Justice Withdraws from Settlement with National Association of Realtors

 

Settlement will not adequately protect the department’s rights to further investigate Realtors

 

Realtors settlement with justice stalled

National Association of Realtors (NAR) policies affect millions of real estate agents and real estate consumers. Data shows consumers paid over $85 billion in real estate commissions last year. The Justice Department

previously filed a complaint and proposed settlement alleging that the National Association of Realtors established and enforced policies that illegally restrained competition in real estate services

. The settlement sought to remedy those alleged practices and encourage competition among Realtors®. However, it also prevented the department from pursuing other antitrust claims against NAR. The justice department settlement is now being withdrawn.

On July 1, 2021, the Justice Department’s Antitrust Division filed to withdraw the proposed settlement with NAR. In addition, the department is voluntarily dismissing its complaint without prejudice. It was determined that the settlement will not protect the department’s rights to investigate other conduct by NAR that could potentially affect competition and harm consumers. The justice department wants to allow for a broader investigation of NAR’s rules and conduct.

“The proposed settlement will not sufficiently protect the Antitrust Division’s ability to pursue future claims against NAR,” said Acting Assistant Attorney General Richard A. Powers of the Justice Department’s Antitrust Division. “Real estate is central to the American economy, and consumers pay billions of dollars in real estate commissions every year. We cannot be bound by a settlement that prevents our ability to protect competition in a market that profoundly affects Americans’ financial well-being.”

Under a stipulation entered by the court and signed by the parties, the department has sole discretion to withdraw its consent to the proposed settlement. The proposed settlement may also be modified with consent from the department and from NAR. The department sought NAR’s agreement to modify the settlement to adequately protect and preserve the department’s rights to investigate and challenge other conduct by NAR. Still, the department and NAR could not reach an agreement.

According to the complaint, NAR’s anti-competitive rules, policies, and practices include prohibiting MLSs that are affiliated with NAR from disclosing to prospective buyers the commission that the buyer broker will earn; allowing buyer brokers to misrepresent to buyers that a buyer broker’s services are free; enabling buyer brokers to filter MLS listings based on the level of buyer broker commissions offered; and limiting access to the lockboxes that provide licensed brokers with access to homes for sale to brokers who work for a NAR-affiliated MLS. These NAR rules, policies, practices have been widely adopted by NAR-affiliated MLSs resulting in decreased competition among real estate brokers.

The National Association of Realtors is a trade association of more than 1.4 million-member REALTORS® in real estate brokerages across the United States. There arRealtor key box accesse over 1,400 local REALTOR® associations (called “Member Boards”) organized as Multiple Listing Services through which REALTORS® share information about homes for sale in their areas. Among other activities, the National Association of Realtors establishes and enforces rules, policies, and practices for its Realtor Member Boards and their affiliated Multiple Listing Services.

The Justice Department hopes to increase competition to benefit consumers and allow for more innovation in markets by having the National Association of Realtors repeal and modify its rules for greater transparency to homebuyers about the commissions when representing homebuyers, cease misrepresenting that buyer broker services are free, eliminate rules that prohibit filtering multiple listing services listings based on buyer broker commissions, and change rules limiting access to lockboxes to only REALTOR-affiliated real estate brokers.

###

For more information about OnlineEd and their education or learning management systems for real estate brokers, principal brokers, property managers, and mortgage brokers, please visit www.OnlineEd.com.

Oregon Lawmakers Vote to Ban Client ‘Love Letters’ in Real Estate Transactions

“A seller’s agent shall reject any communication other than customary documents in a real estate transaction.”

By Jeff Sorg, OnlineEd Blog

(June 15, 2021)

 OnlineEd – The 2021 Regular Session of the Oregon Legislature has passed House Bill 2550. In short, the Bill directs the seller’s agent to reject any communication from a buyer to a seller as necessary to help the seller avoid selecting a buyer based on violation of federal fair housing laws. In addition, the bill amends the seller’s duties in a real estate transaction as outlined in ORS 696.805. The enrolled bill, awaiting Senate President signature, specifically states:

“In order to help a seller avoid selecting a buyer based on the buyer’s race, color, religion, sex, sexual orientation, national origin, marital status or familial status as prohibited by the Fair Housing Act (42 U.S.C. 3601 et seq.), a seller’s agent shall reject any communication other than customary documents in a real estate transaction, including photographs, provided by a buyer.”

Because most Oregon real estate brokers had already determined these types of letters to be discriminatory, this law is not expected to greatly impact the Oregon brokerage community.

###

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of publication date but is not guaranteed by the author and may have been obtained from third-party sources. In addition, due to the fluid nature of the subject matter, regulations, requirements and laws, prices, and all other information may or may not be correct in the future and should be verified if cited, shared, or otherwise republished.

OnlineEd® is a Registered Trademark.

CFPB Warns Loan Servicers to Prepare for Wave of Mortgage Foreclosures This Fall

By Jeff Sorg, OnlineEd Blog

(April 1, 2021)

“There is a tidal wave of distressed homeowners who will need help from their mortgage servicers in the coming months.”

WASHINGTON, D.C. –The Consumer Financial Protection Bureau (CFPB) today warned mortgage servicers to take all necessary steps now to prevent a wave of avoidable foreclosures this fall. Millions of homeowners currently in forbearance will need help from their servicers when the pandemic-related federal emergency mortgage protections expire this summer and fall. Servicers should dedicate sufficient resources and staff now to ensure they are prepared for a surge in borrowers needing help. The CFPB will closely monitor how servicers engage with borrowers, respond to borrower requests, and process applications for loss mitigation. The CFPB will consider a servicer’s overall effectiveness in helping consumers when using its discretion to address compliance issues that arise.

“There is a tidal wave of distressed homeowners who will need help from their mortgage servicers in the coming months. Responsible servicers should be preparing now. There is no time to waste, and no excuse for inaction. No one should be surprised by what is coming,” said CFPB Acting Director Dave Uejio. “Our first priority is ensuring struggling families get the assistance they need. Servicers who put struggling families first have nothing to fear from our oversight, but we will hold accountable those who cause harm to homeowners and families.” The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides borrowers with federally-backed mortgages with access to forbearance, and private lenders have also provided similar assistance. As of January 2021, approximately 2.7 million borrowers remained in such programs, with 2.1 million borrowers in forbearance and at least 90 days delinquent on their mortgage payments. Another 242,000 mortgages not in forbearance programs were at least 90 days delinquent. Industry data suggest that nearly 1.7 million borrowers will exit forbearance programs in September and the following months, with many of them a year or more behind on their mortgage payments. Beginning with the expiration of the federal foreclosure moratoriums at the end of June 2021, mortgage servicers will need ramped-up capacity to reach out and respond to the large number of homeowners likely to need loss mitigation assistance. To meet this surge, servicers will need to plan now. In its oversight of mortgage servicers, the CFPB is focused on preventing avoidable foreclosures. The CFPB will pay particular attention to how well servicers are:

  • Being proactive. Servicers should contact borrowers in forbearance before the end of the forbearance period so they have time to apply for help.
  • Working with borrowers. Servicers should work to ensure borrowers have all necessary information and should help borrowers in obtaining documents and other information needed to evaluate the borrowers for assistance.
  • Addressing language access. The CFPB will look carefully at how servicers manage communications with borrowers with limited English proficiency and maintain compliance with the Equal Credit Opportunity Act and other laws.
  • Evaluating income fairly. Where servicers use income in determining eligibility for loss mitigation options, servicers should evaluate borrowers’ income from public assistance, child-support, alimony or other sources in accordance with the Equal Credit Opportunity Act’s anti-discrimination protections.
  • Handling inquiries promptly. The CFPB will closely examine servicer conduct where hold times are longer than industry averages.
  • Preventing avoidable foreclosures. The CFPB will expect servicers to comply with foreclosure restrictions in Regulation X and other federal and state restrictions in order to ensure that all homeowners have an opportunity to save their homes before foreclosure is initiated.

Provided that servicers are demonstrating effectiveness in helping consumers, in accord with today’s compliance bulletin, the CFPB will continue to evaluate servicer activity consistent with the Joint Statement on Supervisory and Enforcement Practices Regarding the Mortgage Servicing Rules in Response to the COVID-19 Emergency and the CARES Act on April 3, 2020, which provides flexibility on certain timing requirements in the regulations.

[Source: CFPB Media Release]

###

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of publication date but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices, and all other information may or may not be correct in the future and should be verified if cited, shared, or otherwise republished.

OnlineEd® is a Registered Trademark.

Centers for Disease Control and Prevention Announces Extension of Moratorium on Residential Evictions

The CFPB and FTC are working with CDC to make renters aware of their rights

By Jeff Sorg, OnlineEd Blog

(March 30, 2021)

 

WASHINGTON, D.C. – The COVID-19 pandemic has created a financial crisis that threatens the ability of millions to stay in their homes. Renters and homeowners experiencing pandemic-related unemployment or wage reduction are struggling to make monthly payments. A recent CFPB report found that over 11 million families are behind on their rent or mortgage payments: 2.1 million families are behind at least three months on mortgage payments, while 8.8 million are behind on rent.

Today, the Centers for Disease Control and Prevention announced an extension of its moratorium on residential evictions to keep people in their homes, out of shelters, and to stop the spread of COVID-19. Renters have struggled to exercise their rights under the CDC’s eviction moratorium, and news reports indicate many renters have been forced out of their homes despite federal protections.

CFPB Acting Director Dave Uejio and FTC Acting Chairwoman Rebecca Slaughter:

“We have directed our staff to investigate eviction practices, particularly by major multistate landlords, eviction management services, and private equity firms, to ensure that they are complying with the law. Evicting tenants in violation of the CDC, state, or local moratoria, or evicting or threatening to evict them without apprising them of their legal rights under such moratoria, may violate prohibitions against deceptive and unfair practices, including under the Fair Debt Collection Practices Act and the Federal Trade Commission Act. We will not tolerate illegal practices that displace families and expose them—and by extension all of us—to grave health risks.”

The CFPB and FTC are working with CDC to make renters aware of their rights under the eviction moratorium and to help them to understand how to complete declarations needed to stop evictions. Renters can learn about their eviction and debt collection rights and how to get help with housing costs at www.consumerfinance.gov/renters.

The CFPB is also regularly providing updated information on a wide range of mortgage relief options and rental protections available to consumers. These updates can be found here: www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/

[Source: CFPB Media Release]

###

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of publication date but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices, and all other information may or may not be correct in the future and should be verified if cited, shared, or otherwise republished.

OnlineEd® is a Registered Trademark.

Categories: Real Estate, Mortgage

Over 11 Million Families at Risk of Losing Housing

Federal foreclosure moratorium slated to end June 30, 2021

By Jeff Sorg, OnlineEd Blog

(March 1, 2021)

CFPB, WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) issued a report that warns of widespread evictions and foreclosures once federal, state, and local pandemic protections come to an end, absent additional public and private action. Over 11 million families are behind on their rent or mortgage payments: 2.1 million families are behind at least three months on mortgage payments, while 8.8 million are behind on rent. Homeowners alone are estimated to owe almost $90 billion in missed payments. The last time this many families were behind on their mortgages was during the Great Recession.

According to the CFPB report:

  • Black and Hispanic families are more than twice as likely to report being behind on housing payments than white families.
  • While mortgage forbearance – the option to pause or reduce payments temporarily – has dropped foreclosures to historic lows, 1 million homeowners are more than 90 days behind on payments and are likely to experience severe financial hardship when payments resume. Of these families, an estimated 263,000 families are seriously behind on their mortgages and not in forbearance, putting them at higher risk of foreclosure once federal and state moratoria end.
  • 9 percent of renters, who do not have the same protections or options as homeowners, report that they are likely to be evicted.
  • Black and Hispanic households are more likely to report being at risk.
  • 28 percent of manufactured home residents reported being behind on their housing payments, compared to 12 percent of single-family home residents and 18 percent of residents in small-to-mid-sized multi-unit buildings.

The CFPB report, “Housing Insecurity and the COVID-19 Pandemic,” can be found here: Housing insecurity and the COVID-19 pandemic.

 

###

OnlineEd® is a Registered Trademark. For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

OnlineEd blog postings are the opinion of the author. Nothing posted in this or any other article is intended as legal or any other type of professional advice. Be sure to consult an appropriate professional when professional advice is needed. Excerpts from articles not originating with Jeff Sorg/OnlineEd are reprinted with permission; remain the author’s sole property; no permission to reprint articles or portions thereof not arising from this blog but reprinted here is given or implied. Information in this posting is deemed correct as of the date of publication. Still, the author does not guarantee articles to be accurate, and information may have been obtained from third-party sources and cannot be further verified for correctness. Due to the subject matter’s fluid nature, information may or may not be correct after the publication date and should be verified.

Oregon Excludes Certain Facts as Material Facts to Real Property Transactions

Oregon Excludes Certain Facts From Disclosure as Material Facts to Real Property Transactions

By Jeff Sorg, OnlineEd Blog


sellers disclosure statement(February 10, 2021)
 – In Oregon, unless one of the limited legal exclusions applies, each seller of residential property is required to deliver to each buyer who makes a written offer a Seller’s Property Disclosure Statement. A seller who is not excluded under the law who fails to deliver this statement is penalized in that the buyer of the property will be able to revoke their transaction at any time up until closing.  These allowable seller exclusions are:

  • The first selling of a dwelling never occupied;
  • The sale of property by a financial institution that acquired the property as a trustee, custodian, or agent, or by foreclosure or by deed in lieu of foreclosure,
  • The seller who is a court-appointed trustee, representative, conservator,  or guardian; and
  • The sale of property by a governmental agency.

While the Oregon form lists many items that must be disclosed and allow for additional material facts not listed in the form to be disclosed, the following are among incidents that are not considered to be material to a real property transaction under Oregon law and do not have to be disclosed by the seller or real estate brokers:

  • The fact or suspicion that the real property or a neighboring property was the site of death by violent crime, by suicide, or by any other manner;
  • The fact or suspicion that the real property or a neighboring property was the site of a crime, political activity, religious activity, or any other act or occurrence that does not adversely affect the physical condition of or title to real property;
  • The fact or suspicion that an owner or occupant of the real property has or had a blood-borne infection;
  • The fact or suspicion that a sex offender registered under ORS 163A.010 (Reporting by sex offender discharged, paroled or released from correctional facility or another United States jurisdiction), 163A.015 (Reporting by sex offender discharged, released or placed on probation by court or another United States jurisdiction), 163A.020 (Reporting by sex offender upon moving into state) or 163A.025 (Reporting by sex offender adjudicated in juvenile court) resides in the area; and
  • The fact that a notice has been received that a neighboring property has been determined to be not fit for use under ORS 453.876 (Determination that property is not fit for use).

Brokers should advise their buyers of these exceptions and notice them to perform their own due diligence investigations.

(Original article published October 21, 2015)

###

 All information in this posting is deemed correct at publication but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices, and all other information may or may not be correct in the future and should be verified if cited, shared, or otherwise republished.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

Eviction and Foreclosure Moratoriums on Federally-backed Single-family Mortgages Extended Through March 31, 2021

HUD has implemented President Biden’s requests to immediately extend eviction and foreclosure moratoriums

By Jeff Sorg, OnlineEd Blog

(January 25, 2021)

US Dept. of HUD – Acting U.S. Housing and Urban Development (HUD) Secretary Matthew E. Ammon today announced that the Department has implemented President Biden’s requests to immediately extend eviction and foreclosure moratoriums on federally-backed single-family mortgages through March 31, 2021, to provide meaningful support to homeowners struggling financially as a result of the COVID-19 pandemic:

“President Biden asked the Department of Housing and Urban Development (HUD) to consider an immediate extension of eviction and foreclosure moratoriums on federally-backed single-family mortgages. To provide much-needed economic relief and support to working families, HUD has implemented the President’s requests.

“Millions of Americans are at risk of eviction or foreclosure because of the COVID-19 pandemic and corresponding economic crisis, and the Biden Administration is pursuing a comprehensive strategy to prevent widespread housing loss. As we have seen throughout the pandemic, this looming wave of evictions and foreclosures disproportionately impacts communities of color. These executive actions are a critical first step to ensure that families hit hard by the economic crisis will not be forced from their homes during their time of need.

“Specifically, HUD has extended the Federal Housing Administration (FHA) eviction and foreclosure moratorium until March 31, 2021 and extended the Public and Indian Housing (PIH) eviction and foreclosure moratorium until March 31, 2021.

“Failing to prevent widespread evictions and foreclosures would lead to untold hardship for families and overwhelmed emergency shelter capacity, increasing the likelihood of COVID-19 spread in our communities. The Biden Administration is committed to using the tools at its disposal and working with Congress to help struggling households keep a roof over their heads. These agency actions support the Administration’s broader strategy by immediately extending nationwide restrictions on evictions and foreclosures.”

 

###

OnlineEd® is a Registered Trademark. For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

OnlineEd blog postings are the opinion of the author. Nothing posted in this or any other article is intended as legal or any other type of professional advice. Be sure to consult an appropriate professional when professional advice is needed. Excerpts from articles not originating with Jeff Sorg/OnlineEd are reprinted with permission; remain the author’s sole property; no permission to reprint articles or portions thereof not arising from this blog but reprinted here is given or implied. Information in this posting is deemed correct as of the date of publication. Still, the author does not guarantee articles to be accurate, and information may have been obtained from third-party sources and cannot be further verified for correctness. Due to the subject matter’s fluid nature, information may or may not be correct after the publication date and should be verified.

New 2021 Rules for Advertising by Oregon Real Estate Licensee

The Oregon Real Estate Agency has adopted new rules for advertising, effective January 1, 2021

By Jeff Sorg, OnlineEd Blog

(January 6, 2020)

 OnlineEd – The Oregon Real Estate Agency has updated advertising rules for real estate licensees. Highlights of these new rules for brokers and principal brokers, which became effective January 1, 2021, are listed below.

  • Brokers no longer need their principal broker’s approval for their advertising, which makes brokers responsible for their own advertising. However, principal brokers can still establish internal policies for advertising approval.
  • If the advertising licensee is not the authorized licensee for the registered business being advertised, the licensee cannot state or imply in the advertisement that they are responsible for the operation of the registered business.
  • Any licensee can register with the Oregon Real Estate Agency for an alternative name to use in their advertising. If the licensee is known by a name other than their legal name, the registered name can be used in advertising. However, when using an alternative name, the licensee’s license number must be included in their advertisements.
  • Registered business names no longer need to be included in social media posts advertising real estate or real estate services so long as the posts link to a social media profile page or another web page that includes the licensee’s licensed name or registered alternative name and their registered business name.
  • “Licensed in Oregon” is no longer required for online advertising.

All of the new and updated rules, along with rules for property managers, can be found here.

 

###

OnlineEd® is a Registered Trademark. For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

OnlineEd blog postings are the opinion of the author. Nothing posted in this or any other article is intended as legal or any other type of professional advice. Be sure to consult an appropriate professional when professional advice is needed. Excerpts from articles not originating with Jeff Sorg/OnlineEd are reprinted with permission; remain the author’s sole property; no permission to reprint articles or portions thereof not arising from this blog but reprinted here is given or implied. Information in this posting is deemed correct as of the date of publication. Still, the author does not guarantee articles to be accurate, and information may have been obtained from third-party sources and cannot be further verified for correctness. Due to the subject matter’s fluid nature, information may or may not be correct after the publication date and should be verified.

Categories: Real Estate

Exceptions to Oregon Property Manager Licensing

Oregon does have a few exceptions to property manager licensing

By Jeff Sorg, OnlineEd Blog

(December 9, 2020)

 OnlineEd – Property management of rental real estate under Oregon law also means representing a tenant or prospective tenant when renting or leasing real estate and includes, but is not limited to:

  • consulting with tenants or prospective tenants about renting or leasing real estate;
  • assisting prospective tenants in renting or leasing real estate;
  • assisting prospective tenants in qualifying for renting or leasing real estate;
  • accepting deposits or other funds from prospective tenants for renting or leasing real estate and holding the funds in trust for the prospective tenants;
  • representing tenants or prospective tenants renting or leasing real estate;
  • offering or attempting to do any of the acts described in this paragraph for a tenant or prospective tenant. These activities apply to residential real estate and nonresidential real estate. Residential real estate is defined as real property that constitutes “dwelling units” and “premises,” and nonresidential real estate is anything other than residential real estate.

There are some exceptions to the requirement to have a license for property management. Some of these exceptions are:

  • When a person is an employee of a property manager or principal broker. An unlicensed employee of a property manager or principal broker cannot negotiate a property management agreement with an owner. However, an unlicensed employee can engage in other property management activities under the supervision of a property manager or principal broker, so long as the employee follows the laws and rules governing property management activities. Some of these permitted activities are:
    • showing a rental unit to a prospective tenant;
    • receiving rental applications from prospective tenants;
    • checking a tenant’s personal and credit references;
    • negotiating rental agreements with tenants;
    • hiring for repairs or maintenance;
    • collecting and processing rents;
    • supervising a premise manager; and
    • coordinating F.E.D. (Forcible Entry and Detainer) actions.
  • When a person is a full-time employee of a single owner of real estate whose activities involve real estate of the employer and are incidental to the employee’s normal nonreal estate activities.

A common example would be the secretary of a property owner who periodically shows vacant space to potential tenants.

  • When a person is acting as an attorney-in-fact under a duly executed power of attorney from the owner. A power of attorney must authorize the person to supervise or execute any contract to lease real estate. A power of attorney must be recorded in the county in which the subject property is located.
  • When an attorney is rendering services in the performance of his or her duties as an attorney for a client.

A typical example is an attorney entering into a rental agreement for property belonging to an estate in probate.

  • When a person engages in property management activity under the order of any court.

A typical situation for this exemption is a court-appointed receiver ordered to manage and liquidate property in a bankrupt estate.

  • When a person is a regular full-time employee of a single nonlicensed corporation, partnership, association, or single owner and that person only engages in property management activity for that single entity. This employee may engage in property management activity only. The employee may not engage in the sale, exchange, lease option, or purchase of the owner’s real property. The employee may manage property ranging from one residential unit to multiple apartment complexes. The employee’s compensation must be through regular paychecks, with proper federal and state tax withholding. In other words, independent contractor status is not allowed. If the individual holds a real estate license, the exemption does not apply.
  • When a person is a general partner for a domestic or foreign limited partnership. The person must be working for a limited partnership properly registered with the Oregon Secretary of State, Corporation Division. The general partner may engage in the sale, acquisition, exchange, lease transfer, or management of the limited partnership’s real estate without a license. If the individual holds a real estate license, the exemption does not apply.
  • Community Association Managers. Under Oregon law, a community association manager does not fall under the definition of professional real estate activity and does not have to be licensed by the Oregon Real Estate Agency. A community association manager will manage the common property and services of condominiums, cooperatives, and planned communities through their homeowners’ association. While a community association manager’s work is similar to that of a property manager, the community manager does not deal with tenants but does deal with owners of property within the association and its residents.
  • Vacation Rental Management. ORS 696.030 does not consider vacation rental management as a professional real estate activity. Vacation rental management deals with transient lodging, which does not require a real estate license.

 

###

OnlineEd® is a Registered Trademark. For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

OnlineEd blog postings are the opinion of the author. Nothing posted in this or any other article is intended as legal or any other type of professional advice. Be sure to consult an appropriate professional when professional advice is needed. Excerpts from articles not originating with Jeff Sorg/OnlineEd are reprinted with permission; remain the author’s sole property; no permission to reprint articles or portions thereof not arising from this blog but reprinted here is given or implied. Information in this posting is deemed correct as of the date of publication. Still, the author does not guarantee articles to be accurate, and information may have been obtained from third-party sources and cannot be further verified for correctness. Due to the subject matter’s fluid nature, information may or may not be correct after the publication date and should be verified.

Categories: Real Estate

FTC Sues to Block CoStar Group, Inc.’s Proposed Acquisition of RentPath Holdings, Inc.

The acquisition could increase the concentration of internet listing services advertising for large apartment complexes

By Jeff Sorg, OnlineEd Blog

(December 4, 2020)

 OnlineEd – The Federal Trade Commission has filed an administrative complaint (a public version of which will be available and linked to this news release as soon as possible), and authorized a suit in federal court, to block internet listing services provider CoStar Group Inc.’s proposed $587.5 million acquisition of competitor RentPath Holdings, Inc. CoStar operates a network of websites, including Apartments.com, ApartmentFinder.com, and ForRent.com, which are two-sided platforms that match prospective renters with available apartments. RentPath operates similar websites, including Rent.com and ApartmentGuide.com.

The complaint alleges that the acquisition would significantly increase concentration in the already highly concentrated markets for internet listing services advertising for large apartment complexes in 49 individual metropolitan areas across the United States.

“Renters have come to depend on the convenience of online search sites to find available apartments that meet their needs and budget,” said Daniel Francis, Deputy Director of the FTC’s Bureau of Competition. “CoStar and RentPath operate several of the most popular sites, and their aggressive, head-to-head competition has kept advertising rates low while offering consumers a convenient, data-rich tool for finding an apartment. This acquisition will eliminate price and quality competition that benefits both renters and property managers.”

Internet listing services, or ILSs, provide free user-friendly interfaces for consumers to search for a place to live from a database of available units. Information about the number of bedrooms, monthly rent, available move-in date, and amenities like swimming pools or exercise rooms is readily available, as are floor plans, real-time vacancy data, and quality photos or video tours. Millions of U.S. consumers rely on ILSs each year to gather information about rental properties, or to contact property managers about leasing an apartment, according to the complaint.

For apartment owners and property managers, ILSs help to fill apartments by creating and targeting advertisements of vacant units to interested prospective renters. Property managers pay ILSs advertising fees in exchange for listing their properties. ILSs attract significant numbers of prospective renters to browse available rental units, and provide a way for them to contact properties directly to express interest in leasing.

According to the complaint, 70 percent of U.S. apartment complexes with 200 or more units, and approximately 50 percent of U.S. apartment buildings with 100 to 199 units, advertise on ILSs operated by either CoStar, or RentPath, or both. The acquisition will increase concentration in these markets even further.

The complaint alleges that for years, CoStar and RentPath have been each other’s closest rivals, competing to sell ILS advertising to property management companies and to attract prospective renters to use their ILS search services. CoStar and RentPath compete aggressively for website traffic from prospective renters and business from advertisers. Each has targeted the other with sales campaigns and significant discounts to win and retain advertising customers.

The Commission vote to issue the administrative complaint and to authorize staff to seek a preliminary injunction was 4-1. Commissioner Christine S. Wilson voted no. The FTC will file a complaint in the U.S. District Court for the District of Columbia to enjoin the deal pending an administrative trial. The administrative trial is scheduled to begin on June 1, 2021.

 

###

OnlineEd® is a Registered Trademark. For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

OnlineEd blog postings are the opinion of the author. Nothing posted in this or any other article is intended as legal or any other type of professional advice. Be sure to consult an appropriate professional when professional advice is needed. Excerpts from articles not originating with Jeff Sorg/OnlineEd are reprinted with permission; remain the author’s sole property; no permission to reprint articles or portions thereof not arising from this blog but reprinted here is given or implied. Information in this posting is deemed correct as of the date of publication. Still, the author does not guarantee articles to be accurate, and information may have been obtained from third-party sources and cannot be further verified for correctness. Due to the subject matter’s fluid nature, information may or may not be correct after the publication date and should be verified.