Home Brokers & Agents Initial Questions and Thoughts: New NAR Franchise-IDX Rule

Initial Questions and Thoughts: New NAR Franchise-IDX Rule

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As reported by Inman News, NAR’s Multiple Listing Issues and Policies Committee has approved a new addition to the Internet Data Exchange (“IDX”) policy as follows:

Display of IDX Information by Real Estate Franchise Organizations

Participants may provide IDX information to their real estate franchise organizations (“franchisors”) to be indexed for display on franchisors’ websites. For purposes of this policy, “real estate franchisor” is defined as a company granting real estate brokerage franchises under the franchisor’s trademarks pursuant to a franchise disclosure document meeting applicable Federal Trade Commission rules. Display of IDX information by franchisors is subject to the following requirements and limitations. Failure of a franchisor to comply with the following requirements and limitations can, at the discretion of the MLS, result in suspension or termination of the participant(s)’ authority to provide IDX information to the franchisor:

  • Initial search results that provide minimal information (e.g. “thumbnails”) are exempt from MLS-required disclosures (e.g. listing firm, listing agent, source of information, notice that information is deemed reliable but is not guaranteed accurate) provided that a direct link to a detailed (“full view”) display that includes all required disclosures is provided.
  • Consumers can link directly to the detailed (“full view”) display that complies with MLS disclosure/display rules of the source MLS.
  • IDX information is not used for any unauthorized purpose.
  • Inaccurate or incomplete information related to any listing is promptly corrected by the franchisor at the request of the source MLS.
  • No advertising may appear on pages displaying IDX information.
  • IDX listing information will not be modified, manipulated or permanently retained.

Rationale: This proposed expansion of the IDX policy would authorize real estate franchise organizations, with their franchisees’ consent, to index those franchisees’ IDX displays, with the results being displayed on franchisors’ websites, subject to appropriate qualifications and limitations.

On the surface, this seems like a fairly minor change to the IDX policy.  But we’re not content to lick the surface of this watermelon.  Let’s dive in a bit with some questions that immediately arise.

Curious…

I thought this formulation was, to say the least, curious:

Initial search results that provide minimal information (e.g. “thumbnails”) are exempt from MLS-required disclosures (e.g. listing firm, listing agent, source of information, notice that information is deemed reliable but is not guaranteed accurate) provided that a direct link to a detailed (“full view”) display that includes all required disclosures is provided. (Emphasis added.)

Exempt from MLS disclosure rules?  So the search results display can be made to appear as if all of the properties “belong” to the franchise, as long as there is a “direct link” to a detailed property display page that does follow the MLS rules.

In and of itself, this doesn’t appear to be that big of a deal.

The larger national franchises, such as Century 21, Coldwell Banker, Remax, and such, will improve their SEO with the much larger inventory of listing data on the search results page.  I’m certain that SEO consultants are hard at work right this minute creating thousands of landing pages populated with IDX search results.  Before, Coldwell Banker for example, could populate those pages only with listings of the franchisee (or with other Realogy brand franchisees).  Going forward, those landing pages will be populated with every listing via IDX.

Tactically, I wonder if the big national websites (e.g., remax.com) will make those “direct links” back to the franchisee’s “detailed page” be follow or no-follow.  It’s not clear to me whether they’d want to use up Google Juice (in the form of page rank) on thousands upon thousands of pages on franchisee websites.

Details aside, strategically, this is a big win for the franchisors.  I can think of several ways to utilize this new capability to benefit not only the national website, but also the franchisees.  One major difficulty will be figuring out to which franchisee’s webpage to link the “detail view” if you have multiple companies within the same MLS — those links constitute a funnel for leads, and lead routing/distribution will be a big issue for franchises in 2011.

Curioser…

What’s even curioser is the definition of a franchise: “For purposes of this policy, “real estate franchisor” is defined as a company granting real estate brokerage franchises under the franchisor’s trademarks pursuant to a franchise disclosure document meeting applicable Federal Trade Commission rules.”

I believe this language will lead to inevitable litigation, either for clarification or to have it be struck.

First, that language leaves out quite a few “marketing networks” — the largest of which is Leading Real Estate Companies of the World.  I can think of no good reason why the filing or not filing of a UFOC (Uniform Franchise Offering Circular) should have any bearing on how a MLS’s rules do or do not apply.  If the idea is that a franchisor works for the benefit of its franchisees in marketing the brand, marketing their properties, and drives leads (at no extra charge) to them… then marketing networks work exactly the same way, utilizing exactly the same tools.

This is particularly poignant in light of the fact that the Franchise Rule of the FTC was created to prevent deceptive sales of franchises to unsuspecting entrepreneurs:

To prevent deceptive and unfair practices in the sale of franchises and business opportunities and to correct consumers’ misimpressions about franchise and business opportunity offerings, the Commission adopted the original Franchise Rule, which is primarily a pre-sale disclosure rule. The original Rule did not purport to regulate the substantive terms of the franchise or business opportunity relationship. Rather, it required franchisors and business opportunity sellers to disclose material information to prospective purchasers on the theory that informed investors can determine for themselves whether a particular deal is in their best interest

While the Rule was amended in 1997, that original intent was never changed to my knowledge.  The Franchise Rule does not purport to regulate the actual day-to-day operations of a franchise, nor have any impact on how a franchise markets itself to consumers (as opposed to potential investors/franchisees).

Therefore, for NAR to rely on the FTC as the standard of what company is and is not a franchise, in the context of a rule that is entirely about consumer access to listings information (i.e., a marketing strategy), is… to curioser, to say the least.

Second, that language leaves out various web-based lead generation companies, such as Homegain, Trulia, Zillow, and others.  Given that all of those companies are competing fiercely on organic SEO, I doubt any of them are particularly thrilled about this decision.  Once again, the justification for singling out “franchises” as defined by reference to the FTC is pretty weak, given that display of real estate listings to consumers is simply marketing and unconnected to the offering of business opportunities.

If suit is brought on this IDX policy against NAR and against various MLS’s, for anticompetitive restraint of trade (because that’s what it really smells like from the outside), I rather imagine it’d be difficult to justify the different treatment of one website over another simply because the corporate parent of one filed a UFOC with the FTC.

If, after further consideration and review, or after legal challenge, NAR elects to either get rid of the “franchise” requirement — thereby opening up the IDX to any company that has permission from a bona fide member of a MLS… well, we’ve entered a new and interesting world then.

Curiosest…

[Note: Yes, I know neither that, or “curioser” is an actual word….]

The most curious impact of this policy, of course, is on the brokers and agents.  Assume that Acme Realty, a brokerage, does not belong to a large national franchise, which can leverage the new IDX policy to create highly competitive SEO-optimized national sites that can compete with Realtor.com, Trulia, Zillow, etc. (and beat them, as they have access to all of the IDX data for any MLS where they have a franchisee).

It was already difficult enough for an independent to compete on organic search against the national portals.  After this policy, it will make it that much harder to do so.

An independent brokerage, then, is left with two choices.  One, it can join a national franchise — and bigger the better, since more listings, more data, all of which can be indexed and displayed, means better SEO opportunities (e.g., better landing pages, etc.).  Two, it can try to deny permission to national franchises — whose franchisees, mind you, are direct competitors in its marketplace — to use its listing data in this manner, even in IDX.

I expect that in some MLS boardrooms, this issue will become quite perplexing in the next several months.  Note in this context that the current IDX rules do allow for case-by-case opt-out (or a blanket opt-out, but I don’t think most independent brokerages will want to opt out of IDX entirely), but on a listing-by-listing basis, rather than denying display rights to a company or to a type of organization. The key provision is this:

Q. Can I authorize some, but not all, Participants to display my listings on the Internet?

A. If you consent to the display of your listings by other Participants under the IDX program, then any other Participant in the MLS may display your listings. If you prefer to authorize some, but not all, Participants to display your listings, this can be accomplished – though not under the IDX program. Separate consents would have to be granted to each Participant authorized to display your listings. As noted in an earlier question, MLSs may, but are not required, to transmit your listings to any destination you authorize. The decisions as to whether an MLS will provide such a service, and the related charges (if any) are matters to be determined locally. (Emphasis added)

Also note that a MLS may refuse under the current rules to syndicate your listing to property portals and other websites, such as Realtor.com, if you opt-out of IDX.

All of which signals that in some MLS’s, where franchised brokers do not dominate, I suspect that a new program — let’s call it… Broker Data Exchange or BDX — will be proposed and hotly debated, where “separate consents” would be granted that do not fall under the IDX policy.

An individual agent, of course, is in the same boat — but with fewer rights, since they actually do not have any rights to any of the listing data; the broker does.  If this rule is approved by the Board of Directors, and implemented… an individual agent using IDX for SEO purposes is likely to find the effort (a) very difficult, and (b) not really worthwhile.

Keep in mind that a year ago, quite a few agents and brokers fought hard to make sure that “search engines” can index (aka, “scrape”) IDX data.  This was framed as an issue of innovation — the people who wanted to protect the data were portrayed as being a bunch of out of touch luddites.  With this rule (and its possible progeny), the individual real estate agent may come to view things differently.  Time will tell.

Miscellany

A couple of miscellaneous questions that arise from this policy.

First, note this language:

  • Inaccurate or incomplete information related to any listing is promptly corrected by the franchisor at the request of the source MLS.

“At the request of the source MLS” sounds like the various Compliance departments of MLS’s are about to take on more work.  Thing is, the Franchises are not members of a MLS; they are not paying the dues out of which additional Compliance people may be hired.  Even if the MLS gets around this by charging some sort of a premium fee to the Franchise for the IDX program (a provision that is missing from the policy) to pay for additional Compliance, the actual work of looking at a large national-scale website like a Coldwell Banker to see if information is inaccurate or incomplete is non-trivial.

Any MLS that does not today have automated compliance systems should consider investing in one pronto.

Second, note this clause:

  • IDX listing information will not be modified, manipulated or permanently retained

Given that the policy, on its face, is that the Franchise is exempt from MLS rules, one is left wondering how modification and manipulation are to be defined, policed, and enforced.  Presumably, this doesn’t mean the Franchise has to put the raw CSV or XML data on a website with no design, no user interface.  There has to be some modification and manipulation.

Perhaps it means merely the actual data itself — dates, addresses, prices, etc. cannot be modified or manipulated.  Which makes sense, but raises the issue of Compliance again.  Since data modification/manipulation cannot be determined solely by looking at the webpage itself, presumably MLS’s will need to figure out a way to audit the Franchise website’s IDX database, where the data will be held temporarily to be made available for display.  Good luck with that.

Conclusion

It is difficult to draw any real conclusions yet.  We may do some formal research into this topic at a later point.  But initial impressions are:

  • This will lead to lawyers making money.
  • MLS’s will face some resistance, possibly heated, from some of their membership.
  • Brokers and agents are likely to find that listings-based SEO just got a lot harder to pull off.
  • Compliance, the piece being taken for granted, will be a challenge.

I welcome any thoughts on this issue.

31 COMMENTS

  1. I will be curious to see what your research nets on this topic. My sense of this rule is that it was partially put in place to have a policy around a practice that is already happening for the most part. Of course any time a “definition” is provided it is subject to interpretation (and litigation) but I have to believe since NAR spent some time with the DOJ and FTC of late that those issues were considered heavily. But I’ve been wrong before!

    • If the DOJ and FTC have signed off on this carve-out, I’d be (a) surprised, and (b) very interested in seeing the formal opinion letter. 🙂

      There is some ‘legislative language’ in the committee report (and the CMLS recommendation) that says something along the line of “although franchises are not REALTORS or Members, their goals are aligned with those of NAR” and some such. That language is going to cause problems if this thing ever gets litigated.

  2. The world is getting smaller. When IDX first came out it became our electronic MLS listing book, We said who cares, as long as our sellers listing gets sold. Then came Realtor.com, Trulia, and Zillow. (More places to have our sellers property marketed) Realtor.com, Trulia, and Zillow appear to be National IDX. Why not C21, CB, ReMax, ERA, Prue, and others (Now Mr. and Mrs seller, I have 6 more major portals to expose your property) My point is, we can make lemonade out of lemons. Easy for me to say though, I’m a CB agent. However, if I was a was a small broker, I would use this IDX to my advantage and be happy to have my listing syndicated to the whole enchilada of portals. That’s my take. 🙂

    • I see your point. I do wonder, however, if the world does become a place where the indie and the agent simply cannot rank on Google anymore, except for the longest of long tails, and the Web continues to be the dominant source for leads and inquiries…

      What exactly would convince an agent to stay with an indie instead of with a broker who holds a major franchise and can compete on the SEO battlefield?

      • If the indie and agent were depending on listings to provide Google juice, then they didn’t have much of a long-term strategy for said Google juice.

        Realistically (and I don’t know the answer to this) how many agents, when interviewing potential firms, evaluate SEO and rank? I’ve found that most mainstream agents care about splits first.

      • But leads generated has nothing to do with leads converted. Internet lead conversion is just not on the radar of most big brokers…at least not in a meaningful way.

      • how many agents, when interviewing potential firms, evaluate SEO and rank?

        This one. I concluded that since most brokers are beyond SEO illiterate that it wasn’t a determining factor. Someday, SEO will be the differentiator and worthy of consideration. As of now brokers just flex their MLS committee power to hold nible independents in check and recruit more spaghetti agents to toss on the wall.

  3. One issue that immediately came to mind would be the “co-mingling” of listings. Currently if you land on a broker’s website from their franchisor’s website you would have an “additional listings” box with counts of listings that may be in the area but where the broker may not be part of the MLS. Having all the franchisor’s brokers listings indexed would do away with this issue on the franchisors search result pages. Waaaay better consumer experience.

  4. Rob, thanks for taking the time to analyze this and share your initial thoughts. It feels like we have been moving with a slow and steady inertia since IDX toward… well I don’t know but it just seems like this is another transitional policy that lacks any type of sustainability or permanence. Another baby step.

    I have not seen any examples that indexing listings drives any significant traffic to a site. Could be that some smart people know otherwise and are not telling the rest of us about it but there is an agent in Hawaii, I think Jeff Madson who writes on Geekestateblog who tested it and found no measurable increase in traffic that actually contacted him either directly or through a registration form.

  5. Rob, thanks for taking the time to analyze this and share your initial thoughts. It feels like we have been moving with a slow and steady inertia since IDX toward… well I don’t know but it just seems like this is another transitional policy that lacks any type of sustainability or permanence. Another baby step.

    I have not seen any examples that indexing listings drives any significant traffic to a site. Could be that some smart people know otherwise and are not telling the rest of us about it but there is an agent in Hawaii, I think Jeff Madson who writes on Geekestateblog who tested it and found no measurable increase in traffic that actually contacted him either directly or through a registration form.

  6. Rob, as the first person to step up and speak regarding RSS/Social Media Distribution in IDX Rules, I have to admit, I screwed up. I focused on that issue. I have had a relationship with the corporate partners of my local offices, so did not see the impact of the indexing issue. Call me stupid!!! I try to represent my members’ best interests. When I finished my statement regarding RSS/IDX (which took a lot of courage to be the first speaker from a “small, unknown” MLS) I did not zero in on the indexing. I feel the decision was a poorly made decision, overshadowed by the other issue. I am sad, but have to say the fact that RSS/Social Media was sent back is a win. If I have to pick to win some, lose some, I can deal with this, as poor a decision as it may be. Thanks for your great breakdown of the issue. Many of our members do not understand the complexities and your analysis is a great third party view, keep it up.

  7. @benjaminbach @Jason – putting my reply here so we don’t get too stacked in. 🙂

    Of course brokerages ‘sell’ leads 🙂 It’s what they do. But you gotta generate some to sell ’em.

    Jason – I don’t disagree with you, but for contemporary brokerages, is conversion their responsibility or the agent’s responsibility? It’s actually an interesting question to ponder.

    • Good question Rob. The reality is I think both are responsible. On the brokerage side they need to funnel leads to agents that can convert them. Many brokers/managers seem to want to feed the agents that have clout or influence in the office or to appease the “top producer” This is the wrong reason and these are not the best agents to handle these types of leads.

      On the agent side they MUST understand exactly what they are getting into, and if they agree to work these leads they HAVE to take responsibility for that business. That means following best practices, providing the highest level of service, engaging in the process and really participate. Many agents say they want this but the reality is once they get into it they don’t and most of these opportunities fall into a deep dark hole.

  8. Amy –

    I think you are correct that this is the case:

    “…policy around a practice that is already happening…”

    What’s it been – 12 years since Boise MLS passed IDX rules and allowed Windermere (a franchisor) to place listings on windermere.com?

    IMO, it’s perfectly appropriate for a licensed franchisee to partner in marketing with their ‘parent’ organization. As long as the local MLS member is a party to the feed agreement, MLSs have all the control they need to enforce display rules. Franchisors have a strong vested interest in following said rules.

    The language may need refinement for clarity, but surely the intent behind it isn’t something that still requires debate.

  9. Amy –

    I think you are correct that this is the case:

    “…policy around a practice that is already happening…”

    What’s it been – 12 years since Boise MLS passed IDX rules and allowed Windermere (a franchisor) to place listings on windermere.com?

    IMO, it’s perfectly appropriate for a licensed franchisee to partner in marketing with their ‘parent’ organization. As long as the local MLS member is a party to the feed agreement, MLSs have all the control they need to enforce display rules. Franchisors have a strong vested interest in following said rules.

    The language may need refinement for clarity, but surely the intent behind it isn’t something that still requires debate.

    • I think the issue will arise out of the special treatment for “franchisor”. Given that every single franchise disclaims liability for anything its franchisee does (“Each office independently owned and operated”), calling the franchisor a “parent” is probably going a bit too far.

      As to following local MLS rules, every single marketing organization has a strong vested interest in following said rules.

      If the Rule were generalized to, “any organization with permission of the MLS member can display IDX listings in search results (thumbnail) mode” then I don’t really see a problem. (Except the unintended consequences, of course, of now throwing the door open to every Tom, Dick, and Harry.) As phrased, I think we’ll see a bit of the ole kerfuffle.

      • I don’t see an issue with special treatment for a franchisor. It’s a special relationship.

        Unlike a relationship one might have with a marketing organization (be it LeadingRE, Trulia, the local newspaper, etc.), the franchise agreement is exclusive and ‘independently owned and operated’ disclosures aside, it’s crystal clear in the mind of the consumer that THIS company belongs to THAT franchise (for the express purpose of branding and marketing).

        Generalizing the rules to allow “any organization…” access if a difference in kind that I doubt any MLS would find acceptable.

      • No doubt that few, if any, MLS would accept a “any organization” type of rule. But I really think there’s going to be debate and controversy around the “franchisor” carveout. The idea that that is a special relationship isn’t going to hold as strongly in our space, given what’s at stake.

    • Michael!

      I should have known you were out there lurking somewhere!! Yes, about 12 years ago when I stood on a podium where half my members thought we were crazy 😉 Who knew we were just pioneers!

      I do think MOST MLS organizations want to serve their member’s and what it is they want and need. I also think MOST IDX providers and brokers and franchisors want to follow the rules. Sadly I think the rules are now being written based upon the unique ways that a few find around them.

      Rob, you certainly raise an interesting perspective on “what is a franchise”. When I look at some of the recent acquisitions like List Hub, I don’t think we can even define “what is a syndicator” any more. One thing is clear, this content is a critical component of the real estate consumer experience and it will continue to evolve.

  10. Just reading this made me money. Thanks. Ammunition, body armor and tactical adjustments have been made.
    This indie is growing and producing because I listen to the likes of you.

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