IDX (Internet Data Exchange) MLS (Multiple Listing Service)

Summary of DOJ vs. NAR Final Judgment

Final Judgment Summary

The litigation between the Department of Justice and the National Association of REALTORS® (NAR) over claims of antitrust violations has resulted in a proposed Final Judgment that likely will become final in early September 2008 without the imposition of any fines or admission of wrongdoing.
The litigation has been costly and time consuming. Both sides claim a win. But, will the judgment have much impact on the way brokerage is practiced? When we examine the key points below, it appears that the typical real estate professional will see little change in the way they service their clients and prospects. One reason is the fact that the popular Internet Data Exchange (IDX) remains intact as a valid method of displaying other broker listings on the Internet.
Some of the key definitions in the Final Judgment include:
  • “Broker” means a person licensed by a state to provide services to a buyer or seller in connection with a real estate transaction (includes agents associated with the broker).
  • “Customer” means a seller client of a Broker or Person who has expressed to a Broker an interest in purchasing residential real property and who has described the type, features, or location of the property in which he or she has an interest, entitling the Broker to Provide the Customer MLS listing information by any method (e.g., by hand, mail, facsimile, electronic mail, or display on a VOW).
  • “Modified VOW Policy” means the policy attached to this Final Judgment as Exhibit A
  • “VOW” or “virtual office website” means a website, or feature of a website, operated by a Broker or for a Broker by another Person through which the Broker is capable of providing real estate brokerage services to consumers with whom the Broker has first established a Broker-consumer relationship (as defined by state law) where the consumer has the opportunity to search MLS data, subject to the Broker’s oversight, supervision, and accountability.
Prohibited Conduct. NAR is not to adopt rules that are inconsistent with the Modified VOW Policy or that prohibit a Broker who uses a VOW from providing to Customers on its VOW all of the listing information that a Broker is permitted to Provide to Customers by hand, mail, facsimile, electronic mail, or any other methods of delivery. Nor can NAR prohibit or restrict the referral of Customers whose identities are obtained from a VOW by a Broker who uses a VOW to any other Person, or establishes the price of any such referral.
Required Conduct. Within five business days after entry of the Final Judgment (estimated to be early September), NAR is to (1) repeal their ILD Policy, (2) direct Member Boards that adopted VOW rules to repeal such rules, (3) adopt the Modified VOW Policy (and make no changes), (4) direct Member Boards to adopt the Modified VOW Policy within 90 days of entry of Final Judgment (around the end of 2008). If NAR finds that Member Boards do not adopt consistent rules, NAR can deny coverage under any NAR insurance policy.
Permitted Conduct. NAR may adopt the definition of MLS Participant and the accompanying Note (Exhibit B). NAR is to direct each Member Board not to suspend or expel any Broker from MLS membership or participation for reasons of the Broker’s then-failure to qualify for membership or participation until May 27, 2009.
NAR is to designate an Antitrust Compliance Officer with responsibility for educating Member Boards about the antitrust laws and for achieving full compliance with this Final Judgment. NAR is to publish the Final Judgment and Modified VOW Policy on www.realtor.org and once in the REALTOR Magazine.

NAR is to permit DOJ access to records and reports for purposes of determining compliance with the Final Judgment. The Final Judgment expires 10 years from date of entry.
MLS Participant – Exhibit B Summary
A key part of the Final Judgment in the settlement of the action brought by the US Department of Justice (DOJ) against the National Association of REALTORS® (NAR) is the clarification of the definition of “MLS Participant” under Statement 7.9 of the “Statement of MLS Policy” and Section 3 of the “Model MLS Rules,” as covered in “Exhibit B” of the Final Judgment.
Under the new definition of MLS Participant, the individual or firm must hold a current, valid real estate broker’s license and offer or accept cooperation and compensation to and from other Participants.  Note that Participants can also be appraisers who are licensed or certified by an appropriate state regulatory agency to engage in the appraisal of real property.
The most significant change requires that Participants actually “offer or accept cooperation and compensation” — the previous definition required that they only be “capable of offering and accepting cooperation and compensation.”

Mere possession of a broker’s license is not sufficient to qualify for MLS participation. The requirement to offer or accept cooperation and compensation means that the participant “actively endeavors” during the operation of its real estate business to list real property of the type listed on the MLS and/or to accept offers of cooperation and compensation made by listing brokers or agents in the MLS. “Actively” means on a continual and on-going basis during the operation of the Participant’s real estate business.
The requirement is not intended to deny MLS participation based on 1) a part-time or seasonal practice 2) not achieving a minimum number of transactions despite good faith efforts, or 3) the level of service provided by the Participant. Nor can the MLS deny participation to a Participant that operates a VOW that the Participant uses to refer customers to other Participants if the Participant actively endeavors to make or accept offers of cooperation and compensation.
From NAR’s perspective, the enhanced requirement to be an MLS participant strengthens MLSs, since MLSs will now be able to terminate the access of brokers who make no effort to either list or sell property in the MLS.  A broker who only took the MLS feed to attract consumers to refer them to other brokers will no longer qualify for MLS membership.

Modified VOW Policy – Exhibit A Summary

      – The Policy governing the use of MLS data in connection with Internet brokerage services offered by MLS Participants (“Virtual Office Websites”)
The DOJ vs NAR Final Judgment requires that NAR adopt and maintain what is now referred to as the Modified VOW Policy. This new policy is the guts of the decision that will affect how a MLS Participant (as defined in Exhibit B) may provide brokerage services via a VOW and how a Multiple Listing Service permits MLS Participants to operate VOWs.
I. Key points described in the Scope of Policy are:
  • A Participant may operate their own VOW or designate an Affiliated VOW Partner (“AVP”) to operate a VOW on their behalf, subject to the Participant’s supervision and accountability and the terms of this Policy (similar to IDX solution providers).
  • With the Participant’s consent, non-principal brokers and sales licensees may operate a VOW.
  • The right to display listings in response to consumer searches is limited to display of MLS data supplied by the MLS(s) in which Participant has participatory rights.
  • Participants’ Internet websites may also provide other features, information, or services in addition to VOWs (including the Internet Data Exchange “IDX” function); thus, a site can use both IDX and VOW if desired.
  • The display of listing information on a VOW does not require separate permission from the Participant whose listings will be available on the VOW; i.e.,the opt-in/opt-out procedures with IDX do not apply to VOWs.
II. Key policies applicable to Participants’ VOWs
  • A Participant may provide brokerage services via a VOW, but only to clients and consumers (“Registrants”) with whom the Participant has first established a lawful consumer-broker relationship in compliance with state law disclosures.
  • A Participant’s VOW must obtain the identity of each Registrant and obtain each Registrant’s agreement to “Terms of Use” of the VOW. The Registrant must provide a valid e-mail address. The Participant must verify that the e-mail address is valid and that Registrant received the Terms of Use confirmation.
  • The Registrant must supply a user name and password, which password must expire on a certain date (no sooner than 90 days) but may be renewed. The Participant must keep records of Registrant access information and make them available to the MLS if a suspected violation or breach of security occurs (e.g., for audit trails).
  • The Registrant must affirmatively express agreement to a “Terms of Use” provision that requires the Registrant to open and review an agreement that acknowledges entering into a lawful consumer-broker relationship with the Participant (a “mouse click” is sufficient acknowledgement). The agreement may not impose a financial obligation on the Registrant or create any representation agreement between the Registrant and the Participant (registration is likely to raise “procuring cause” arguments). Any agreement imposing a financial obligation or creating representation must be established separately from the Terms of Use, must be prominently labeled as such, and may not be accepted solely by a mouse click.
  • The VOW must display contact information so a consumer can contact the Participant to ask questions. The participant must be “willing and ableto respond knowledgeably to inquiries from Registrants about properties within the market area served by the Participant and displayed on the VOW.
  • A Participant’s VOW must protect the MLS data from misappropriation by employing reasonable efforts to monitor for and prevent “scraping” or other unauthorized accessing, reproduction, or use of the MLS database.
  • No VOW shall display listings or property addresses of sellers who have affirmatively directed their listing brokers to withhold their listing or property address from display on the Internet. The seller must sign an approved standard form (sample located in Appendix to Exhibit A). The broker must keep the Seller Opt-Out Form on file for one year.
  • The seller can request that the VOW disable or discontinue any feature that (a) allows display of an automated estimate of the market value in immediate conjunction with the listing or (b) allows third-parties to write comments or reviews about particular listings or displays a hyperlink to such comments or reviews in immediate conjunction with the listing. A Participant may include personal comments (“professional judgment”) about other brokers’ listings posted on the VOW, and the seller’s right to require the Participant to “disable” the inclusion of third party comments does not apply to those.  But the Participant’s comments are subject to the requirement of section II.5.d that requires those statements to be accurate.
  • The VOW must maintain a means to receive comments about the accuracy of data added beyond that supplied by the MLS and that relates to a specific property displayed on the VOW. The VOW operator must correct or remove any false data (other than information that simply reflects good faith opinion, advice, or professional judgment).
  • Each VOW must refresh MLS data at least every 3 days.
  • Except as provided in this Policy or in MLS rules and regulations, no portion of the MLS database may be distributed, provided, or made accessible to any person or entity.
  • Every VOW must display a privacy policy informing Registrants how their information will be used.
  • A VOW may exclude listings from display based only on objective criteria, including, but not limited to, factors such as geography, list price, type of property, cooperative compensation offered by listing broker, or whether the listing broker is a REALTOR.
  • A Participant must notify the MLS of its intent to establish a VOW and make the VOW readily accessible to the MLS and to all MLS Participants for verifying compliance purposes.
III. Policies Applicable to Multiple Listing Services
  • MLS Participants may operate VOWs, or have Affiliated VOW Partners (AVPs) operate for them, subject to state law and this Policy.
  • Participants may request basic “downloading” of all MLS non-confidential listing data. Confidential data includes only that which Participants are prohibited from providing to customers orally and by all other delivery mechanisms. Sold data shall be deemed confidential and withheld from download only if the actual sales prices of completed transactions are not accessible from public records (in certain ‘non-disclosure’ states or counties, such as Texas, Utah, Alaska, Louisiana, New Mexico).
  • MLSs are not required to establish publicly accessible sites displaying Participants’ listings. See http://PublicListings.RealTown.com
  • MLSs may require appropriate security protections and/or maintain an audit trail of Registrant’s activity.
  • An MLS may not prohibit or regulate display of advertising or the identification of entities on VOWs except to prohibit deceptive or misleading advertising.  The seller does not have the same right to request these ads be disabled as they can with any third party comments or automated estimates of market value in immediate conjunction with the seller’s listing.  III.7 is the new version of what was referred to as the “clean page” rule in the old policy.  That rule precluded any advertising on a page of a VOW where a listing of another broker was displayed.  The new rule allows such advertising but precludes it when, in effect, it appears in such a fashion that it is not clear that the VOW itself is operated by the participant operating the VOW.  That is why there is a “deceptive or misleading standard” and a safe harbor provision addressing the size of the identification of entities other than the VOW operator.
  • An MLS may not prohibit Participants from enhancing their VOWs by providing information obtained from sources other than the MLS, additional technological services (such as mapping functionality), or information derived from non-confidential MLS data (such as estimated monthly payment derived from the listed price), nor can the  MLS restrict  the format of data display on a VOW or regulate the appearance of VOWs.
  • An MLS shall make the MLS data available to an AVP under the same terms and conditions as those applicable to Participants. AVP access to MLS data is derivative of the rights of the Participant on whose behalf the AVP is downloading data. MLSs may require Participants and AVPs to execute license or similar agreements that insure that the data provided by the MLS may be used only to establish and operate a VOW on behalf of the Participant and not for any other purpose.
  • An MLS may not prohibit, restrict, or impede a Participant from referring Registrants to any person or from obtaining a fee for such referral.
  • An MLS may impose certain requirements on VOWs but may impose them only to the extent that equivalent requirements are imposed on Participants’ use of MLS data in providing brokerage services via all other delivery mechanisms. A Participant’s VOW may not make available for search or display to Registrants the following data intended exclusively for other MLS Participants:     1. Expired, withdrawn, or pending listings     2. Sold data unless the actual sales price of completed transaction is accessible from public records     3. The compensation offered to other MLS Participants     4. The type of listing agreement, i.e., exclusive right to sell or exclusive agency     5. The sellers and occupants name, phone number, and email address, where available     6. Instructions or remarks intended for cooperating brokers only, such as those regarding showing or security of the listed property.
  • Content of MLS data that is displayed on a VOW may not be changed from the content as it is provided in the MLS. MLS data may be augmented with additional data or information not otherwise prohibited from display as long as the source is clearly identified.
  • Any listing displayed on a VOW shall identify the name of the listing firm in a readily visible color (not, for example, white on white), and reasonably prominent location, and in a typeface not smaller than the median typeface used in the display of listing data. The listing shall also identify the name of the listing agent.
  • The MLS can limit the number of listings that may be viewed or downloaded in response to an inquiry, but in no event may the limit be fewer than 100 listings or 5% of the listings in the MLS, whichever is less.
  • An MLS may not prohibit Participants from downloading and displaying or framing listiings obtained from other sources but may require either that such information be searched separately or, if such other sources are searched in conjunction with searches of the listings available on the VOW, that the display of listings from other sources identify such other source.

Additional Resource Video (6 min) – https://www.realtown.com/about/resources/InternetListingDisplayResource/Final-Summary

https://www.realtown.com/about/resources/InternetListingDisplayResource – there is a sidebar box with links to key summaries, documents, and videos of Saul and John discussing the DOJ/NAR Settlement when it was hot off the press in late 2007

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