Real Estate Central

CMLS Rules Obstruct Competition from Low-Priced and Innovative Real
Estate Brokers



WASHINGTON, May 2 /PRNewswire-USNewswire/ — The Department of
Justice’s Antitrust Division today filed a lawsuit against the Consolidated
Multiple Listing Service (CMLS) of Columbia, S.C., challenging its rules
that unreasonably restrict competition among real estate brokers. The
Department said that CMLS’s rules have caused consumers buying or selling
homes in the Columbia, S.C. area to pay more for real estate brokerage
services.



The Department’s civil antitrust lawsuit was filed today in U.S.
District Court in Columbia. In its lawsuit, the Department alleges, among
other things, that CMLS requires brokers to perform a prescribed set of
services, which limits consumer choice, and excludes competitors who might
offer innovative options that could provide better services to consumers in
that area.



“Buying or selling a home is one of the most significant financial
transactions in the lives of most Americans. The kinds of rules CMLS
imposes stifle competition to the advantage of its members and the
disadvantage of home buyers and sellers,” said Thomas O. Barnett, Assistant
Attorney General in charge of the Department’s Antitrust Division. “Today’s
lawsuit seeks to remove unlawful impediments to competition for real estate
brokerage services in the Columbia area, so that consumers will benefit
from the additional options and reduced fees that competition can bring.”



Like multiple listing services (MLSs) elsewhere in the country, CMLS is
a regional joint venture of real estate brokers that combines its members’
home listings information into an electronic database that is made
available to all brokers who are members. The database serves as a
clearinghouse for the members to communicate information among themselves,
such as descriptions of the listed properties for sale, and offers to
compensate other members if they locate buyers. In addition, the database
allows members who represent buyers to search for nearly all the listed
properties in the area that match the buyer’s needs.



By providing an efficient means of exchanging information on home
listings, MLSs can benefit consumers, but that same role makes access to
the MLS database - and therefore MLS membership - critically important for
any broker seeking to serve clients efficiently in the MLS’s service area,
the Department said. Consequently, the rules adopted by CMLS governing who
can be a member and how members must run their businesses have a
significant impact on competition among brokers in the area served by the
MLS.



In its court filing, the Department said that the rules that real
estate brokers in Columbia have adopted through CMLS unreasonably restrict
competition among brokers in the area. For example, unlike brokers
elsewhere in the country, CMLS members are prevented from offering home
sellers the opportunity to avoid paying a broker’s commission if the seller
locates a buyer on his or her own. CMLS rules also require brokers to
perform a prescribed set of services - such as being involved in the
negotiation of a home’s sale price and attending the closing - even if the
broker’s customer would prefer to perform some of these tasks on his or her
own in order to save money on the real estate broker’s fee.



The Department said that CMLS’s rules also give Columbia real estate
brokers the ability to exclude rivals from outside Columbia who might offer
local consumers innovative brokerage options that save them money or
provide services that better match their needs. The Department’s lawsuit
challenges these and other CMLS rules that unreasonably restrain
competition among real estate brokers and thereby lead to reduced consumer
choice and higher fees paid by consumers.







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Source: Real Estate Newswire