Monthly Archives: May 2008

From Confusion to Bizarro-Land

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The NAR-DOJ settlement is the gift that keeps on giving.  To a blogger at least.  Well, to a blogger that happens to be interested in such an obscure and unimportant topic. :)

The latest piece of information is throwing me from confusion directly into bizarro-land.  NAR released a “Special Report” in which it announced that it and the DOJ has agreed on MLS policy.  The relevant part is this:

NAR has reached a favorable settlement with the U.S. Department of Justice, resolving the litigation between them over the display of listings from the MLS on brokers’ virtual office Web (VOW) sites. The final order, to be filed with the federal district court in Chicago today, validates NAR’s long-standing Internet data exchange (IDX) policy and strengthens the membership rules governing multiple listing services.

Say what now?

Here’s section (V) of the Proposed Final Order, entitled “Required Conduct”:

A.  Within five business days after entry of this Final Judgment, NAR shall repeal the ILD Policy and direct each Member Board that adopted Rules implementing the ILD Policy to repeal such Rules at the next meeting of the Member Board’s decisionmaking body that occurs more than ten days after receipt of the directive, but no later than ninety days after entry of this Final Judgment.

Section V goes on to talk about implementing the new Modified VOW Policy (which was attached, and described as a Revised VOW Policy), setting up an Antitrust Compliance Officer at NAR, etc.  It never mentions ILD or IDX ever again in the document.

The Revised VOW Policy mentions the term IDX exactly once, under section I. Definitions and Scope of Policy:

Participants’ Internet websites, including those operated for Participants by AVP’s [Affiliate VOW Partner], may also provide other features, information, or services in addition to VOWs (including the Internet Data Exchange (“IDX”) function). Section I(a)(3), Revised VOW Policy.

Nowhere else is “IDX” mentioned.

Now… about NAR’s “longstanding Internet data exchange (IDX) policy”… here’s NAR in 2005:

NAR has adopted a new policy to govern the display of MLS listings on the Internet. This new policy, Internet Listing Display (ILD),replaces NAR’s Internet Data Exchange (IDX) and Virtual Office Website (VOW) policies, and is effective immediately. MLSs have until July 1, 2006, to adopt the new policy.

This Internet Listing Display policy was specifically repealed by the Final Order.

So… NAR’s “Special Report” basically says this:

The Final Order validates NAR’s longstanding IDX policies by repealing them specifically, by name.

Lest anyone thinks this is just an unimportant little piece of legal trivia, we’re already hearing very confused things at OnBoard (my employer).  While I don’t like to mix the day job and blogging, in this case, it’s extremely relevant.  We’re hearing from clients that they believe this settlement affects them, despite the fact that they do not operate a VOW.  We’re getting questions on whether this settlement affects them, and in one case, we have a client who believes he is now completely freed of all IDX rules.

I went searching for the old IDX Policy, circa 2000, and couldn’t locate it.  But I did find ARMLS (Arizona MLS) IDX Policy of 2006 online, and there are provisions like these:
 

11.  The name of the real estate brokerage that has the property listed must be displayed on the screen and in printed reports for each property where the property information is presented in a “Full View.” The real estate brokerage name must be displayed in the same font size as the listing information. For purposes of this policy, “Full View” means the display of listing information that includes seven or more data fields.

12. An IDX Broker may not modify, enhance or manipulate a Shared Listing. In addition, listing information from other sources may not be combined with IDX Listings. For instance, property listings from other multiple listing services, for sale by owner properties and properties not in the MLS may not be combined with the IDX Database.

Right now, it is not at all clear to me that someone taking an IDX feed from ARMLS has to obey these rules.  Maybe I can decide not to display the name of the listing brokerage.  Maybe I can modify or enhance a Shared Listing, and mix FSBO listings with the IDX listings.  Even if the Revised VOW Policy says I can’t do those things, that only covers VOW’s, not IDX websites.

Here’s hoping that NAR acts swiftly to correct this serious gap in policy, because I can nearly guarantee that our client who thinks he is no longer bound by IDX rules is NOT alone.

-rsh

 

 

I Think Jeff Jarvis Is in for a Shock…

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The NAR-DOJ Settlement is news outside of our little RE.net corner of the blogosphere.  One of the grand poobahs of the blogosphere, Jeff Jarvis of Buzzmachine, exults in a post entitled, “Take That, 6 Percenters!”.  Why, he’s positively leaping with joy:

The monopolistic hold big real estate agents have had on information — on access to use multiple listings services — has been blown open at last thanks to the Justice Department’s antitrust settlement with the National Association of Realtors.

Kiss your 6 percent commission good-bye, Ms. Agent! Competition is on the way.

The only reason — only reason — that Realtors could hold onto their high commission for such little value and work is that they kept information away from the marketplace, making it inefficient.

Yeah… about that whole “competition has been blown open at last” thing….

The rest of his post makes clear that it is more of a statement of hope rather than a sober analysis of the impact of the NAR-DOJ settlement.  For that matter, Jarvis really seems to know very little about how our industry actually functions.

That is to say, the control of information leads to inefficient marketplaces. But in the long run, Zillow is becoming far smarter than the smartest agent because it knows more thanks to the aggregation of our data about sales.

Is this the same Zillow that is taking feeds from the hated MLSes?  The same Zillow that is desperately trying to convince agents that it is not their enemy, because it realizes that the dumbest agent knows more about her local market than the supra-geniuses at Zillow ever could?  I say again, real estate agents have nothing to fear from Zillow; real estate brokerage companies, on the other hand, should worry.

His post quotes the New York Times story in which the general counsel of NAR says the settlement is no big deal:

Laurie Janik, the [National Association of Realtors] general counsel, said in a telephone interview that the settlement would have no real impact on home buyers or sellers.

“I don’t think they’ll see anything different,” she said. “This lawsuit never had anything to do with commission rates, or discount brokerages.”

To which Jarvis responds:

Bullshit. Competition is coming. Information will get freer. Rates will decline. Homes will be worth more. A more efficient marketplace is good for buyer and seller but not middleman. We’re finally headed in the right direction.

I suspect Jeff Jarvis hasn’t yet read the Proposed Final Order of settlement.  Or the Revised VOW Policy.  Or the original ILD Policy, which replaced the old VOW and IDX rules.  I wrote about this already so I don’t want to go into too much depth.

Nonetheless, suffice to say that I believe Mr. Jarvis and others currently enjoying the schadenfreude are in for a disappointing shock.

The settlement does not “free information”.  It does not create competition.  Rates will not decline as a result of this settlement.  The settlement covers only the minutest corner of the Real Estate Internet — the Virtual Office Website, a creature whose birth may have been accompanied by much crying and pain but whose death is going completely unnoticed.  Nothing in the settlement prevents NAR or individual MLS or even individual brokerages from telling Zillow and Trulias of the world to go take a flying leap off the stack of invoices from the lawyers involved in this ridiculous waste of time and money.

In fact, that this settlement will change absolutely nothing for buyers and sellers is evidence in and of itself of the strength of competition in the real estate industry.  MLSes and brokers aren’t sending their listings to Trulia and Google and Zillow because of a DOJ decree — they’ve been doing it for years now because it’s in their competitive best interest to do so.

If information becomes freer, if rates decline, that will be the natural result of competition within the real estate industry that remains pretty competitive despite being still too protected (by legislation and governmental action, not by NAR and broker action).  The Internet is a big part of that competition, and the future of real estate marketing is interactive at heart.  But DOJ, NAR, VOW — these are just mirages of a red herring in the dusty smoke.

The real action will unfold once the industry, DOJ, and others start to think really hard about IDX, about listings exchange, about data standardization, and ownership of listings data.

-rsh

The NAR-DOJ Settlement: Journey from Chaos to Confusion

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I’m seriously up to my eyeballs in my dayjob (plus, I have to go to my second job of raising two little boys under the age of three after my dayjob — this second job is a LOT HARDER than my dayjob, I have to say…) but I had to emerge and say a word about the recently announced settlement between the DOJ and NAR.

Where’s the beef?

From the NAR website, I get this:

The final order expressly provides that NAR does not admit any liability or wrongdoing, and NAR will make no payments in connection with the settlement. The terms of the agreement preserve and strengthen the MLS as a means for broker-to-broker cooperation intended to serve real estate professionals who list or sell property in that MLS. “This will ensure that MLSs are used for what they were originally intended to do, which is help real estate professionals find buyers for people who want to sell their homes,” said Laurie Janik, NAR general counsel.

NAR will be reinstating an updated version of its VOW policy, which governs the use of MLS data for brokers who offer brokerage services online by requiring customers to register with the brokerage before they can search for homes. That policy was rescinded in 2005 when certain provisions were challenged by DOJ. The revised policy continues to protect the rights of sellers who do not want their property or their property’s address displayed on the Internet, and also protects sellers from having false information about their listings appear on the VOWs of a member of the MLS. Among other things, the revised policy requires brokers hosting others’ MLS data on their site to turn off features–such as home value estimates and blogs–surrounding a listing at the request of the seller.

The agreement requires MLSs and local associations that operate MLSs to pass and implement the amended VOW policy within 90 days of the court’s approval of the final order.

The revised policy comes at a time when brokers appear to be moving away from the VOW business model. “The response to VOWs hasn’t been great because consumers can find sites throughout the Internet on which to gather information without having to register their name and contact information,” said Mark Lesswing, NAR chief technology officer.

Okay. So basically, after three years, hundreds of thousands (possibly millions) of dollars in legal fees, and spending thousands upon thousands of taxpayer dollars on DOJ employees… we get… this pale imitation of reform?

Fact is, VOW’s suck for the consumer.  The user is required to register to use a VOW website.  From the NAR website:

The primary distinguishing feature of a VOW is the requirement that visitors register by entering an e-mail address and receive a password prior to accessing MLS listing data. Some MLS participants also post terms of use on their VOWs and require visitors to agree to those terms.

Um, big deal?  Consumers don’t care to use a VOW for the most part, because of the registration requirement.  This might be of some huge importance to the boys and girls at the DOJ, but as Brian Boero writes, “No one cares. The DOJ and NAR “settled” a dispute today that had pretty much resolved itself by 2005.”

Far worse, we have traveled from chaos — when individual rules for VOW’s by MLS created different regimes and different rulesets — to utter confusion.

The rules that were important to the industry was the Internet Listing Display (ILD) Policy that NAR itself said in 2005 replaced the old VOW and IDX policies.  The Proposed Final Order (PDF) of the settlement between DOJ and NAR gets rid of the ILD entirely in Section V(A), and replaces that with the Revised VOW Policy (PDF).  I guess that’s cool, but… where the heck are the rules for IDX display?  All that the Revised VOW Policy says is that “Participants” may use IDX on their websites.

The ILD, whatever its flaws, covered both VOW’s (where the user must register) and plain old websites without registration (where IDX rules governed).  The new Revised VOW Policy only covers VOW’s, which is not exactly where the industry is going.

Unless I’m very mistaken (entirely possible), this means that we are now entirely without direction as to IDX rules and policies.  The ILD replaced the old IDX policies; the new Revised VOW Policy specifically gets rid of the ILD entirely.  There is no Revised IDX policy (yet).  Therefore, we have traveled from chaos to confusion.

Thanks, DOJ!  Our public servants hard at work serving the public.  Sa-weet.

Presumably, NAR will promulgate a new IDX policy soon.  I can tell you the industry will need one in a hurry.  Presumably, that policy will need DOJ and/or court review to ensure that it does not stifle competition.  That’s a lot of presumptions and assumptions, and I am now thinking the medicine is worse than the cure.

More later, as time and duties permit.

-rsh

Wanted: A Life

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Or at least an extra 2-3 hours a day.  Maybe I can live the 26 hour day, alone among all humans.

Blogging has been very very light — well, non-existent really, simply because of work and family duties just getting in the way of opining about real estate.  I hope to get back to it real soon, but hey, let’s face it — some things take precedence. :)

-rsh