While details are sketchy, it appears that the Federal Trade Commission has sued and reached a settlement in the same day with the Austin Board of Realtors in which the board agreed (without admitting wrong-doing) not to interfere with members' ability to enter into nontraditional listing agreements.

In a press release, the FTC said it charged "the Austin Board of Realtors with violating the antitrust laws by effectively preventing consumers with real estate listing agreements for potentially lower-cost unbundled brokerage services from marketing their listings on important public websites. 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 any other listing type, and from interfering with the ability of its members to enter into any kind of lawful listing agreement with home sellers."

Further, the FTC says, "ABOR violated Section 5 of the FTC Act by unlawfully restraining competition among real estate brokers in central Texas. ABOR's website policy, the Commission contends, is a joint action by a group of competitors to withhold listing information from publicly accessible websites unless competitors contract with home sellers in the way ABOR dictates."

"Specifically, the FTC charges that ABOR's website policy has the effect of discouraging the use of Exclusive Agency Listings, which often are used to offer lower-cost, unbundled real estate brokerage services to consumers."

Exclusive Right To Sell listing agreements are typically used by brokers who intend to cooperate with other brokers. What that means is the listing broker sells the property. With Exclusive Agency Listings, the home owner can sell the property without using the listing broker's services. It's a way of letting for-sale-by-owners milk the MLS cow through the fence and that's why the suit/settlement is a clear attempt by the FTC to circumvent the minimum service rules that Texas adopted in September 2005.

Texas, after receiving discouraging letters from the Federal Trade Commisions and the Department of Justice, adopted minimum service rules that clarified minimum service for broker and agent licensure. The rule says that to be a broker/agent in the state of Texas, a licensee must present offers, accept counter-offers and provide consultation during negotiations to home sellers.

Otherwise, what's the point of being in business? To let FSBO sellers milk the cow without paying the farmers? To be forced to assist or advise other broker's clients at one's own liability? If everyone did that, the tent would no longer stand. In other words, without cooperation, brokers have no reason to share their listings -- who wants to work harder for more liability while another broker cops the fee? The entire MLS cooperative system could be at risk of imploding.

Anything less than minimum representation is simply advertising for a for-sale-by-owner-minded seller, and the day may come, as it already has in New Hampshire and California where for-sale-by-owner type companies can advertise and advise clients without a brokerage license. Without licensure, there is no brokerage service.

Many brokers have pointed out that many sellers are unequipped to handle their own offers and negotiations. In fact, existing rules say that Texas real estate brokers should try to negotiate the best possible deal for their clients, which suggests a minimum level of representation as an agent, not as an MLS advertiser.

The FTC has stubbornly refused to listen to consumer or broker complaints about so-called discount services, which is tantamount to requiring brokers to do the work of their "discount" competitors without fair compensation. "While an MLS in some circumstances might be concerned that buyers and sellers of properties under an Exclusive Agency Listing could "free ride" on the efforts that the MLS is intended to foster," says the FTC, "this concern does not justify ABOR's website policy, because the ABOR rules already include protections against such misuse."

Three years ago, Aaron Farmer, broker of Texas Discount Realty, filed suit against the Texas Real Estate Commission in order to stop it from clarifying what is and isn't minimum service, but the TREC passed its minimum service recommendations along to the state legislature, where it was adopted into law on September 1, 2005.

That puts the issue back into confusion. If a broker can enter a client into the MLS via an Exclusive Agency Agreement, he or she still has to follow state law to present offers, counter-offers and negotiation consultation. Or does he?

"The order prohibits ABOR from adopting or enforcing any policy to deny, restrict, or interfere with the ability of its members or ACTRIS participants to enter into Exclusive Agency Listings or other lawful agreements with property sellers. ABOR is prohibited from preventing its members or ACTRIS participants from:

(1) offering or accepting Exclusive Agency Listings or other lawful listing agreements;

(2) cooperating with listings brokers or agents that offer or accept Exclusive Agency Listings or other lawful listing agreements; or

(3) publishing Exclusive Agency Listings or other lawful listing agreements on websites otherwise approved to use ACTRIS information."

"The order also bars ABOR from denying or restricting the services of the ACTRIS to Exclusive Agency Listings or other lawful listings in any way that such services are not denied or restricted to Exclusive Right to Sell Listings; or treating Exclusive Agency Listings -- or any other lawful listings -- in a less advantageous manner than Exclusive Right to Sell Listings," says the FTC.

"This has nothing to do with discount brokerage," says a spokesperson for the Texas Association of Realtors. "Brokers can charge whatever they want as long as they follow the three rules of minimum service. It's about protecting the consumer."

The FTC may sue as many as 20 other boards to circumvent minimum service rules so that they're afraid to enforce their state's laws.

Published: July 14, 2006

Use of this article without permission is a violation of federal copyright laws.

Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.