Realtors Win One in Battle Over Multiple Listing Access

The Multiple Listing Service could probably be described as the glue that holds together real estate brokers and groups like the San Fernando Valley Assn. of Realtors. Buyers and sellers turn to the Realtors because of the MLS and its comprehensive listing of homes and other property for sale.

The monopoly over the MLS that the Valley realty association has enjoyed is facing increasing challenges. Many observers are predicting that the realty organization will lose its control over the MLS within the next few years as computers make it possible for anyone to access information about homes for sale. The MLS database is huge--at the moment roughly 11,000 single-family houses and condominiums are listed for sale with the Valley Assn. of Realtors.

Computer giant IBM Corp. has invested in a company called HomeView Realty Centers Inc., which is creating its own database of homes for sale. Other companies--big and small--are also creating computer networks, complete with video tours of each listing. Prospective buyers in some American markets can now view hundreds of homes by just sitting in front of a computer screen.

It’s understandable that all this has got real estate brokers a bit nervous. When local movers tried to appropriate information from the Valley’s MLS, the Valley brokers filed suit, and recently won a court victory to restrict access to the MLS. Despite the fact that thousands of MLS books are published in the Valley each week--and then discarded--a U.S. District Court judge ruled that it was illegal for non-brokers and agents to access the MLS via computer, or by ferreting through trash bins for the purpose of getting business leads.

“Rather than being able to buy a mailing label, movers will have to find other ways to gather marketing data,” said Norman Marshall, partner in the Pasadena law firm of Marshall, Carr & Perrigue. “For now, many movers will have to comb through newspaper ads of homes for sale or drive through neighborhoods and log the addresses of homes with a For Sale sign,” said Marshall, who represented six of the nine defendants in the recently concluded case of the San Fernando Valley Board of Realtors Inc. vs. Mayflower Transit Inc.

In case you’re wondering, the Valley board has since been renamed the San Fernando Valley Assn. of Realtors.

Marshall believes the Valley Realtors shouldn’t be trying so hard to hold onto the MLS. “There’s no copyright protection for facts,” he argued, and MLS information should be available to the public just like the listings in phone directories. The court didn’t buy this argument, however.

The movers and Marshall also said that “if the MLS is so valuable, why do the Realtors allow so many copies of the MLS to be circulated and then discarded so freely?” The judge wasn’t swayed by this question either.

“At this point it’s been established that the MLS is owned by the realtor family. It was not created for use by others,” said Bill Pfeiffer, senior vice president and general counsel for the California Assn. of Realtors. “The information is protected by federal copyright law,” he said, and California law limits MLS access to real estate agents, brokers and appraisers.

Despite the legal protection now afforded the MLS, Pfeiffer concedes that “in the future, there could be a challenge.” With other private companies offering MLS-like services, the market could change if the competition gets a real foothold into the business. Both the National Assn. of Realtors and California Assn. of Realtors are trying to stay competitive, he said, by updating the MLS and making it more high-tech.

“There are quite a few companies entering the market and selling multiple listing information,” said Roberta Moore, president of Qualitative Marketing, a San Jose-based consulting form that is trying to encourage more real estate brokers to use personal computers through its Real Estate Computerization Project. “Some courts are also taking away the rights of real estate associations and boards to keep the MLS information proprietary.”

Real estate agents and brokers shouldn’t fear the dissemination of MLS information, she said.

“It’s important that they look at other ways to add value for their services.” Realtors will continue to be an important part of the home-selling business as long as they respond to their clients, she said.

Many realtors are convinced that the best way to serve clients is to keep the MLS proprietary. “Some settlers have unlisted numbers and they get irate when they start getting phone calls from moving companies that improperly access the MLS,” said David Shane, legal counsel for the San Fernando Valley Assn. of Realtors and a partner in the Warner Center-based law firm of Walleck, Shane, Stanard & Blender.

The Valley Realtors went to court to protect the MLS because “sellers were discovering that the MLS was not as confidential as they thought. It got to be too embarrassing,” Shane said.

“We have fought this battle a couple of times before,” Shane said. “The public has no right of access to this information.”