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.