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NAR/DOJ settlement: “A tale told by an idiot, full of sound and fury, signifying nothing…”

After years of song and dance, the DOJ reached a settlement with the NAR that seems to have achieved absolutely nothing — except the waste of a bunch of tax and dues money. At least that’s what you would think if you read nothing but the NAR’s spin. In fact, the NAR lost the major point of contention, the attested right of brokers to withhold listings from Virtual Office Websites (VOWs). From eWeek.com:

The Department of Justice said May 27 it has reached a settlement in its long-running legal dispute with the National Association of Realtors. Under the terms of the settlement, the Realtors will enact a new policy that guarantees Internet-based brokerage companies will not be treated differently than traditional brokers. 

Under the new policy, Realtor-affiliated brokers participating in multiple listing services will be prohibited from withholding their listings from brokers who use virtual office websites, generally known as VOWs. The Realtors agreed to a 10-year settlement to ensure the group continues to abide by the requirements of the settlement.

“Today’s settlement prevents traditional brokers from deliberately impeding competition,” Deborah A. Garza, deputy assistant attorney general of the DOJ’s Antitrust Division, said in a statement. “When there is unfettered competition from brokers with innovative and efficient approaches to the residential real estate market, consumers are likely to receive better services and pay lower commission rates.”

The Realtors also agreed to adopt antitrust compliance training programs that will instruct local associations of about the antitrust laws generally and about the requirements of the proposed settlement. The National Association of Realtors is a trade association of more than 1.2 million residential real estate members who operate in local real estate markets nationwide.

That sounds like something, but it ain’t. For one thing, the NAR gets to define what a VOW is. From its own press release:

The terms of the proposed final order validate NAR’s position – that MLS members must be actively engaged in real estate brokerage by actually helping people buy or sell homes. This will ensure that MLSs are used for what they were originally intended to do – to help real estate professionals find buyers for people who want to sell their homes.

But, even so: Who cares?

No one uses VOWs by now, and it’s small potatoes if they do. Meanwhile, occupational licensing creates a cartel. Broker licensing creates a sinecure for brokers. Withholding tax exclusion turns brokerages into dairies for milking gullible agents. Sellers — via their listing agents — paying the buyer’s agent’s commission makes a mockery of buyer’s agency and enshrines sub-agency behind a camouflage of tattered lace. Persistent pressure by branches of the NAR to pass anti-competitive legislation sustains artificially high price levels and outrageously low service levels. And all of this entirely ignores the nation’s psychotic monetary policy, its insane real estate-favoring tax laws and the persistent pandemic mess in the mortgage markets. The real estate industry could not possibly be any more screwed up than it is right now. But don’t worry. After years of nattering and millions of wasted dollars, the deck chairs on the Titanic have been moved! Hurray!

I expected nothing from this, and, lucky me, I got it.

Thomas Johnson forwarded the NAR’s press release to me, and he says this in email:

My take: DOJ has no interest in kicking an industry when it is down in an election year. Looks like the sellers will be paying both sides for another decade or so. We now get to see the victory dances of both sides in the media. DOJ gets to claim that VOWs have been cleaned up and the MLS’s get to keep on keeping on (who uses VOW’s, anyway?). Score one for the status quo.

I’m inclined to agree. The press release itself is indicative: It’s almost entirely about how to spin the media. No kidding.

Here’s my take: If you want to see a better real estate practice in the United States, you will have to make it better. You can’t do much about the NAR or the Fed or the DOJ, but you can do everything you can to push the bums out of this business. I hate it that my dues money goes to support people who will frustrate true competition in any way they can, but their days are numbered. The wired world of real estate belongs to us. My plan is to make it impossible for these lazy leeches to compete against me. How about you?

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  • 27 comments

    27 Comments so far

    1. Barry Cunningham May 27th, 2008 2:30 pm

      “My plan is to make it impossible for these lazy leeches to compete against me.”

      Ditto!

      By the way you can download the actual Final Judgment and read it for yourself by Downloading the judgment here

    2. Barry Cunningham May 27th, 2008 2:33 pm

      oops wrong link above…Download the judgment here

    3. Flynn Gentry-Taylor May 27th, 2008 2:42 pm

      Which lazy leaches are you talking about? Flynn

    4. Greg Swann May 27th, 2008 2:51 pm

      > Which lazy leaches are you talking about?

      All of them. Capitalism rewards zeal and penalizes sloth. I long to put the sloths into jobs they can handle.

    5. [...] Bloodhound [...]

    6. Hunter Jackson May 27th, 2008 3:26 pm

      Now on to DOJ vs CMLS (Consolidated Multiple Listing Service, Columbia SC). That one will be interesting…

    7. Tom Vanderwell May 27th, 2008 3:43 pm

      Greg,

      Very well said. I’m all for improving the caliber of those of us who are left standing on both your side of the fence and my side of the fence.

      Tom

      P.S. Did you get the e-mail I sent you Friday?

    8. [...] Bloodhound [...]

    9. Thomas Johnson May 27th, 2008 4:08 pm

      I long to put the sloths into jobs they can handle.

      Would you like fries with that?

    10. Greg Swann May 27th, 2008 4:15 pm

      > Did you get the e-mail I sent you Friday?

      I’m sure I did. I’m about a month behind on everything. My apologies.

    11. Greg Swann May 27th, 2008 4:18 pm

      > Would you like fries with that?

      I was thinking of something requiring a mop, a bucket and a plunger, but you’re on the right track. ;)

    12. Robert Kerr May 27th, 2008 4:41 pm

      I’ve read both sides of the spin, both sides of the analyses, and this still looks to me like a major defeat for the NAR and local brick-and-mortar and a significant victory for online agents. Only time will tell.

    13. [...] Greg Swann at Bloodhound, quoting Hamlet, rightly said so what. [...]

    14. Tom Vanderwell May 27th, 2008 6:02 pm

      > Did you get the e-mail I sent you Friday?

      I’m sure I did. I’m about a month behind on everything. My apologies.

      No apologies necessary. Unchained took a lot of extra time and energy. I just wanted to make sure you got it.

      Call or e-mail any time you have a chance.

      Tom

    15. [...] as a result of coming on a day where the NAR-DOJ agreement stole the headlines, there was an announcement today in the real estate tech world that went largely unnoticed — [...]

    16. Late Night Austin Real Estate Blog May 28th, 2008 12:11 am

      I wish NAR spent more time on trying to have its members to be better agents for consumers (which would help in general the reputation of realtors) instead of fighting about VOW’s and nonsense about who can say the world mls

    17. [...] Bloodhound [...]

    18. Dave Phillips May 28th, 2008 7:28 am

      Greg, you have hit the nail on the head, especially with the comment by Tom Johnson. When Microsoft was hot, the DOJ sued them and when real estate was hot, the DOJ sued NAR. This case was always about the politics of public perception and had no real substance to it – on either side. The DOJ refused to settle this case until the market tanked and suddenly they were agreeable. I have followed this case closely and now I feel like I need to shower and wash off the slimy politics of the DOJ. Not that I’m excusing NAR for all their actions…

    19. DOJ and NAR - so what? | VARbuzz May 28th, 2008 7:58 am

      [...] Bloodhound [...]

    20. Chris Eliopoulos May 28th, 2008 8:14 am

      How dare you talking like this about the “Realtors”?LOL

    21. Dan Melson May 28th, 2008 3:08 pm

      Well said, Gregg. Now I get to be lazy and tell people to read your article. Thanks.

      If we get the government we deserve, what have we done to deserve either DOJ or NAR?

      I’m not sure even Mao Tse Tung deserves either one, let alone both.

    22. Matt Gentile May 28th, 2008 8:49 pm

      Wow, a lot of negativity torward professional Realtors here from what I thought was a leading professional real estate opinion leader. Yikes. When the dogs start to eat themselves watch out.

      From the beach chair,

      Matt Gentile – 300 Days of Sunshine
      FloridaMoves.com

    23. Greg Swann May 28th, 2008 9:12 pm

      > Wow, a lot of negativity torward professional Realtors here from what I thought was a leading professional real estate opinion leader.

      Your first time here? People who use force to prevent honest commerce are criminals. I don’t speak for anyone else who writes here, but I am always anti-crime.

    24. Terry Shortt May 29th, 2008 5:24 am

      Although consumers probably won’t actually see any benefit from this settlement agreement, it does send a strong message to the real estate industry to stop erecting barriers to alternative business models.

      The US real estate industry, dominated by the National Association of REALTORS and its affiliates nationwide is still a closed business that is highly resistant to change. Implementing any change that would have a direct impact on consumers (like lower fees) is like trying to turn the Titanic around in a bathtub.

      Most consumers have no idea that the NAR has a strangle hold on virtually every state real estate regulatory body (the very entity that was established to protect consumers).

      They exercise this control through their state affiliates and it goes virtually unnoticed.
      Real estate regulatory bodies like the Kentucky Real Estate Commission (KREC), operate with little or no oversight and rarely make a move without the direct involvement of the Kentucky Association Of REALTORS (KAR).

      It’s easy enough to see that that the objectives of the KAR would be “industry” oriented and that the KREC should be “consumer” oriented.

      We are not likely to see any meaningful change in the way the real estate industry functions until we restore independence to real estate regulators.
      Currently in many states, a position on the state real estate regulatory body is a “pay-back” for past political involvement and has to be approved by the state REALTOR trade group.

      What we actually need (on real estate commission)are “subject matter experts” serving the interest of consumers and establishing reasonable rules and policies that reflect the fact that we are living in 2008 not 1960.

    25. Mark Eibner May 31st, 2008 2:01 pm

      Greg-
      Well Said, well Put. In beginning and in the end, this was a whole shame that had a lot to do with a whole lot of nothing.

      The DOJ (read, the man) and their business harassment tactics, demonstrate many key facets of what’s wrong with our society or country in general. Mainly, the presumed state of Nannism through the use of legal fascism, coupled with main stream media (MSM) doublespeak to mess with people over issues that do not mean ‘jack’ in the cosmic scheme of universal creation. Once again, the clear winners are the lawyers, lobbyists and bureaucrats. Hands Down. That’s what everyone forgets. The consumers and the American tax payer (one in the same) are the lowest chink in the post, as always. Funny thing is that, consumers (tax payers) got screwed twice. Once by paying for this ruse and secondly, by the DOJ providing no real meaningful solution. Nothing.

      Is the DOJ just plain stupid? Or are the NAR lawyers just that good? In an era where everything is moving towards transparency…real estate’s fundamental root of all evil, the coop or cooperating broker compensation fee… is still an unchanged, a 30 plus year old doctrine and now as a result of this multi-million dollar non-solution, will remain that way for years to come.

      Thomas Paine…”That government is best which governs least”. The DOJ and it’s army of LEGAL Nazis, with their actions and the final ruling is significant proof that the administration of business is best done without bureaucrats involved. When we, the people, provide a group of civil servants within a centralized and unchecked governmental body with cash, that they openly steal from their constituents, the people of America, then this is what happens…nothing. Nothing happens. The only real activity that most bureaucrats can do very effectively involves tax collecting then schemes involving redistribution through spending them against their own people.

      So once again, money gets removed from out pockets and then sucked out to the lawyers on both sides as well as the bureaucrats to justify their lucrative “civil servant” positions.

    26. [...] it: Inman News wrote the first piece I read on it, Jay Thompson gives a good roundup of reaction, Greg Swann gives a strong “who cares?” and Sellsius frames the decision in light of [...]

    27. [...] If you interested in more details on the major talking points, I will defer to the excellent post by non other than Mr. Greg Swain of the Bloodhound Blog. [...]