Tag Archives: Redfin

The seeds of war bark like dogs

seeds of war bookInman reported on 4/30 that Redfin was going live in Las Vegas – going live, meaning they would have real agents with boots on the ground rather than relying on just one broker to give them a virtual presence in the market and access to the MLS. In a blog post entitled “Redfin and the Seeds of War” Brian Boero at 1000 Watt Consulting asked later that day why this was any big deal. After all, Redfin has had Vegas MLS listings on its site for four years by virtue of being a “Paper Broker” (I hate that term, but we’ll deal with that later), the industry invective for a referral model broker who doesn’t actually help buyers and sellers transact real estate purchases. Brian summarizes by stating the following:

Paper brokers get a license, tap into the MLS and drink from the cup of data direct from the source, whether or not the practicing brokers in an MLS are OK with it. I have written about this issue before.
Some brokers are concerned but worry about any sort of response for fear that the federal government will view such a response as anti-competitive. Others dismiss the issue as immaterial. In any case,
I believe this issue to be explosive, divisive and pregnant with the possibility of a war with much collateral damage.

(To his credit, Brian later posted a rebuttal from Glenn Kelman, CEO of Redfin, in which Glenn professes Redfin’s intention to pass through the “paper” phase to become a true, national electronic brokerage. Please reread Brian’s post for Glenn’s remarks if you haven’t already.)

Brian is exactly right on a number of levels but at the same time misses an even bigger explosive possibility.

First, a little history DOJ beats NAR

Paper brokerages were a bane of existence to traditional brokers, their MLSs and their national association as far back as the middle ‘00’s. NAR took the DOJ inquiry into VOWs as an opportunity to squash Paper Brokers once and for all. The final settlement of the matter was published in May, 2008 and the definition of MLS Participant is in Exhibit B. The settlement that was reached included a provision that NAR demanded, that being a clear definition of “Participant” for MLS purposes. And the MLS purposes toward which the definition was crafted were to prohibit Paper Brokers from being MLS subscribers and getting access to MLS data without actually doing any brokerage. The definition reads:

“Under no circumstances is any individual or firm, regardless of membership status, entitled to MLS ‘Membership’ or ‘Participation’ unless they hold a current, valid real estate broker’s license and offer or accept cooperation and compensation to and from other Participants.”

The underlined words above replaced the previous language which read, “are capable of offering and accepting” cooperation/compensation. This change was further clarified in additional language which reads:

Note: Mere possession of a broker’s license is not sufficient to qualify for MLS participation. [Emphasis mine] Rather, the requirement that an individual or firm ‘offers or accepts cooperation and compensation’ means that the Participant actively endeavors during the operation of its real estate business to list real property of the type listed on the MLS and/or to accept offers of cooperation and compensation made by listing brokers or agents in the MLS. “Actively” means on a continual and on-going basis during the operation of the Participant’s real estate business. The ‘’actively” requirement is not intended to preclude MLS participation by a Participant or potential Participant that operates a real estate business on a part time, seasonal, or similarly time-limited basis or that has its business interrupted by periods of relative inactivity occasioned by market conditions. Similarly, the requirement is not intended to deny MLS participation to a Participant or potential Participant who has not achieved a minimum number of transactions despite good faith efforts. Nor is it intended to permit an MLS to deny participation based on the level of service provided by the Participant or potential Participant as long as the level of service satisfies state law.

The key is that the Participant or potential Participant actively endeavors to make or accept offers of cooperation and compensation [Emphasis mine] with respect to properties of the type that are listed on the MLS in which participation is sought. This requirement does not permit an MLS to deny participation to a Participant or potential Participant that operates a Virtual Office Website (“VOW”) (including a VOW that the Participant uses to refer customers to other Participants) if the Participant or potential Participant actively endeavors to make or accept offers of cooperation and compensation. An MLS may evaluate whether a Participant or potential Participant “actively endeavors during the operation of its real estate business” to “offer or accept cooperation and compensation” only if the MLS has a reasonable basis to believe that the Participant or potential Participant is in fact not doing so.The membership requirement shall be applied on a nondiscriminatory manner to all Participants and potential Participants.

Let me highlight a couple of key phrases that fall into the “CYA” category.

  1. Not intended to preclude part time brokers/agents. OK, just because you have two jobs in order to eat, you can still be an MLS broker
  2. Not intended to preclude those who have not achieved a certain number of transactions. OK, just because you’re an ineffective unproductive broker, you can still be in the MLS.
  3. Not intended to preclude limited service brokers. OK, just because you’re too lazy to provide full service and you want to pop listings into the service and on Realtor.com for a couple hundred bucks each, you can still be in the MLS.
  4. And finally, a broker who operates a VOW, and uses that VOW to refer out business to other brokers can still be in the MLS  “if the Participant actively endeavors to make or accept offers of cooperation and compensation” (in addition to the referrals).

That last bullet was aimed directly at the paper brokers, most prominently ZipRealty (through their “Powered by Zip” network), RealEstate.com (then a part of Market Leader and now rolled up into the Trulia camp of companies), and Redfin (in those markets where they had not yet transitioned to a full brokerage model).

What has happened since?

So what has happened in the six years since the DOJ gave NAR and its MLSs the club they so desperately wanted and needed to attack the paper brokers and grind them up in the paper shredder of oblivion?

Nothing!

Absolutely Nothing!!

No broker that I know of has been expelled from or denied participation in any MLS because they failed the “actively endeavors” test. I am not aware of any MLS that has been so bold as to draft policy that defines the level of activity required to pass such a test.

ZipRealty continues with their referral network, adding more brokers on a continuing basis.

Redfin, as we see in this story, continues to expand unabated by such restrictions.

Trulia professed loudly when they bought Market Leader that they wouldRECom WA LIC get rid of their referral brokerage licenses and not compete with their brokerage advertisers. Trulia VP Alon Chaver told Inman News in September, 2013, “We are not an operating broker, and thus do not intend to use IDX data on RealEstate.com after the acquisition closes.” Yet Trulia still maintains brokerage licenses in 44 of the 51 licensing jurisdictions.
(Just to be sure this list was not just an extraneous page they forgot to take down from the website, I checked four west coast states’ real estate departments and licenses were still active in Washington, Oregon, California and Nevada. In fact, the Washington license was just renewed this past January 8.)

The RealEstate.com referral model previously came under the scrutiny of HomeServices of American and The Realty Alliance brokers a year earlier (August, 2012) which prompted the aforementioned and highly esteemed Mr. Boero to pen “Welcome to Crazy Town.” In that op-ed, he opined that the middle-finger salute Market Leader was flashing at the industry could intensify the cry for “broker owned portals, MLS apostasy and retrenchment.”

To take Brian’s “Seeds of War” theme and extend it with the help of man’s best friend (Arf) and a little Pink Floyd, “The dogs of war won’t negotiate. The dogs of war won’t capitulate.” If you think the road to apostasy has been paved over with forgotten memories paper brokers past, think again. As I suggested recently, the Project Upstream initiative by the Realty Alliance consortium is moving forward apace. Despite those who think this might be a boon to the MLS (by speeding consolidation) rather than yet another nail in its coffin, let me modestly suggest: MLSs have been warned. They were warned in 2012 when Market Leader bought Realestate.com. They were warned again when Trulia bought Market Leader. They were warned yet a third time when Realty Alliance CEO Craig Cheatham made his case to the CMLS conference in Boise this past October. arrow

And my guess is the next warning will not be a shot across the bow. It will be through the head.

For this post:
Cause: I shot an arrow into the air . . .
Effect: It fell to earth right through my hair. . . (ouch)

This post also appears on Procuring-Cause.com.

Realogy, Trulia, Rumors, Black Swans: Weaving the Tapestry

 

A couple of days ago, there was a rumor floating around Wall Street that Realogy would acquire Trulia. Both Trulia and Realogy threw cold water on that dream quickly. Nonetheless, I found the whole thing fascinating, since a similar scenario was exactly a “Black Swan” event I used to amuse the audience at the last T3 Summit. Here’s the video, courtesy of Stefan Swanepoel and T3:

Black Swan #2 was that Realogy would acquire Zillow. Heh.

Do I still think Realogy would acquire a major portal? Not really. I never thought it in the first place, but brought it up so as to get the people at T3 thinking in a different way.

But the whole brief chatter got me thinking further, and I draw together various separate strands to make the claim that one day in the not-too-distant future, we could (not that we will, but that we could) see a major acquisition of a major “portal” (in quotes for a reason).

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IDX Websites, Mobile, and Heretical Questions

HeresyStamp

My friends over at Clareity Consulting have released a new white paper entitled, “Is Your IDX Website Mobile Friendly, or Driving Away Business“. You can download the PDF by clicking on that link. It’s a really solid report if you’re in the market for a new IDX website, or need to redo your existing one so that it is mobile friendly.

Because, as Clareity says, citing a Google study:

If your website is not mobile-friendly, it’s time to get a new website. A 2013 NAR study shows that 68% of consumers already use a mobile device rather than a desktop or laptop computer to look for a new home. Many brokers and agents spend a lot of time and money trying to drive consumers to their website, buying online ads for their listings and worrying about search engine optimization (SEO) and so forth – but are they wasting their resources? 61% of consumers on a tablet or phone who visit a website that isn’t mobile friendly leave the site immediately and may never come back. You only have one chance to make that first impression – is it a good one?

They then give you a primer on mobile websites, including adaptive design, responsive design, and of course, native apps. Then Clareity provides a helpful list of vendors.

So as far as that goes, it’s an excellent paper, and I would encourage you to go read the whole thing. But you know me. That ain’t the end of the discussion here. :)

The heretical question I have is not whether your IDX website is mobile friendly or not, but whether you should have an IDX website at all in this day and age.

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Redfin Uses A Curious Definition of “Bubble”

 bubblicious

First of all, I know there’s cool Q1 news out there and coming soon from companies I’m keeping track of. But I’m at the T3 Summit today, so look for the Q1 updates next week.

In the meantime, I thought I would take notice of something… a bit odd.

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Some Data I Just Don’t Understand…

Maybe they're checking Redfin's mobile app...

I think this might be a bleg (that would be a blog/beg) for help in making sense of some recent buyer data. Some of this just makes so little sense to me that I’m asking the Notorious community for assistance.

The buyer data comes from Redfin. I’m focusing on it because I know Redfin’s corporate culture is data-driven, and because the folks there are really good at data. They constantly survey their customers, they take pride in their NPS-derived customer satisfaction surveys, and pretty much have been data junkies from day one.

Given that we’re only looking at buyer survey data from one brokerage, and a fairly unique one at that, it isn’t clear how much weight we could/should put on the data. But it’s something. If you’re aware of any other brokerages (NAR’s survey is a bit too broad/diffuse, and I’d like to look at broker-level surveys) who have this kind of buyer data, I’d be interested in knowing about them.

So let’s get into it.

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