On Rupert Murdoch Buying Realtor.com (Part 1)

Rupert Murdoch: the patron of REALTORS everywhere?

Rupert Murdoch: the patron of REALTORS everywhere? (And his wife… oh my… we need more Asians in RE…)

By now, I’m sure any reader of mine knows that we have seen the second major blockbuster deal in the digital real estate space, with Rupert Murdoch’s News Corp agreeing to buy Move, Inc., the operator of Realtor.com, Top Producer, Tiger Leads, ListHub, and other brands. It’s an all-cash offer of $21 per share, which comes to $950 million as of this writing.

There are all sorts of interesting things to think about and wonder about here, and I’m writing this post in large part to understand my own thinking about this deal. Quite frankly, this is very different from Zillow buying Trulia — they’re both portals, in the same business, and they’re getting bigger. This is a media company that has significant digital real estate operations (2/3 owner of REA, the Australian near-monopoly on online real estate ) buying a U.S. portal.

So I put “Part 1″ above, because I rather think there may be multiple parts to this one. Let’s get into it.

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Edina Realty Reverses Course on Syndication

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Jay Thompson of Zillow celebrating the Edina deal. With what I assume is coffee.

I realize that the news of the day will be the News Corp buying Move, which certainly requires some thought, but since important details are missing from that story as yet and may not be clear for months to come… I figured I should take notice of another sort of significant story that just crossed the wires.

Here’s the official press release:

SEATTLE, Sept. 30, 2014 /PRNewswire/ — Zillow, Inc. (NASDAQ: Z), the leading real estate information marketplace, today announced that Edina Realty, a Berkshire Hathaway affiliate, has joined the Zillow® Pro for Brokers program and will display all of its thousands of listings on Zillow for the first time ever. Launched in June 2012, Zillow Pro for Brokers is a free, five-point program that improves listings accuracy, provides better reporting, includes a powerful contact follow-up system and increases the visibility of listing agents for participating brokerages.

“We couldn’t be more excited to be building a relationship with Edina Realty whereby their direct listing feed will be updated every 15 minutes,” said Spencer Rascoff, Zillow chief executive officer. “It has always been our goal to be the best partner to the industry we can be, and in turn, offer the millions of consumers who visit Zillow the best experience possible. Edina Realty joining Zillow Pro for Brokers helps make that a reality. Now, home shoppers in Minnesota and western Wisconsin will have the most accurate and up-to-date view of the market, while home sellers can rest assured their home is being marketed to the largest audience of home shoppers.”

Edina Realty is one of the nation’s largest real estate companies with approximately 60 real estate offices and 2,300 REALTORS® throughout Minnesota and western Wisconsin.

According to Greg Schwartz, Chief Revenue Officer at Zillow, this is a non-monetary deal. Edina’s listing agents would receive preferential placement and clear identification as the listing agent on their listings (i.e., the listing agent would be the top contact among the 3-4 agents in the box). In exchange, Zillow would get a direct feed from Edina, updated every 15 minutes. Zillow would also get Edina’s completed transactions data, which will populate Edina agent profiles. (I assume Trulia’s deal is the same.)

The MLS is not involved in any way, from what I understand. This is an outside-of-Listhub arrangement.

That’s Zillow’s side of the story. For Edina’s take, we go to its official press release:

Edina, Minn. – Sept. 30, 2014 – Edina Realty, a Berkshire Hathaway affiliate, announced that it will begin sharing its listings directly with real estate media companies Zillow® and Trulia, as well as industry portal realtor.com directly from the MLS, beginning Sept. 30 at noon Central Time.

Edina Realty will share its listings information with Zillow for the first time, and the company is re-entering into partnerships with Trulia and realtor.com after pulling its listings from those sites beginning in 2011, citing concerns over accuracy, adequate disclosure of listing agent and broker information, and more.

“The position that Edina Realty took nearly three years ago has positively influenced the business practices of Zillow, Trulia and realtor.com,” said Greg Mason, president and CEO of Edina Realty Home Services. “The national sites have made enhancements in order to improve the consumer experience as well as the relationship with the broker and agent. For example, on Trulia, the listing agent is now identified alongside their listing at no charge to the agent,” said Mason. “Additionally, the sites are striving for greater data accuracy.”

Edina Realty’s website and mobile apps average a combined total of over two million visits every month and are the most highly trafficked real estate website and apps in the region. The company has led the market in sales for 14 consecutive years and is the region’s largest real estate company with more than 60 offices and 2,300 REALTORS®.

“We remain confident that our clients’ listings receive the best online exposure on edinarealty.com and through our mobile apps, but now their listings will also appear on these national online sites,” said Mason.

Edina Realty’s groundbreaking move to pull its listings from Trulia and realtor.com beginning in 2011 contributed to an ongoing industry-wide discourse about data accuracy and ownership, customer service, and legal obligations by non-broker controlled media companies. “We’re committed to providing the best customer experience,” said Mason, “so we’re happy that our position brought greater awareness around issues with accuracy and listing ownership, and that it contributed to many key changes with the national partners,” he added. “We’ll continue advocating on behalf of our clients and agents to deliver the best real estate experience possible.”

So… Edina’s position appears to be that its move to pull its listings in 2011 led to changes at the portals. Specifically, we’re talking about greater commitment to data accuracy, putting the listing agent first (citing Trulia as the example), and improvement in the consumer experience.

Thing is… the three sites have always been different, with different problems.

For example, data accuracy was never a concern with Realtor.com. And given Realtor.com’s primary product — the Showcase Listing — the “three-headed monster” was never a major issue with them either.

If “data accuracy” refers to outdated listing information on the sites, Zillow and Trulia have been hammering that hard for the past few years. The whole point of things like Z-Pro is to get direct feeds so that the data can be accurate. If it refers, instead, to the widely-despised Zestimates… well, I see nothing in either press release suggesting that Zillow will be doing away with that, or using some new broker-powered AVM.

Bottom line, who cares what the motivations were for Edina to reverse course? Maybe it was because they felt that they had spanked Zillow and Trulia enough, that the portals had learned their lesson, and were now behaving correctly. Having achieved those goals, Edina is now going to partner with them. Maybe it was because Edina saw that failing to syndicate to the largest websites in the real estate category was hurting their recruiting, retention, and business. No one really knows outside of Edina’s HQ.

What we do know, and this is significant, is the implication of Mason’s statement: “We’ll continue advocating on behalf of our clients and agents to deliver the best real estate experience possible.”

As of October of 2014, it appears that the “best real estate experience possible” includes advertising on the portals, at least for Edina Realty.

Whether that has any ongoing significance for others remains to be seen.

-rsh

Antitrust Questions on MLS Decision to Screw With Syndication

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Having just spent a couple of days at CMLS, a young man’s fancy turns to questions of MLS-related things. In this case, a middle-aged man’s fancy might turn that way too, since it’s been a while since I’ve been a young man with fancy of any sort.

As most of my readers probably know, RealTracs, a large regional MLS in Nashville, recently made news:

By the end of the month, Brentwood, Tennessee-based RealTracs Solutions says it will limit the information included in direct data feeds it sends to public portals. RealTracs, which has nearly 10,000 members, is also in negotiations with listing syndicator ListHub to limit third-party portals’ display of listing data.

The changes include a four-photo limit; the elimination of several data fields; listing descriptions will be restricted to 150 characters; and public portals will be required to include a link to the listing detail page on the listing broker’s website.

As part of its reasoning behind the changes, RealTracs said consumers deserve a closer relationship with Realtors who provide the work product powering public portals, and brokerage websites can provide a more personal experience for consumers. The MLS also said brokerages should be allowed to manage advertising in ways advantageous to their companies.

Zillow has already said Nyet to the plan:

Now, White says Zillow has informed him it would reject any data feed that did not have complete data and would therefore terminate the feeds of RealTracs listings it receives from listing syndicators ListHub and Point2 on Sept. 23. Zillow is the most highly trafficked real estate portal on the Web with 46 million unique visitors via desktop and mobiles devices in June, according to comScore.

No response yet from Realtor.com, but Trulia has already said it’ll go along with the MLS’s wishes.

I have to admit to being some sort of strange real estate nerd in that this situation makes me wonder about a couple of antitrusty things. But here goes.

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In Which I Welcome the WSJ to 2011

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The header image at http://deansdale.wordpress.com/

Longtime readers of this blog know that I’ve been talking about Millennials for years now. Back in April of 2011, I wrote a post worrying about Millennials and family formation:

Given the above facts and data, how do you see the Millennials dealing with this issue? Because it’s not a small issue of just boys and girls getting together; family formation drives housing and to a large extent, drives the economy. Men with children work far harder, far longer, than men without — simply because their priorities change the instant they lay eyes on their son or daughter for the first time.

The 230,000 women in the Class of 2008 who cannot mathematically meet a man who is a college graduate… what do they do when time comes to find a husband (or at least a long-term committed boyfriend, willing to provide for her and her children)?

I had discussed the unemployment woes of the Millennials, but one that hits men particularly hard, and the amazing fact that 60% of college students in the U.S. today are women, leading to huge gender imbalance amongst college graduates.

My basic concern was that family formation would remain low, thereby keeping buyer demand suppressed for years if not decades to come.

Well, Nick Timiraos of the Wall Street Journal writes a story yesterday entitled “Rate of Americans Starting Own Households ‘Disturbingly Slow’“. The key graf:

New data show that household formation slowed considerably last year, a potentially ominous sign for the housing market.

Household formation is a key driver of demand for housing. When the economy stumbles and joblessness rises, more people tend to move in with family or double up with roommates. When the economy expands, the opposite takes place as people strike out on their own. Household formation also rises when immigration increases.

Last week, an annual Census Bureau survey showed that the U.S. added just 476,000 households in the year ended in March, compared with an average of 1.3 million in each of the prior two years.

I’d like to welcome Nick Timiraos and the WSJ to 2011!

More seriously, it appears that my fears of three years ago were not that far off. Look at this chart:

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Jed Kolko, Chief Economist at Trulia, was cited in the WSJ story:

Mr. Kolko found that the share of young adults living with their parents ticked down last year, which is good news. The bad news: They didn’t form their own households, perhaps moving in with other relatives or friends. This helps explain why the homeownership rate for 18-to-34-year-olds continued to fall last year.

Yes, yes it does. And one might ask what the root causes in dropping household formation may be. Are those causes temporary? Or are they more structural?

I’m voting it’s the latter. Read my original post from 2011 for reasons why. Now add on the fact that there is a real subculture of the ‘manosphere’ (I got the image above from one such blog) that is politically incorrect, sometimes vile, often sexist, and yet growing year over year… and then tell me you’re optimistic about family formation.

-rsh

 

Competition Is Not Tortious Inteference

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A brief note this Saturday morning…

Conversations around my last post, about FTC taking action on anti-competitive Code of Ethics provisions, have raised an interesting and salient point. The best example comes from the comments, where Brian Rayl writes:

Despite what the FTC states in terms of “soliciting other’s clients” there are very strict laws – federal laws – that prohibit interfering with a contract.

http://en.wikipedia.org/wiki/Tortious_interference

If someone is going down a list of new listings and contacting them with the intention of damaging the contractual relationship, they are guilty of tortious interference. I’m not sure why the FTC would require the code of ethics to allow this when the federal government doesn’t? What are your thoughts on that?

My thoughts are that tortious interference with contract requires a tort. Obviously, what is about to follow is legal mumbo-jumbo, which I do for fun as a blogger with a law background. Please consult your own attorney or counsel; this is not legal advice.

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