Another Government Takeover
Three years ago, I noted the Federal Trade Commission had begun a takeover of privately-owned multiple listing services -- online databases used by local real estate brokers. The FTC unilaterally decided that the existing MLS model was outdated and that all listings should be made available to everyone on a non-discriminatory basis.
Nevermind the fact that the brokers were the ones who expended the resources to build the MLS and compile the listings: Once a product or service becomes popular, the government considers it a "public utility" subject to state control. The FTC made that abundantly clear today in announcing an order against a Michigan-based MLS, Realcomp:
The Federal Trade Commission today issued an Opinion finding that Realcomp II - a Michigan-based realtors' group - violated federal law by restricting the ability of member real estate agents to offer consumers lower-priced alternatives to traditional real estate services. Realcomp refused to transmit discount real estate listings to its own and other publicly available Web sites and excluded such listings from the default searches within its own database. The Commission found that these policies restricted access to these listings and harmed competition. The FTC's Final Order requires Realcomp to provide its members non-discriminatory access to non-traditional and lower-price listings on its Multiple Listing Service (MLS) and to stop preventing such listings from being sent to its public real estate sites.
In its Opinion announced today, the Commission found that "the practices at issue improperly limit consumers' access to information about the availability of these lower-priced alternatives," and . . . concluded "that [Realcomp's] acts and practices unreasonably restrain trade in violation of Section 1 of the Sherman Act . . . and Section 5."
Access to real estate listings is now the sacred birthright of every citizen, but not the right to control the content and use of one's database or website. FTC-manufactured "law" now holds that all decisions regarding the distribution of content to websites and databases will be made by unelected, unaccountable lawyers in Washington. This is necessary to protect "consumers."
This means the FTC can require certain content be published -- and also that certain content be censored, such as anything having to do with the medicinal use of herbs.
The other implication of the Realcomp order is that the FTC has the power to decide what business models are acceptable in the marketplace. The FTC explicitly stated its goal was to drive smaller, full-service brokers out of business. This might have happened anyhow if the market were left to its own devices, but the FTC views "competition" as a measurable quantity: If the level of competition is insufficient, government intervention can bring it back to acceptable levels.
Comments (11)
J. W.
Realtors, like doctors, are the recipients of governmental favor in the form of licensing.
I agree that the FTC's action is improperly justified using antitrust law; however, realtors are creatures of the state, and as such made their deal with the devil. I cannot see how defending the "rights" of realtors is consistent with reason. One might as well defend the "rights" of government employee unions.
If your argument is only against the reasoning employed to justify the FTC action, I agree with you. If however, you are asserting that a government employee (and anyone operating with a license is) can legitimately own property, you are wrong. As an indeterminate amount of realtor's income is generated by forcibly excluding others from competition, and as realtors are willing participants in this violence, they are simply paying the piper.
Published: November 2, 2009 2:17 PM
S.M. Oliva
The FTC's action is not predicated on any licensing benefits conferred upon realtors. The FTC has applied identical arguments against individuals and businesses that do not benefit from licensing. Your argument is irrelevant and ill-informed.
Published: November 2, 2009 2:59 PM
Alpha Bootis
“realtors are creatures of the state, and as such made their deal with the devil. I cannot see how defending the "rights" of realtors is consistent with reason.”
Individuals who want to become realtors, lawyers, doctors, electricians, plumbers, pilots, etc. etc must all be licensed in order to practice their skills; however, this certainly does not mean that an individual or company condones the government’s use of force on them or anyone else. It simply means that they were coerced into obtaining permission from the government in order to practice in their chosen and otherwise virtuous professions.
The government is the only entity involved that threatens and ultimately uses force and it is only those individual’s, realtors, doctors, and companies which advocate for more government force that have truly crossed the line and gotten into bed with the devil.
Published: November 2, 2009 3:03 PM
iawai
J.W. - while you raise a valid issue, there is also the reality that if you wished to sell houses in any State you must first license yourself - regardless of your agreement with the State registrar and rules, or else face sanction.
Further, while we are in the playground of a Constitutional Republic that creates a govt of limited power, thus any licensing restriction must pass constitutional muster by not regulating beyond those rules that are reasonably necessary to implement whatever percieved govt interests were being preserved by licensing.
As the FTC made no claim (that I've seen yet) of being able to limit the MLS service because it relates to a proper licensing reasoning, this usurpation is unconstitutional. More generally, if we view that just as one group "regulating trade" and another in the business of selling houses, the expropriation of these listing services is nothing but social theft.
If there were a voluntary trade organization trying to hold a member to disclose proprietary info as agreed in the membership contract - analogous to your hypo - there would be now problem here.
Published: November 2, 2009 3:49 PM
Doug M
J.W. - The National Association of Realtors is a voluntary organization that refers to its members as Realtors. A Realtor is someone who is a member of this organization. While most Realtors also maintain a state license, either as a real estate agent or broker, membership in NAR and state licensing are not the same. The annual membership fee for NAR is in addition to the costs of licensing. The local chapters of NAR built and maintain most multiple listing services. I'm not aware of any general databases of real estate that is available for sale or that has sold that were built or are maintained by the federal government or any state governments. The state departments in charge of environmentally contaminated properties have databases on these properties, but the NAR, LoopNet, and CoStar databases are far more extensive.
When the developers of these databases can't charge users who are willing to pay for the information, they don't put forth the same effort to compile the information. This information is very important to those of us involved in the profession.
Published: November 2, 2009 4:04 PM
HL
Realtors are kind of like cats to me. I just plain don't like them. A waste of space in most deals. Lots of meaowing but little useful action.
Does my dislike of them matter? Nah, they are still (marginally) human, so any abuse at the hands of gummint' is simply wrong. I feel bad for the critters.
As predicted, the FTC under Obama is going nuts. Lots more to come.
Published: November 2, 2009 7:40 PM
S.M. Oliva
"As predicted, the FTC under Obama is going nuts. Lots more to come."
Actually, this case is three years old. It was approved by Bush-appointed FTC commissioners; and even today, those commissioners remain in office. Obama has yet to appoint any FTC members.
Published: November 2, 2009 8:02 PM
Ribald
Hmm. This is interesting to me because what the FTC is attempting to prevent is this:
"ABOR’s Web site policy, the Commission contends, is a joint action by a group of competitors to withhold listing information from publicly accessible Web sites unless competitors contract with home sellers in the way ABOR dictates." (http://www.ftc.gov/opa/2006/07/austinboard.shtm)
The scenario is reminiscent of the one in which the government does the same thing (generally): withholding access to services unless citizens act in ways that the government dictates. Is it different because no one is required to depend on ABOR? We choose the governments we live under too, after all. There are even places without governments at all.
When we make excuses for remaining under a system of governance that we fundamentally oppose, aren't we simply doing its bidding?
To make such excuses reveals a fundamental question: is it just too much of a bother sometimes to choose the better option? When the cost of choosing exceeds the perceived gain of choice, do we forfeit that choice, or make it in spite of the cost?
The above may have been a stretch for a simple article about the FTC's overbearing motherliness. Sorry about that.
Published: November 3, 2009 2:07 AM
Mill Town
Ribald,
"To make such excuses reveals a fundamental question: is it just too much of a bother sometimes to choose the better option?"
Suppose you have the choice to vote for a douche or a turd sandwich, what would be the better option and why ?
Published: November 3, 2009 10:50 AM
Dennis Norman
I'm all for free-enterprise, but I also realize the importance of regulation to assure there are not monopolies or other "arrangements" that negatively affect the consumer by discouraging or preventing competition. In the case of RealComp they took a gamble and lost....back in May 2008, the FTC filed a law suit against Consolidated Multiple Listing Service in Columbia, South Carolina...similar to the RealComp suit...In August 2009 the FTC prevailed.....in the final judgment there was a laundry list of permitted and not-permitted restrictions that Consolidated had to incorporate into their MLS rules....the majority of the MLS's in the country chose to enter into a voluntary agreement with the FTC...some chose to fight them.....I wrote about this earlier in the year and have all the details of the FTC judgment in a post at
http://www.realestateindustrynews.com/legislative-regulatory/mlss-cannot-exclude-discount-brokers-or-new-business-models/
Published: November 3, 2009 12:43 PM
Ribald
Mill Town,
If you care for my opinion, the turd sandwich has greater utility to me, since it can provide both methane and a fertilizer for plants. I have little need for a douche.
If one of the two is supposed to hold elected office, I'd probably move to a country in which only humans can be eligible in a vote, because the benefit of choosing a better government (moving all of my possessions, etc) would very likely outweigh the costs of being governed by either of the two choices. If I couldn't make that assumption (perhaps other countries follow the same custom), then I'd likely stay and vote for the sandwich. In such a way, my choice would be dysfunctional. I'd disagree with both candidates fundamentally, yet I would not be able to choose otherwise because it is the lowest-cost option.
I'm not sure I would have chosen "douche" and "turd sandwich" as choices in this form of hypothetical situation (if I were the one asking), though.
Published: November 3, 2009 12:53 PM