Hamptons listings battle heads to court
April 16, 2009 11:20AM By C. J. Hughes
The Hamptons
In most of the country, real estate firms of all shapes and sizes use a multiple listings service, or MLS, to freely share information about who's selling what kinds of homes.
But not in the Hamptons. For nearly two years, the dominant method for swapping that type of important sales information has been through the Web-based Open RealNet Exchange, or OREX, which is used by small and large firms, but not by all of them.
Now, though, in an attempt to level the playing field, George and Jean Simpson, a husband-and wife team from Hampton Bays who work in the real estate business, are trying to shut OREX down.
Last month, they filed a 58-page lawsuit (see complaint below) against OREX and 25 firms and individuals who use it, including the Corcoran Group and Prudential Douglas Elliman, claiming that they violate anti-monopoly laws, and that, in making the information inaccessible to the public, defendants have "enacted and enforced various anti-competitive and unfair rules, policies, practices and procedures." To compensate for lost business, the Simpsons are also seeking damages of $18 million.
A key part of the Simpsons' claim is that OREX, which they say controls 85 percent of all Hamptons residential listings, charges a cost-prohibitive $40,000 a year to use it, according to the suit. The fee is classified under the terms of a user's contract, and nobody contacted for this story would disclose it.
In contrast, a typical multiple listings service, like the kind utilized on the rest of Long Island, usually cost about a few thousand dollars a year, for a similar-size firm, George Simpson said.
The value of OREX, which is owned by Quogue resident Nicholas Khuri, according to the suit, is that in addition to details about square footage and number of bathrooms is the name of the seller, and her phone number, which can be critical to scoring clients. When OREX was being launched in the Hamptons in the summer of 2007, Khuri told The Real Deal: "It's just basically making things more efficient. Not only does it eliminate the need to fax listings, but the data is more accurate because it comes directly from the participating companies' databases."
George Simpson, who currently runs the Suffolk Research Service, which provides transfer data, also designed Appraise@, which is a non-Web-based database created in 1997 whose listings can't be shared. Ten Hamptons agencies currently use it, for about $150 per terminal a year, Simpson said.
He dismisses criticisms that he's just looking to pick up more customers for Appraise@, suggesting instead the real beneficiary will be the Long Island Board of Realtors, which runs its own MLS.
But "we want to stop these crooks from doing what they do best," he said. "It is terrible."
Khuri didn't return a call for comment, nor did Corcoran, Town and Country Real Estate, Saunders and Associates nor Strough Real Estate, who are other defendants. Other firms named in the suit include Brown Harris Stevens, and Sotheby's International Realty and Coldwell Banker Prestigious Properties, both sister companies to Corcoran. The defendants need to file responses by June 10.
Defendant Simon Harrison, who heads a three-agent business in Sag Harbor, and who has used OREX for three years, told The Real Deal that he's not convinced a MLS would be a cheaper system, as it can penalize users for minor clerical changes.
Plus, it benefits the whole industry better to use the same system, with as much sharing as possible, because if "I can't co broke, I will go broke," said Harrison, who estimates he's used eight different systems, including one with index cards, over his 20-year career..
"We're being sued for making the choice that would be best for clients and customers, as well as for us," Harrison said, "and that's managing information."
Complaint
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Comments
Anonymous
Yeah, yeah yeah... Let's do the same with L.I.M.O....
Comment #1 Posted By: Anonymous 04/16/09
Anonymous
Mr. Harrison, you're being sued for anti trust violations, and for violations that involve a system that is multiple times the cost of the MLS- you couldn't possibly make enough clerical errors to come close to the cost or OREX. And if you DO, maybe real estate is the wrong business to be in. Keeping listing information from the real estate community and consumers is unacceptable, no matter HOW much the companies out there want to insist that "it's better for the client." It's better for the brokers, period- and serves no one else. As the last hold outs (likely in the nation), quit imagining that, as brokers, you provide so much more to consumers with your methods- no one believes it except the companies that operate with greed as the priority. That you don't see it makes you at the very least, stupid; at worst, a participant in a system accused of being criminal. LM
Comment #2 Posted By: Anonymous 04/16/09
Anonymous
"it benefits the whole industry to use the same system"- so, why aren't you in the MLS, which is the predominant system? THAT'S the one that "everyone" uses.
Comment #3 Posted By: Anonymous 04/16/09
Anonymous
i think alot of brokers need to stop crying. these listing are very limited and if you sell multi million dollar houses you should be able to afford it. Step up your game and work harder and stop blaming others for your misfortune
Comment #4 Posted By: Anonymous 04/16/09
Tom D
It's all about greed. With the market in the toilet for at least another 2 years, the idiot Hamptons brokers will be wishing that they had a service that people outside of their own little world could see. Do you think you just might generate a little more business if your listings were a little easier to find? I know it's a tough concept to consider when you've had those blinders on for 20 plus years like Mr Harrison but you might at least want to step into the world of the late '90s. Maybe by 2020, you'll be where the rest of the country is in 2009.
Comment #5 Posted By: Tom D 04/16/09
Anonymous
#4, it's not about affording it- it's about being forced to afford it, because a group of unethical agents have chosen to enter into a system that intentionally creates a cost barrier. That's not a legal situation, and good brokers wouldn't get involved in that kind of collusion. Nor would they disadvantage sellers/buyers for the purpose of lining their own pockets. LM
Comment #6 Posted By: Anonymous 04/16/09
Anonymous
80% of the real estate brokers operating in the hamptons will be history by the end of 2009.
Comment #7 Posted By: Anonymous 04/16/09
George Simpson
To the Editors of The Real Deal: Your quote from me: "we want to stop these crooks from doing what they do best," was out of context. I was referencing the restraint of trade activities we believe is crooked behavior that is described in great detail in the lawsuit complaint. Please refer your readers to the complaint at: www.eastendlistings.com/complaint.pdf. George Simpson
Comment #8 Posted By: George Simpson 04/16/09
Anonymous
There is also a REALTOR® organization which covers both the North and South Fork who has a state of the art - RETS compliant listing service available through Rapattoni where companies and agents can place their listings for a fraction of the cost (1/10) of that being provided by OREX. Why do companies and agents shun that system operated by HANFRA (Hamptons and North Fork REALTORS® Association) which would save their companies hundreds of thousands of dollars over time for the more expensive, now legally questionable system called OREX? It doesn't make sense. And now they have to defend themselves and spend more money?! And what are the consequences if they are found guilty? It this what it means when a previous poster says "80% of the real estate companies will be history by the end of 2009?
Comment #9 Posted By: Anonymous 04/16/09
Anonymous
#9 no it means that only a bull market can support the army of brokers that was assembled to shill real estate on the southfork. most of the brokers will starve in the current environment and be forced to wrok for a living. GAME OVER!
Comment #10 Posted By: Anonymous 04/16/09
Anonymous
Except, if they're found guilty, 80% of the remaining licensed 20% will be gone- maybe a good time to get a real estate license and work out there!
Comment #11 Posted By: Anonymous 04/16/09
Anonymous
If these agencies lose the lawsuit, chances are, NYS Dept of State will revoke all the Real Estate Licenses of those agents who illegally used the OREX system.
Comment #12 Posted By: Anonymous 04/16/09
Truth Is
This suit is so groundless this bitter old bozo couldn't even get a lawyer to represent him. Imagine that! I guess that means less time for George to spend on his other hobby: tracking UFO's. Nutty as a fruitcake! And yes: there will be alot less companies and agents selling in the Hamptons soon but George will have nothing to do with it. It's called survival of the fittest. They need a good "controlled burn" out there. Healthy for everyone.
Comment #13 Posted By: Truth Is 04/17/09
Anonymous
Truth Is, you've offered nothing of value. You must be a real estate agent from the Hamptons!
Comment #14 Posted By: Anonymous 04/17/09
Anonymous
and you must be George #14! I think I hear Mr Spock calling you. Beam him up Scotty!
Comment #15 Posted By: Anonymous 04/17/09
Anonymous
Yes, Mr. Simpson is an internationally recognized expert in the subject of UFO/ET. He was one of two experts chosen to be interviewed on Fox News Network for a thirty-minute program on the anniversary of the sighting at Roswell New Mexico. Other things he has done include: he Invented the 1st CRT word processor -- predecessor of the Personal Computer; he was one of the founding stockholders of a super computer company; he was CEO of a public company which had the mission of developing a new type of flat panel computer display; he was the 1st non TIME Magazine employee to have bylines in TIME; he ran a company which produced trade shows in the NYC Coliseum; he started the first off-shore "real time" data entry company; he was a space scientist at NASA (Project Mgr of SERT II), etc.
Comment #16 Posted By: Anonymous 04/17/09
Anonymous
I'm sure that Truth Is has a similar resume, right? Let's see it!
Comment #17 Posted By: Anonymous 04/17/09
Anonymous
Be a good looser. If you cant afford it, play in someone else's sandbox or create your OWN. Who is to say that M.L.S. is not too expensive ? Let the market determine what is a better service. Obviously these very successful brokers choose not to use M.L.S. Isnt that the same with Computers, IBM versus Apple; the market made the determination of WHO will dominate
Comment #18 Posted By: Anonymous 04/18/09
Anonymous
#9, that's the multi million dollar question at this point- no one within the OREX system has an answer for you, at least, so far. LM #18, based on the current Hamptons market, the answer has been provided- and the costs for both have been demonstrated. The majority of brokers enjoyed success when the market was hot; how much did sellers lose then, with limited exposure? No way to ever know.
Comment #19 Posted By: Anonymous 04/19/09
Anonymous
Anti trust has HUGE fines, as well as the possibility of jail time. The following might be helpful for those wondering why it's as much about the law as it is about fiduciary to sellers: "Certain acts of a real estate agent, broker or brokerage can be deemed per se offenses of the federal antitrust statutes if they are of the type that have been deemed extremely anti competitive to the point that proof of their anticompetitive nature is not neccessary, only that the defendent committed the acts. The government has identified per se offenses in the real estate industry to include commission fixing, setting coop splits, boycotting competitors for any reason, or even agreeing to setting the time frame of listing contracts." OREX has in writing a split agreement which is interpreted by some as hugely risky, among other aspects that create perceived risk for members. For many companies, they aren't "join-able", irrespective of entry fees.
Comment #20 Posted By: Anonymous 04/19/09
Anonymous
#9..take a look at the officers & directors of HANFRA. Primarily Corcoran & Brown Harris. Why would they want HANFRA's MLS to succeed when they can control the listings via OREX? So they are using their authority as officers & directors to torpedo a real system (by not putting in their listings) in favor of their private little club. Conflict of interest on that side as well as illegal behaviour on the other side. What a group!!!
Comment #21 Posted By: Anonymous 04/20/09