The Department of Justice announced a settlement yesterday with the board that runs the Multiple Listing Service (MLS) for Columbia, South Carolina, and it is a clear victory for consumers. A year ago in May 2008, the Justice Department filed an antitrust lawsuit against Consolidated Multiple Listing Service, Inc. (CMLS) for unfair business practices that effectively barred competition from real estate agents trying to offer low cost services as well as homeowners doing For Sale by Owner (FSBO):
“CMLS required applicants for membership to discuss the nature of their businesses with a committee of incumbent members and reserved the power to deny membership to brokers who they feared would compete too aggressively. CMLS also stabilized the price of brokerage services by forcing its broker members to provide a full set of brokerage services regardless of whether a client wanted the required services. The Department said that those rules prevented consumers from receiving the full benefits of competition, discouraged discounting, and threatened to lock in outmoded business models.”
That quote from the Department of Justice is unbelievable! Unbelievable that CMLS was engaged in price fixing. I guess the 6% commission needs to be propped up somehow! Might as well mandate it.
The proposed settlement fixes several things:
- CMLS must allow membership for real estate brokers of any business model or price structure.
- Home sellers will have the ability to hire a real estate broker to perform only the specific services the seller desired, at a lower cost than the seller would pay a traditional, full-service broker.
- Home sellers can avoid paying commissions to a broker if the sellers find buyers for their home.
Recently I wrote about similar challenges a low-cost real estate broker in Georgia was facing. These are unfortunate examples of how boards that control MLS access behave like monopolies, as they are the gatekeepers for data about homes for sale in every city in the U.S.
Luckily the Department of Justice takes the problem seriously. It’s the only way these unfair practices within the real estate industry will change – by force.
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