February 6th - 2004

VOWS: A cautionary tale

If you're considering a VOW, a virtual office web site—, stop to smell the coffee. There could be strychnine in it.

If you're considering a VOW, a virtual office web site—, stop to smell the coffee. There could be strychnine in it.

A VOW is an internet site operated by MLS participants to conduct online brokerage. It’s a way to establish relationships and work with clients and customers in cyberspace, without a “brick and mortar” environment. Consumers accessing VOWs search and view MLS listing data after registering by providing names and e-mail addresses.

The attraction of this new business tool is undeniable because it responds to consumer demand.  A recent poll shows that in the last two years an internet search was involved for six of every 10 house sales in Canada. That number will only grow as more and more Canadians go on line.

Don’t confuse a VOW with Internet Data Exchange (IDX). The latter is a limited electronic MLS book which allows consumers to seek out relevant MLS listings in a local area. For brokers, it’s a relatively inexpensive marketing tool which creates new internet outlets for advertising listings and expanding reach.

In the US, IDX is a National Association of Realtors (NAR) program, also known as Broker Reciprocity or Internet Data display. It allows broker members, with permission, to post listings on each others’ web sites. In Canada, several boards have conducted research or adopted positions on the subject, including Vancouver, London and Ottawa.

VOWs take the IDX platform one step further. They create private business platforms designed to facilitate actual transactions. The typical VOW invites consumers in, obtains identifying information, registers buyers and/or sellers and delivers the registered consumers as a lead to other real estate companies/sales agents. NAR adopted a VOW policy in the spring of 2003 and originally gave MLSs (American real estate boards) until Jan. 1 of this year to comply. This date has now been extended to July 1, 2004.

But as you read this, a VOW in Ontario would likely be considered unauthorized use of a board’s MLS database and unauthorized advertising of another REALTOR’S listings. And this is likely to remain the case until some regime is created by MLS rules, either at the board of national level that provides blanket permission to advertise other REALTOR’s listings as well as permission to download or extract MLS data to populate another database.

The point is driven home in one of several RECO CCD decisions, summarized in the OREA legal pamphlet Advertising Other REALTORS’ Listings, which can be found in the legal area of the OREA web site. A sales representative who did not obtain the permission of the listing broker to advertise a property was found to have failed to ensure that his advertising was not false or misleading in violation of Rule 1(5) and Rule 21 of the RECO Code of Ethics. Respectively, these deal with the requirement to “deal fairly, honestly and with integrity with the public, other Members and third parties” and state that “a member shall ensure that all advertising and promotion by or on behalf of the Member, including for Properties and services, is not false, misleading or deceptive.”

A resolution may be on the horizon. CREA’s Electronic Data Usage (EDU) Task Force, paying close attention to the issues identified and lessons learned in the US, is developing Canadian guidelines that coincide with Canadian laws, particularly the Competition Act.

However, Canadian REALTORS should keep all this in mind when approached by US software providers who may not realize that the NAR rules and deadlines on VOWs don’t apply in Canada and that by setting up a VOW, an Ontario REALTOR could run afoul of his or her Board or regulatory body. 

For further information on VOWS from the US perspective, visit the VOW Information Center at www.realtor.org/realtororg.nsf?pages/VOWHome?OpenDocument.

The CREA EDU Task Force reports on VOWs and IDX can be found on REALTOR Link at www.realtorlink.ca in the CREA – MTC section.

The legal pamphlet “Advertising Other REALTORS’ Listing” can be found in the Members’ Only--Legal--Legal Pamphlets section of the OREA web site, www.orea.com

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