Should an Electronic Listing Service Such as Loopnet be Required to Be Licensed as A Broker in Each State that it Lists Properties for Sale?

I recently read an interesting article distributed by the Associated Press and republished by the Silicon Vally, Mercurynews.com about the state of Nebraska's requirement that the owner of a property-listing website based in California, obtain a license to market homes in the Midwestern state.

Apparently Leslie Young filed a federal lawsuit, seeking a permanent injunction to stop Nebraska from enforcing the law, which she says violates her First Amendment rights, the Lincoln Journal Star ( http://bit.ly/Pu0WWf) reported.

We'll, as you will see, this got me thinking and when I start thinking, I get dangerous and write blog posts.

Ms. Young claims that her website, elistme.com, merely provides a way for sellers to advertise their homes, like a classified ad section in a newspaper. She does not act as a broker and does not receive a commission.  This sounds like a pretty good argument to me, if it is true. Now, of course, I don't know what is actually true but it was reported that in court documents that Young's Elist.me site has referred to her as "advertising broker."  Now if she is not acting as a broker, then why would the site list her as the advertising broker? Perhaps this was something, nothing more than sloppy copy or an inadvertant statement and in fact, she is not acting as a broker in the state of Nebraska.  But I would be so bold to suggest, that when you state that you are acting as the "advertising broker, " you are not passing the sniff test, which certainly warrants some initial due diligence on the part of the state of Nebraska.  My guess is that this is a matter that should be straightened out informaly, rather than by a lawsuit and that Ms. Young should make sure that her website not state or infer that she is acting in the capacity as a broker in the state of Nebraska or for that matter, in any state that she is not licensed to act as a real estate broker. Just as important, she should make absolutely certain that she does not actually act as a broker, notwithstanding how she might refer to herself on her website.

So you ask yourself, what does all of this have to do with Loopnet?  While Loopnet does not publish the availability of residential property on its website, (I don't think so, at least), it does publish listings for commercial property in most, if not all states in the United States. While I am sure that Loopnet has an army of attorneys that spend their entire day to insure that Loopnet fully complies with all state and federal laws, you do wonder, to what extent, there has been a lot of attention paid to the inner workings and agreements of these listing services, how they get paid and to what extent the agreements involve broker or broker like tasks. How close do they skirt the line as a mere advertiser versus broker?

Nebraska Real Estate Commission Director, Greg Lemon declined to specifically comment about Young's lawsuit. He said, however, that the Nebraska law addresses how property is marketed. He further expressed that if the ads direct potential buyers to the owner who listed it and no broker is involved, the law isn't breached.

Does that mean that if a commercial property is listed on Loopnet by a listing broker licensed in the state of Nebraska, Loopnet must be licensed as a real estate broker in the state of Nebrask?  That doesn't make any sense to me, if you take the above statement of Director Lemon at face value.

I think this all warrants some investigative reporting on this issue and I will report back in later blog posts.

Comments

[LauraLea]

She is a license broker in California. Her documents for e-list me and contracts spell out what she does exactly and the fee charged for advertising. She states she is an "ADVERTISING Broker". This case is HUGE and if she loses EVERY home owner will lose. I know a lot about this case because she is my sister and she has been attacked by the Real Estate Commission Offices in several States. Nebraska has re-written laws with respect to "advertising" homes for sale. Please investigate it for yourself. These cases have costs her everything and it is VERY sad what is being done. It was NOT her that wanted to file a lawsuit she is fighting for her rights and life. It is the STATES that went after her. And, although she proved to them she only charges a flat fee for advertising. There was NEVER any choice given her to change any verbiage. YOU really need to know what the Real Estate Commissioners did how they made her out to be a criminal fining her Thousands of dollars and long arming her license in California. The reason a law suit is IMPORTANT is that many States are looking into what happens in this case and how Nebraska created a new law to shut her down. If she losses they will try to control the "advertising" of homes for sale by owners making it impossible for homes for sale by owners to get listed on MLS's. Her business only feeds information provided to her to sites that list homes for sale and she charges a very reasonable flat fee of $95. She does NOT "write" the advertisement she does NOT take pictures, she does NOT negotiate sales, she is in NO way any part of the sale process. Her business is "ADVERTISING" broker...plan and simple. ALL her documents and contract DO in fact accurately reflect what her business does...she has done nothing wrong or illegal. The NAR help fund States and like a CARTEL want to control the commissions paid to realtors. In this day and age where many home owners simply do not have the equity in their homes to support high costs of selling their home. It is important that they have a way to advertise homes for sale for a reasonable fee. What the STATES are doing to Leslie is shameful and wit in several States. The commissions are simply making it difficult for owners to sale homes themselves

[REO Properties for Sale]

great point you raised unfortunately i am also searching for this answer and now i got some little bit point from here thanks friends :)

[Howard F. Kline]

LauraLea. If what you say is true and Ms. Young only gets a flat fee for advertising, then perhaps it would help her if she did not refer to herself, in her documents as a listing broker in her advertising agreement.

Let me ask you this:

Is it less expensive and easier to make some changes to your documentation to make sure that they accurately reflect what you are actually doing, or should you just file a lawsuit? It seems to me that Ms. Young could have made some changes to her documentation and avoided some of the problems that she now faces, assuming what you say is true.

[LauraLea]

The Doc is an agreement to advertise. Simply put! Please understand this for what it is! Her fight is for EVERY HOME OWNER who wants to advertise their home for sale by owner to save the high costs of selling their home. There is nothing in the agreement that suggests that elistme will be involved in the actual selling process other than list the home. And, YES the Nebraska Real Estate Commission is VERY aware of the FACTS that Ms. Young only gets a flat fee (about $95) for advertising homes for sale by owners.

[Howard F. Kline]

What an odd concept, be HONEST. Yes, but if you are not that experienced, you could certainly run afoul of the law while still being honest.

[Cinnamon Trimmer]

Simple solution - In the auto dealer sales (former auto wholeseller here) I could only list 5 personal autos per year for sale for free, if I sold any car under my dealer name/brokerage I had to pay a fee based on price and list that I was indeed a BROKER. SEVERE penalties to me as the broker if I did not list so. So it's simple be HONEST and that will get you further then being SHADY.

I feel IF a listing service provides the EXTRA services, such as documentation, bookings or even showings, as a broker then yes they should be held accountable for what they are doing. Listing a property is just that listing, contact detail etc. But if eList.me acts at anytime as an agent or provides any services that list eList as the acting agent then it's crossing the line.

[Bob Canter]

I do NOT believe the listing services mentioned such as LoopNet et al, should be required to be licensed as a real estate broker. Now if someone is parading as such, and using the service to get listings in a particular market then yes it should be further investigated. We need transparent and the free flow of information and if the Governments get involved this will stifle this progress to the detriment of not only CRE brokers but the CRE buying/renting public.

[Howard F. Kline]

Chris. I agree with you and I have always assumed that these listing services were nothing more than advertisers, like a newspaper. As just an advertiser, I don't see why a broker's license would be required. However, in this case, there seems to be enough evidence online regarding Ms. Young and her, elist.me site to at least question whether or not she is really acting as a broker under the guise of advertisement or whether she is just an advertiser as she claims. It seems to me that if she were really acting as an advertiser, she should be able to clear up the online documentation and website and make that clear, without the necessity of a lawsuit.

As to the other services, at face value, they seem to be nothing more than an advertiser and likely should be able to generate significant revenue using that business model alone without the necessity of having unseen agreements behind the scenes. But who knows what really goes on behind the scenes and what makes people take shortcuts for more money. I am not suggesting that anyone is doing something wrong, but maybe, every now and then, someone in authority might take a quick "look see" just to make sure that things are on the "up-and-up".

[Chris Rosprim]

There are a number of listing services the likes of Loop Net..... CoStar, Xceligent, local MLS, national MLS, and a host of sites listing commercial and/or land tracts. These sites only offer the listing broker or owner the ability to advertise the property. They are not acting as a broker in the deal and receive no commission. I can not see where they would be required to obtain a broker license and be a member of any board of REALTORS in order to accept advertisements on their sites.

[Howard F. Kline]

Our further investigation into this elist.me service reveals at http://www.docstoc.com/docs/87139538/AgreementDOC---eListme-Advertising-Services, reveals that you can register for a document download service through Docstoc.com, where you can find and download a "Property Agency Listing Agreement" identifying the "broker" as "eList.me".

A quick review of the Listing Agreement does not reveal any limitation by jurisdiction and the only reference to a jurisdiction is to resolve disputes in California.

The interesting thing is that Docstoc lists this document as a"Agreement.DOC - eList.me Advertising Services." Sounds to me like someone is looking for listings as a broker and calls it advertising.