March 12, 2007

The following is a preliminary draft of Chris Nye's March 15 presentation to the Washington Real Estate Commission:

My name is Chris Nye and I am the President of MLS4owners.com.  For a flat fee we advertise homes in the local multiple listing service and syndicate to more than 100 local and national real estate websites.   With annual customer sales of more than $200 million, we are ONE of the largest single-office real estate brokerages in Washington. 

I am here to report to you about how chronic violations of state law by real estate licensees are hurting Washington consumers and costing them millions of dollars.  I also would like to share recommendations that I hope the Commission and the Director will consider.

In our experience, real estate licensees frequently violate state licensing law by making false statements to consumers.  Documented samples of these violations are available for your review.[1]  They have continued since 2001 despite our best efforts to educate brokers and agents.   I am sharing my personal knowledge, but you will find that other brokerages offering alternative business models are also affected. As you may be aware, this is also a hot topic with the Federal Trade Commission and Department of Justice, and we encourage local action to prevent federal intervention.

Washington brokers have threatened local merchants, consumers and newspapers not to do business with us.  This hurts everybody involved – including the merchants and consumers.  The real estate RCWs prohibit “false statements to induce any person to act”.[2]  Among the typical false statements are “your home won’t sell”, “agents boycott those listings”, “what they do isn’t legal”, “they aren’t members of the real MLS” and “you cannot conduct an open house if you list with MLS4owners”.  Licensees make these statements in order to induce our customers and prospects to pay a commission to them and to stop advertising with us. With the new NAR IDX/Exclusive Agency listing policy we believe these false and misleading statements; violations of RCW’s will only increase.   

Because of our success we don’t get many Christmas cards from traditional brokers, but our customers’ results prove that these statements are just plain false. Here are the facts:

1. Our customers have closed more than $600 million in sales, with a median marketing time of less than 30 days.[3]
2. Agents from more than 300 different Washington brokerages have represented buyers for our sellers.[4]
3. Customers have saved more than $20 million compared to what they would have paid with a 6% commission.[5]
4. Hundreds of customers send us letters of appreciation, including one last month who stated, “I can say without hesitation, that MLS4owners.com has improved the quality of our lives.”[6]
5. Even the 2006 NAR® Profile of Home Buyers and Sellers states the median time on market for arms-length For Sale By Owner transactions is less than the median time on market for agent-assisted transactions.[7]
6. MLS4owners.com has had over 3,000 customers and has never been the subject of a consumer complaint to the Department of Licensing, real estate trade association or multiple listing service.
7.  Department Of Licensing has conducted two routine audits of our Brokerage and has given us a clean bill of health each time.  
8. We have hired as our 5^th employee, an in-house attorney to help us navigate this anti-competitive environment. But today’s focus is on the public interest.

Recommendations to the Commission and the Director

As we understand it, the mission of the Real Estate Commission is to uphold, protect, and promote the public interest, which embraces both the interests of regulated licensees and entities and the interests of consumers, by the fair and impartial development of the licensing laws and regulations. Today we offer these recommendations for the promotion of the public interest.

1.         Conduct a public awareness campaign about how to select a real estate professional[8], including their selling options, and what to do when they are the object of false and/or misleading statements (including a way to report the events without fear of reprisal).

2.         Notification to all licensees that the Department of Licensing will take strong enforcement action against violators of 18.85.230(2) and 18.235.130(3).

3.         Improve education of licensees by including instruction about anti-competitive behavior in the core curriculum class.

4.         When the next opening occurs on the Real Estate Commission, encourage the Governor to appoint a person who has expertise in alternative business models (which combined with FSBOs represent about 20% of the market).

Thank you very much for your time, and I would be glad to offer any assistance the Commission requests in this matter.