Hamptons listings battle heads to court

New York /
Apr.April 16, 2009 11:02 AM

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 [email protected], 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 [email protected], 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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