Why IDX at all? A response to 7DS Associates

by Victor Lund on April 30, 2011

I cannot speak for The Realty Alliance, Leading RE or any other brokerage. But I can summarize the sentiments of WAV Groups’ broker clients.  This will hopefully shed some light on the question of IDX usefulness, and the issues that are concerning brokers across America representing 200,000 REALTORS.

Brokers are upset with recent changes to NAR’s model IDX rules and regulations. Brokers claim that the two recent modifications to IDX, and a third policy revision under consideration; NAR’s MLS Policy Committee failed to contemplate (or appreciate) who owns the data and who is legally responsible for it. The first policy change extended IDX rights to Franchise Organizations who are not members of the real estate board and are not participants in the MLS. The second policy change extended Indexing rights to the Franchise Organizations. Now NAR is on approach to allow anyone with IDX to make ALL IDX DATA available by ANY ELECTRONIC MEANS to anyone. The outrage is that the listing broker and the MLS who own the copyright to the data are still legally responsible for it. Listing data is not a public information. It is the private and curated information of the broker contracted by the home seller, cataloged under uniform rules of the MLS who carefully shares it with Participants and Subscribers of the MLS governed by rules and legal agreements.

 

IDX is a valuable client servicing tool. IDX (and VOW) websites are valuable resources offered by brokers to consumers. It allows consumers to research area properties online, all in one place. Consumer convenience when working with an agent or broker is the purpose of IDX. It allows the real estate service provider to advertise the homes and services that they provided to the home buyer and home seller. Without IDX, the consumer would need to visit hundreds or thousands of broker websites to access the complete and accurate listing inventory. Try to find a home in Portugal if you want to experience life without IDX and MLS.

MLS rules indicate that the broker may opt out of IDX entirely, or on a listing by listing basis. A broker who opts out of IDX may not display listings to the public on their website, but may operate a VOW website. Opting out a specific listing from IDX usually requires a document signed by the seller. Brokers are free to distribute their listings to anyone.

I do not think that brokers will withdraw from IDX anytime soon. But if NAR does not rescind their extension of IDX data to non MLS Participants – litigation will likely unfold. The letters sent by brokers to NAR specifically position their legal case. I suspect that NAR’s legal department will assess the legal concerns offered by brokers and MLSs alike, and roll back the rules. With my understanding of law, this looks like a case that NAR would have a difficult time winning (I am not a lawyer).

If Franchise Organizations want the data, they can join the board of REALTORS and MLS like other brokers to gain access to it. By doing so, Franchise Organizations would be governed by the State Department of Real Estate; and local rules and regulations as adopted by local participating brokers. Trulia and Zillow may do the same. The flaw in this strategy is that they would need to demonstrate the ability and intent to represent consumers in transactions. (remember LendingTree?)

To circumvent this “ability and intent issue”, MOVE, Inc., the operators of REALTOR.com have effectively gotten access to the data by contracting with NAR. Their contract with NAR extends the data coupled with the IDX rules and regulations of the MLS to REALTOR.com and other MOVE websites displaying the data. NAR, acting on behalf of the Association owned MLSs, governs MOVE’s use of the data. Sidebar: there are a number of MLSs around the country that are broker owned and are not subject to NAR’s policies. If Franchise Organizations or Trulia or Zillow want to pay NAR as MOVE does, and agree to the rules and regulations as MOVE does, they might have an opportunity. However, I would be surprised if the NAR – MOVE agreement is not exclusive. I also expect that the brokers would also be angered that NAR is collecting revenue on data supplied by the broker.

This is not a big issue. NAR appears to have made a mistake. The brokers have pointed it out. I have full confidence that NAR will amend the policy.

(disclosure: WAV Group provides consulting services from time to time to Move, NAR, The Realty Alliance, Leading RE, numerous brokerages, and Northstar MLS who publishes the service marked broker reciprocity logo in this post)

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