Multiple listing service upheld in new legal test
Once more the concept of a multiple listing service (MLS) has been upheld in court. Generally, its basic structure has remained intact in legal tests, and sometimes the practice has emerged with new strength from a positive court report.Skip to next paragraph
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The MLS system is designed to make a larger number of properties available to cooperating real estate brokers and thus to potential buyers. Simply, it's a pooling of all listings among the brokers. Thus it is not an exclusive listing with any one broker and, theoretically, the home seller stands a better chance of a quick sale.
An MLS can be sponsored by a local board of agents or it can be a totally independent organization of broker members. The information on property listings is usually communicated to members through a weekly or biweekly ''MLS book.'' This is sometimes supplemented by an on-line computer system with terminals in each participating broker's office.
The latest court case was in California, where the plaintiffs brought suit against a board of real estate agents and its MLS, claiming antitrust violations. The complaint centered on the refusal of the MLS to make its property listings and services directly available to anyone, not just to people with a real estate license.
The plaintiffs alleged that because of this, they were forced to employ a real estate broker to arrange the sale of their property and to assist them in buying another house. The state appellate court, however, strongly endorsed the MLS concept as it's now structured.
''The exchange of price, data, and other information among competitors is not a violation of the antitrust law,'' the court determined.
Such an exchange of information is ''valid under the rule of reason'' if it increases the economic efficiency and renders the market more competitive, the court said.
The court also found strong policy reasons for restricting access to the MLS to people licensed to perform activities ''in accordance with exacting professional standards.''
The court concluded that if every member of the general public had the right to participate in an MLS, all attempts to ensure high standards of competence among people dealing with the public in real estate matters would be seriously undermined.
There is some evidence that the MLS system can promote competition in the real estate marketplace. Occasionally, even MLS organizations themselves may compete.
In the metropolitan area of Portland, Ore., for example, a number of active brokers were concerned that their board-sponsored MLS was not being operated in an efficient and cost-effective manner. Instead of just complaining about it, the brokers are now in the process of organizing a new and independent MLS.
''We are structuring this nonprofit MLS as a highly efficient operation to serve the 'property pooling' and communications needs of participating brokers in the Portland area,'' said Mel Fox, a broker member of the new MLS committee.
''Such an MLS will directly benefit property buyers and sellers in this area, '' he declared.
Much preliminary work was involved in planning and organizing the MLS, including a comprehensive study of costs and fees as well as determining that service elements should become part of the MLS operation.