Settlement reached for online real-estate agents

WASHINGTON — The Justice Department gave a boost Tuesday to online real-estate brokers — and potentially their clients — by forcing new industry policies that give Internet-based agents access to home listings they were previously denied.

The tentative settlement, which requires court approval, could save consumers thousands of dollars when buying a home.

For years, Internet-based brokers have complained that the National Association of Realtors wanted to let real-estate agents exclude some of their listings from their online competitors, many of whom offer discounted prices. More than 800 multiple-listing services nationwide are affiliated with the Realtors group.

The Kirkland-based Northwest Multiple Listing Service, which covers more than 15 counties in Washington state, is not affiliated with the national group.

But lawyers for the local group are reviewing the settlement, which is expected to have little effect here because the Northwest MLS has not been in violation of any Department of Justice policies, Chief Executive Tom Hurdelbrink said.

When the Department of Justice sued the NAR nearly three years ago, Chris Osborn, an attorney who represents the local listing service, said the local organization had no policy like the one the national groups were sued over.

In a September 2005 lawsuit, government lawyers said NAR's policies discriminated against online brokers. The settlement, filed in U.S. District Court in Chicago, opens the MLS databases to online and traditional residential-property agents.

"It really does free brokers generally to engage in whatever they feel is the most efficient and effective way to compete," Deputy Assistant Attorney General Deborah Garza told reporters.

Garza, of the Justice Department's antitrust division, said the settlement "should lower the cost of the transaction for buying a house."

In 2006, for example, consumers saved up to 1 percent on the price of a home by using an online broker, Garza said. That year, the median home price was more than $225,000, with median commissions of more than $11,000.

Real-estate agents earned $93 billion in commissions in 2006, she said.

In a report last year, the Justice Department and Federal Trade Commission found that limits on discount brokers' access to Web listings prevented consumers from saving money and receiving other benefits online competition has brought to other industries.

The report found that when house hunting, more consumers rely on the Web than they do on "For Sale" signs in yards.

Even so, online brokers who were locked out of the MLS databases were unable to compete with real-estate agents, government attorneys said. In at least one case, in Emporia, Kan., an Internet-based agent was forced out of business after the local MLS denied his access to any property listings in the local market.

Glenn Kelman, chief executive of Redfin, an online real-estate brokerage based in Seattle that operates in 20 large metropolitan areas, said the settlement came as a relief for executives at the company, which bills itself as a lower-cost alternative to traditional real-estate agents.

However, Kelman said he was concerned about a piece of the settlement that lets sellers' agents block Internet users from making comments on listings. Such comments are "just part of how today's consumers make decisions," Kelman said.

Realtors President Richard Gaylord said the association is "focused on what matters most to consumers — re-energizing the housing market."

Information from real-estate editor Cindy Zetts is included in this story.