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Federal regulators are cracking down on the real estate industry for alleged anti-competitive practices on the Internet that hurt home buyers and sellers. At issue are claims that consumers are being denied access to all the homes listed for sale on public Web sites, such as Realtor.com, and that firms trying to offer cheaper services on the Internet are facing restrictions. Most recently, the Federal Trade Commission (FTC) filed a complaint on July 13 against the Austin Board of Realtors in Texas for allegedly violating antitrust laws by preventing certain sellers from marketing their listings on public Web sites. The FTC is looking into similar practices in Detroit, Indianapolis, Cleveland and Columbus, Ohio. Also, a lawsuit against the National Association of Realtors is continuing to unfold in a federal court in Chicago, where the U.S. Department of Justice claims that NAR policies obstruct real estate brokers from offering better services and lower costs to online consumers. U.S. v. National Association of Realtors, No. 05 C 5140 (N.D. Ill.). “The FTC and Justice Department see a lot of consumer welfare at stake,” said attorney Mike Cowie, a former assistant director at the FTC who believes that the recent “protectionist activity” by the real estate industry will trigger lawsuits. “There likely will be litigation by smaller Internet-based retailers�[who] would say they’re being driven from the marketplace,” said Cowie, now an antitrust lawyer at Howrey in Washington. “The FTC and the Justice Department have been out front on this.” Ralph Holmen, associate general counsel of the National Association of Realtors in Chicago, defended the real estate industry. “This notion that there is an absence of competition in the real estate business is ludicrous. Look up and down the street and see how many real estate firms there are. And they’re all over the Internet,” Holmen said. “The Internet has affected real estate in the way that it’s affected a lot of industries. We’re just sorting through how to do [virtual listings] and legal rules on how to govern those practices.” Meanwhile, FTC officials are focusing on operators of multiple-listing services, which let brokers share data on homes for sale and list home sales on Webs sites. In the recent Texas case, the multiple-listings services operator in question was the Austin Board of Realtors (ABOR), which had a rule that prevented certain homes from being made available on public Web sites. Those homes were owned by sellers who entered into nontraditional agreements with brokers who offered cheaper a la carte services, rather than the traditional full-service deal. Such agreements, known as exclusive agency listings, offer sellers the option of selling their home themselves. According to Patrick Roach, deputy assistant director in the FTC’s Bureau of Competition, under ABOR’s rules, sellers using a la carte services were prohibited from having their listings appear on the group’s Web site. ABOR, he said, favored the traditional, full-service broker listing agreement, wherein the broker does everything from putting up a sign to showing the house to closing the deal. “If you go a la carte, you’re listing will be visible to other realtors but it won’t be fed to general Web sites, which is what consumers look to,” Roach said. “So if you get someone who goes on the Internet and is looking for houses in Austin, they think they’re looking at all the houses that the real estate brokers have, and they’re not.” Tactics defended ABOR defended its tactics, noting that the rule preventing certain homes from being featured on the group’s consumer Web site is no longer in effect. It was rescinded last August, three months after it was established. “The rule was initially established to ensure that our consumer Web site was used to promote listings to benefit members. We realized, however, that the rule was confusing and did not work as well as we’d intended, which was why it was rescinded so quickly. We are disappointed that the FTC’s press release implies that we are guilty of wrongdoing,” David M. Foster, president and CEO of the Austin Board of Realtors, said in a statement. So far, a voluntary agreement has been reached between the FTC and ABOR regarding the recent FTC complaint. In settling the charges, ABOR is prohibited from adopting or enforcing any rule that treats one type of real estate listing agreement more advantageously than another, and from interfering with the ability of its members to enter into any kind of lawful listing agreement with home sellers. The order is open to public comment until Aug. 11.

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