Questions about implications of VOW settlement

The Notorious R.O.B. said some nice things about MLSTesseract and our VOW Clearinghouse in a post on his blog. He also apparently read the stuff we wrote (thanks for having the patience, Rob) and made some interesting comments. I wanted to address some of them here.

Rob wonders whether "the NAR-DOJ settlement override[s] Delaware law by operation of the Supremacy Clause." I think the answer is 'no'—the settlement between NAR and DOJ binds only the parties to the litigation, NAR and DOJ. It expressly defers to state law on questions of the formation of brokerage relationships. Note, however, that federal regulators are not afraid to go after state real estate commissions if they think the latter are imposing anti-competitive requirements.

We pointed out that third-party sites, like Zillow, Realtor.com, etc., are not currently operated as VOWs. Rob wondered whether this means an MLS "could... display all of the listings info on [the MLS public web site] without limitation, and without the 'signup' requirement... prohibit all [brokers in MLS] from sending any data to Trulia, Zillow, or any national aggregator; and... force brokerages to use either shut-from-the-public VOW requirements, or ass-backwards IDX rules filled with purposely inane requirements to discourage the use of IDX."

I think an MLS could make its public-facing web site attractive in the way that Rob suggests. But not all MLSs have public-facing web sites. (Public-facing MLS web sites are a whole other can of worms—we can discuss in another post, I think.)

I do not think an MLS could prevent brokers/agents from putting their listings on Trulia, Zillow, etc. That would likely be an unlawful restraint of trade (Sherman Antitrust Act Section I or Section II violation, or both). A broker could probably prevent its agents putting listings up on any web site; under the laws of many states, brokers have supervisory rights and duties regarding the ways agents advertise listings. (The law varies from state to state, though, and brokers and agents may have additional provisions in their independent contractor agreements.)

There certainly are MLSs that crock their IDX rules to make IDX less useful for brokers. And there are brokers that opt out of their listings appearing in IDX, as Jim Duncan has noted. Under the new VOW policy, MLSs and listing brokers do not have the same flexibility. It provides that MLSs cannot regulate VOWs except as expressly provided in the policy; brokers are entitled to data feeds including all non-confidential fields (and confidential fields are defined very narrowly; if they are confidential for VOWs, brokers cannot disclose them to consumers, even orally); and listing brokers cannot opt out of display on other brokers' VOWs. If the MLS does not comply with the policy, NAR has to turn it in to the DOJ.

Also in that context, Rob mentions Realtor.com. (They deserve a whole post, too.) I object to the idea, which I don't think Rob is proposing, that an MLS would facilitate Realtor.com or the MLS's public-facing web site showing more data from the market than the broker could show on its IDX or VOW site. It seems if an MLS is going to equip anyone with the tools to be perceived by consumers as the source for real estate information, it should be the brokers, not the MLS, a publicly-traded company, or anyone else.

-Brian