Last week, real estate blogger, Rob Hahn suggested that the National Association of Realtors’ (NAR’s) Code of Ethics (COE) is “probably” illegal based on a recent Federal Trade Commission (FTC) complaint against the National Association of Residential Property Managers (NARPM) that Hahn opines “should be sending shockwaves throughout the ranks of REALTOR Associations.”
The FTC alleges “that NARPM and its members restrained competition” through their Code of Ethics which forbids members from criticizing competitors or soliciting their clients, much like the NAR’s COE. The proposed consent order would require NARPM to “stop restraining its members from soliciting property management work, and from making statements that are not false or deceptive about a competitor’s products, services, or business or commercial practices.”
“Given the similarities involved in the NARPM case and as-yet-unfiled NAR case,” Hahn writes, “I assume the only issue will be whether NAR proactively changes its Code of Ethics, or waits for the FTC to file a complaint. But as it stands today, the Code of Ethics is an illegal violation of anti-trust laws.”
The NAR reacts
Given the similarities in the language used by NARPM and NAR in their ethics codes, what is NAR’s position on the topic?
In a statement released exclusively to Realuoso, the trade group states:
NAR’s Code of Ethics provision regarding solicitation of other REALTORS®’ clients is narrowly tailored to facilitate cooperation in the MLS and still preserve the right to compete for clients in other ways.
The real estate industry is unique – not analogous to the property management or music teacher industries at issue in the consent orders – in that cooperation among competitors in the real estate industry is necessary and beneficial to consumers.
Article 16 has the procompetitive effect of facilitating the sharing of exclusive listings on the MLS where participants are required to publish what essentially amounts to a client list.
Without the protections set forth in Article 16, REALTORS® may be reluctant to participate in this procompetitive vehicle.
Given NAR’s position on the topic, do you think there are changes on the horizon for the Code of Ethics or not?