The Hamptons are an upscale community on the east end of Long Island. The property values for the top end start in the millions of dollars and selling real estate is a full contact sport. A couple of closing on summer homes will make an agents year.
So when the Justice Department started investigating 25 agencies for collusion it is achieving national attention.
The gist of the matter is that the larger agencies are participating in a private MLS for the most expensive properties. This MLS costs between $15,000 and $50,000 pricing out the smaller agencies. The smaller agencies are upset because they do not have access to the listings and feel it is restraint of trade.
The service, known as Realnet, allows members to share their listings with other members. Last year, George Simpson, who runs his own real estate listing company, sued more than two dozen local brokerages and Realnet. Mr. Simpson said that because only larger brokerages could afford the annual fee, which he said ranged from $15,000 to $50,000, those brokerages ultimately controlled “80 percent to 90 percent of the exclusive real estate listings.” via DealBook at the NYT
But it does raise a bigger point. The overall MLS systems in a community are part of the real estate cartel and need to be paid for. The Hampton’s situation is just a more exclusive version.
So it is hard to cry restraint of trade when all MLS’s are closed systems with tight security?
And the other question that arises is, at what stage do a band of real estate agents start forming rival MLS’s and splinter the system? The technology is there, and I could see Zillow or Trulia hosting something like this as an a la carte service.
As the internet has opened up the listings that used to be buried in an expensive book to print, now they are all digital. What we are seeing in the Hampton’s may be a thing to come in the future of real estate.
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{ 2 comments… read them below or add one }
The author is confused and misinformed. The OREX system is not an MLS. OREX is a private listing system. An MLS is a nationally recognized system usually owned and operated by REALTORS® who are also members of a national (NAR), state, and local REALTORS® Association. It is governed by a strict series of rules and regulations, including a national Code of Ethics which layers of oversight. This is not the case with OREX. The only rule in place there, is to allow the vendor to overcharge a customer 15 to 40 times the going rate for an inferior system because it can’t feed into the #1 national real estate property listing system in the world at http://www.realtor.com.
And, to add to Mr. Stauffers comment, while the Hamptons myth of nothing but high end properties has been perpetuated ad nauseum, the truth is that there are a huge number of properties well under that million dollar mark that are included (forced into) in the private, exhorbitantly priced system favored by the largest (all of them- no exceptions) brokerages. Brokerages who, it should be noted, are MLS members (the real kind) everywhere else that they operate on Long Island.
So, all selling parties are stuck with a small group of choices, none of whom have demonstrated even the common sense to have an anti trust lawyer review a system that includes such devices as “opt outs” (yes, they can opt one another out, even as they’ve succeeded in “opting out” any broker unwilling to part with 4 to 10k/month plus); they set splits- clearly defined as price fixing by the DOJ…
Not a good move on the part of agencies that are supposed to be leaders, in terms of size- had even one had the sense to avoid such a system, it wouldn’t appear so… moronically intentional.