Los Angeles real estate firm sues Realtors over pocket listing ban – Daily News

on May30
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The National Association of Realtors has been sued for a second time in two weeks over its new policy banning “pocket listings,”  arguing the ban seeks to stifle competition and maintain NAR-affiliated multiple listing services as a monopoly.

The lawsuit, filed in Los Angeles federal court on Thursday, May 28, also names as defendants three Realtor-affiliated multiple listing services, including the Chino Hills-based California Regional Multiple Listing Service, the nation’s largest Realtor listing database.

Pocket listings are homes sold privately outside the quasi-public multiple listing service, which shares data with real estate websites like Realtor.com, Zillow and Redfin.

The lawsuit, filed by The PLS.com of Los Angeles, takes aim at a NAR’s “clear cooperation policy,” effective May 1, which requires real estate agents to input a home into a Realtor-affiliated MLS within one business day after they start marketing it for sale.

The PLS.com, which started as Pocket Listing Service, claims to have nearly 20,000 members.

“The surge in consumer demand for pocket listings … was a competitive threat to the viability of the NAR-affiliated MLS system,” the lawsuit states. “These market changes also threatened NAR’s ability to control competition in the residential real estate brokerage.”

The lawsuit comes just two weeks after the San Francisco-based Top Agent Network filed a similar claim in federal court, also arguing the pocket listing ban is anti-competitive.

NAR officials couldn’t be reached for comment, and the head of the California Regional MLS said his group still is assessing the lawsuit.

But in response to the earlier Top Agent Network suit, NAR issued a statement saying there’s no legal basis for the claim.

The pocket listing ban “ensures greater transparency and competition,” the statement by NAR Communications Vice President Mantill Williams said.

“Cooperation with other MLS participants is in (a) client’s interests and enables the listing to be shared with the widest group of potential buyers,” the statement said.

Supporters of the ban attending NAR’s convention last November, when the new policy was adopted, argued pocket listings exclude buyers and agents from bidding on desirable properties. In addition, they argued, pocket listings allow discrimination against racial and ethnic minorities or are used by sellers’ agents to cut buyer agents out of a deal, hogging the whole commission.

Both the Top Agent Network and PLS.com have private databases agents can use to search for buyers or properties for sale. But unlike the MLS’s, those posts aren’t publicly available outside the network.

Private marketing allows celebrities and the wealthy to maintain privacy while selling luxury homes or allow clients to test the market without the stigma of listing and then delisting a property in the MLS, advocates say.

“Demand for pocket listing services has skyrocketed in recent years, particularly in large and competitive real estate markets such as Los Angeles, San Francisco, Miami, and Washington, D.C.,” the PLS.com lawsuit says. “In some of these markets, 20 percent or more of residential real estate was being sold outside the NAR-affiliated MLS system, primarily as pocket listings.”

The California Regional MLS has more than 100,000 members, covering all of Orange County and portions of Los Angeles, Riverside, San Bernardino and San Diego counties. It also serves communities in Central and Northern California, going as far north as Red Bluff, located between Chico and Redding.

Agents violating the pocket listing policy in the California Regional MLS territory face fines of 1% of the home’s purchase price up to a maximum of $2,500. Violations in San Francisco can fetch fines of $5,000 for the first violation, the Top Agent Network lawsuit said.

The PLS.com suit seeks an injunction against the pocket listing ban and unspecified monetary damages.

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