Fanning the For Sale by Owner Flames

Controversy brews over limited-service tactic.

January 1, 2009

It was no mere war of words.

Within hours of a Nov. 12 announcement from the company that said FSBOs could now list side-by-side with brokers on, REALTORS® expressed their fury in hundreds of blog posts and letters.

By the end of the day, the NATIONAL ASSOCIATION OF REALTORS® and had issued statements denying the claim and demanded a retraction from

In its announcement, had tried to connect listings at with the pending agreement between NAR and the U.S. Department of Justice on the display of MLS listings on brokers' Web sites.

"The DOJ-NAR settlement benefited consumers by giving them access to without the expensive cost of a commission fee," Greg Healy, vice president of operations, said in his company's press release.

But the pending DOJ-NAR agreement makes no reference to FSBOs on, and all listings on must still be listed with a real estate professional, says a spokesperson.

Limited-Service Broker Conundrum

In its essence, the flap revolved around listings held by limited-service brokers, which chooses to term "FSBO listings." In the service it was touting in its press release, charges sellers a fee to send their property to a participating broker, who lists the property in an out-of-state MLS which allows it to be swept into The listings aren't FSBOs because they're represented by real estate licensees.

Sellers agree to offer a commission to any selling agent who comes with a buyer, but there's little likelihood of that happening because the property and the MLS are in separate jurisdictions.

"I would close a loophole that allowed outside listings to be put in the MLS," Kim Hannemann of Samson Realty in Chantilly, Va., told REALTOR® magazine after the flap subsided. "I wouldn't care if a Connecticut REALTOR® wanted to belong to an MLS in California, but I wouldn't be letting him put a Connecticut listing in that California MLS."

Although they're far fewer in number, some REALTORS® aren't concerned about the loophole. "Consumers are savvy enough to know where to get the information they want, says Robert Hulme, GRI, of Prudential Real Estate in Provo, Utah. "I'm leaning toward offering as many homes for sale to my buyers as possible, including FSBOs. I know I'm in the minority, but why make a big deal about it?"

But a big deal was just what got. As a member commenting at the magazine's Speaking of Real Estate blog put it, "I am so tired of the FSBO listing publications trashing us. They use to their advantage through a back door approach while thumbing their nose at us. Can our Code of Ethics be amended to address this?"

Robert Freedman

Robert Freedman is the former director of multimedia communications at NAR.