marketing your services to non-MLS merchants.”
Looking ahead, it remains unclear what the DOJ’s next steps will be regarding the no-commingling rule. The DOJ’s Antitrust Division declined to comment on this matter and its recent actions. But whatever the future holds, the DOJ has certainly succeeded in sparking a discussion.
