The National Association of Realtors has settled its antitrust case with the Department of Justice, and has given online realtors full access to the industry-standard Multiple Listing Service (MLS) Databases. The MLS is a comprehensive listing of homes that are are available on the housing market, and until this point the NAR has restricted access to online brokers.
These online brokers have been offering fees that are significantly lower than traditional realtor rates, and rather than adapt as an industry, the NAR choose a more childish route and withheld the essential data. The Department of Justice took issue with this stance, and filed suit in September 2005.
The deal is especially important for disruptive online-only companies like Redfin, which rely on being able to access current home listings. If the case had gone the other way, Redfin CEO Glenn Kelman says that the company would have died a “slow, grisly death” (SeattlePI). Redfin aims to make the home-buying process more efficient, while saving consumers money in the process (it has been able to save the average home buyer $10,000, which doesn’t sit well with most traditional realtors).
Unfortunately, the settlement isn’t a complete victory for online sites, which will be subject to restrictions on the comments users can leave on each home. If a home-seller asks that a comment be taken down, websites are obligated to comply (consequently, you probably won’t be seeing many negative reviews). Instant customer feedback is one of the most valuable assets of online retailers - to deny consumers access to such information is both annoying and foolhardy on the NAR’s part. The NAR should be supporting traditional brokers by emphasizing personal interaction and service, not by handicapping the competition.
Uhh… link?
GO REDFIN!
Excellent news and a victory for the US consumer.
Now only if we could get the same kind of level playing field for online estate agents here in the UK. The big portal players over here like Rightmove often restrict access to online agents preventing them from advertising their properties to the general population and keeping estate agency fees high.
Our industry is always years behind the tech curve, so it doesn’t surprise me that NAR is opposed to wiki-fying the MLS.
As for Redfin…actually they’re not at all trying to “take Realtors out of the home sale process” — they’re simply trying to make the whole byzantine world of real estate transactions more efficient. Redfin has numerous Realtors on staff — you know, those folks needed to help with things like showing properties, advising on a contract, negotiating, etc. They’re a great company and I love how they’re shaking things up.
I was about to say the same thing, Kevin. Go Redfin!
@Kevin Boer
Thanks, you’re right. I’ve updated the post.
spelling nit: foolhardy, not foolhearty.
Slight correction… The ruling, if accepted, will not prohibit sites from having comments on homes. The ruling just states that if the seller requests the comments be removed, the participating site has to remove them.
Here’s the exact language:
@David Ulevitch
Thanks, I adjusted the post accordingly.
User comments on a house? Well, maybe, whatever.
Maybe it’s just my approach, but if I’m buying a house, online reviews are going to be really low on my scale of credible sources of information in making a purchase decision.
@Jason Kincaid
Sweetness.
Slight side-note, but reading through the comments here, I’m always struck by how impressive it is that the first ten comments or so usually handle correcting factual, spelling, link, etc errors which are then updated in the main post. After that, the discussion moves forward.
It’s little things like this that really remind me of the potential of what we’re all building. In any case, sorry to interrupt :).
@David: “the VOW shall disable or discontinue either or both of those features as to the seller’s listing at the request of the seller.”
I love how that’s worded. If I were running the VOW, I would comply to the letter: I would disable comments on the listing. No more comments may be made
@jro - really? You wouldn’t want to know that the house across the street has wild parties until 2am every night, or that the nearby High School is one of the top 10 in the country?
OK, so you don’t take it as gospel, but it seems that it could provide good information to take into consideration.
Unbelievable… why are they unable to help the consumer by allowing a history of the problems in homes to be recorded online? This sounds like an opportunity waiting to happen…home ratings online could be used to quickly address the necessary changes to homes pawned off by shady realtors as ready to move into when they actually have tons of issues (leaks, insulation problems, code violations in construction…etc.) assuming I understand correctly what is not allowed.
So the comment prohibition on realtor-run websites just opens an opportunity for somebody to create a separate listings comment site, right? Go to the other site, paste in the MLS number and read/post comments.
The NAR is about ten years behind in terms of technology. As I’ve observed them over the years, their paranoia appears so severe, it prevents them from actually creating anything useful with their database. The best analogy that describes them is Polaroid is (was) to photography, what NAR is (will be) to real estate.
Now if only the travel industry was as open with it’s information…
Mike Dee — perfect analogy. I’m a NAR member — hard to make a living in this biz without being one — and it always astounds me how behind the times technologically NAR is. In their defense — and very weakly so — they’re not really set up to be a tech-promoting organization, but more of an advocacy-and-maintaining-the-status-quo organization. The governing body is an 800-person lumbering behemoth, and sub-committees set up to look at different issues — like listing syndication — often have several dozen members.
John/David/Tony et. al — The fear is simple — lawsuits. Real estate is arguably the second most litigious industry in the US after the medical field. The fear is that if you enable random riffraf to comment on your listing, they might — horrors! — write something bad about it, making it more difficult to sell. Along comes the seller, frustrated that his home isn’t selling … discovers the negative comment … and sues his Realtor for not “marketing his home correctly.” Trust me — there’s a dozen more frivolous lawsuits than that filed ever week!
The industry’s response, however, has been ostrich-like. “If we pretend change ain’t happening, maybe it won’t!” You’re right — this presents a perfect opportunity for a third party to come around and enable open commentary about homes. Wait a minute — that’s Zillow!
It doesn’t do much good if realtors withhold listings, which they do and will continue to do.
Not that I’m trying to crash anyone’s thunder, but the Redfin model in my opinion does not work. Just as the stock market emerged from the greatest bull market in history (ie. < 2001), so has the U.S. housing market (ie. < 2005). Redfin is just another Discount Broker (ie. Schwab, Ameritrade, E-trade, etc.) As our U.S. housing market goes into turbulence with a lot of economic break-downs, it will be interesting how Redfin survives as they burn thru cash (ie. employees, overhead, etc.) through the next few years until the real estate market can recup at the earliest. I think its important that companies like Redfin keep things interesting, and this ruling essentially is a win for them. But the ‘discount broker model’ does not work in the long run.
You can start with punishing sellers who squelch comments by putting a big sticker:
“THE SELLER HAS REQUESTED THE REMOVAL OF 2 COMMENTS FROM THIS THREAD”
@david: why not? I don’t need a babysitter to walk me through the house buying process. I can pick out a house myself. I need someone to fill out the paperwork. The $15,000+ cash I get back is just icing on the cake.
its a step in the right direction…
I don’t see exactly how one goes about getting access to the data?
@ Sep,
What data are you referring to? Data from the original post about NAR allowing access, or data that sites like Redfin are churning out?
For my local MLS (San Francisco) I had to beg, borrow and steal for over one year to get permission to download and re-transmit MLS data in a different format as a “third party vendor” for my real estate newsletter biz (sfnewsletter). The process was painful! Not painful because they required so much of me, but painful because something so simple as signing a contract and tweaking it to accommodate our modified needs took ages to get through the legal department. Local associations of Realtors guard that information very closely. In the end I prevailed and can now publish sold data in real time to my list of readers, but it will be quite some time before companies that to NAR appear hostile will have access to that same data.
i see this as a combination of things. realtors don’t want to be replaced by a simple database just like so many customer service jobs already have.
also, realty suffers extensively from pro-marketing — the idea that they only list the pros of a property, and never any of the cons. a simple example is washer/dryers in apartments. most places that have it will say it, the places that don’t won’t mention it. the place that leaves it off will sell better than the place that discloses it doesn’t have it. if onliners put in that information, sales will be reduced.
realty suffers extensively from pro-marketing ?please plain…thanks
Alex - say I want to do make my own mini-Redfin (for argument sakes). How exactly do I go about getting access to NAR (fees? delivery mechanism? etc etc)
@sep — Good luck. There are ~900 MLS’s in the country, each with their own registration procedures, data display rules, data formats, and rules. It can cost as much as $500/month to get a data feed from one of these MLS’s. It’s just crazy. One of them will allow you to publicly display these 25 attributes; the one in the neighboring county will have a different list of 28 attributes.
@djlosch — Crap realtors, of whom there are plenty, are perhaps just “customer service jobs.” The good ones, thankfully, are more akin to other professionals — coders, consultants, attorneys, doctors, etc. Doing a home transaction is considerably more complicated than, say, taking orders at a McDonald’s drive-through. So it’s unlikely the profession will ever be replaced “by a simple database.”
@Mighty Sam — The notion of Realtors withholding listings from the MLS is, in my experience, something like the Lochness Monster — vague hints of being true, but very few actual confirmed sightings. In the good ol’ days when product flew off the shelf in a weekend, a handful of ne’er-do-good’er Realtors would do the old “double-end” trick: “forget” to put a property on the MLS, do open houses anyways, then sucker some unsuspecting buyer into using said Realtor to do both sides of the transaction. 2X commission = 2X $. Now that sales have slowed and homes are taking some actual effort to sell, I rarely if ever see that happening these days. There are still ways of double-ending a deal, but not putting a listing in the MLS is not an easy way of doing so.
@Tony 13 - that information might be useful, but I doubt that quality of information will be acquired. But by all means have people add all the comments they want. I question the quality, accuracy and *gaming* of the information.
David (#20) is correct for the reasons he stated above and about a dozen more that are not covered anywhere in this story or comments. All for which these online real estate sites will not make it.
Anything to put those 6% wannabes to rest. However the biggest problem with real estate in America is too many people still have way too much of themselves invested in their home (in many cases its their only asset) thus they are having a hard time accepting that residential real estate is not a good investment - its just better than paying rent if (and its a still a big IF) you can pay the same or less than if you rent . In the end it won’t help the industry or economy in terms of any kind of recovery because we are in need of major league correction which is more related to the end of the lax credit that help drive this liar based industry but once the dust settles I expect to see a much more efficient and an empowered buyer aware market.
this could be great news, hopefully some of these sites will present a decent search. realtor.com is not the best, especially if you have an address of a home and want to just check the details of it, it can be frustrating…
@ Sep
Kevin (what’s up Kevin?) said it right….”Good luck”. We actually had plans of taking our SF model into other markets, but like Kevin said, each and every single MLS is different. We simply didn’t have the time or capacity to do so. It is a frickin nightmare! I actually didn’t have to pay any fees for our access to the local MLS data, but I believe that to be because I am a member of SFAR and NAR. Like I said, outside companies might have a bit more trouble.
@MM and David #20
It is a long hard battle and the NAR and all of the Realtors will put up a HUGE fight against change. It has been my experience that it is true the travel industry was shaken up, but buying an airline ticket is different than buying a house. You cannot buy a house off of pictures alone (although I did 5 times, but they were investments), and there are too many variables of a transaction that a computer/program likely will never be able to duplicate/replace. You guys are spot on…at least for now.
Comments on homes have been around since 2006:
http://www.realestatejournal.c.....laney.html
Redfin isn’t the first to come up with this.
According to the ruling, these ‘new’ rules only apply to VOW sites, not IDX websites. As far as I know, Redfin is an IDX site, so I don’t think any of this affects them at all.
Has no one here heard of ZipRealty? or the fact that the MLS is available currently on line to everyone? The NAR is a professional organization which of course is going to attempt to protect the livelyhoods of its members. Why shouldn’t they? I think that this ruling was a defeat for Redfin as it has destroyed their ability to use conversational marketing as a tool to sell homes.
Well, these online realtors will have next 6-18 months to work the bugs out before anyone starts looking to buy in this crapper of a real estate market again.
And hey, in San Diego, I see houses down about 40% in value from last year, yet I don’t see many realtors lowering their commission rates to help the beleaguered homeowner.
6% commission - deadpool
Not quite sure this is a win for us just yet. I suspect much red tape to come down the line very quickly from the NAR as they still have some grips on how new innovative tools & widgets that we use may be effected. (Darn attorneys).
Currently we allow comments on listings & some AVM tools for every home…I guess we will see how fast this goes into action.
No one has mentioned that the data we are all fighting over is maintained by Realtors. Realtors take the listings, fill out the forms on the MLS and when something about the listing changes the Realtors update the data, sometimes Realtors spend hundreds of dollars on photos, websites and video and you want them to give this info away for free?
What happens when average home owners maintain the info? Sales dates are not recorded, sale prices are not recorded, stale and erroneous info is left in the database. I’m not claiming Realtors are perfect or rocket scientists but if you get rid of them who will diligently maintain the info and unlock the doors? Do you want just anyone to enter your house at any time while it is for sale? Do you have the time to stay home from work to show your home seven days a week 12 hours a day? Many Realtors also spend a good deal of money and time advertising and promoting properties. Did you know that the 6% so many of you mentioned does not go directly to the Realtor? It’s usually split between a number of people. Quite often the listing agent keeps less than 2% for him/herself. Even when the Realtor gets both sides of the deal he/she still has to share with the broker. This can range from 50% to 20% of the commission.
Sure there are some slimy agents out there and there may be some making well over a six figure income but the last I heard the average agent makes less than $35,000 a year. Does that sound like they are all overpaid and worthless?
Just because you don’t see all the crap Realtors have to put up with does not mean that they are overpaid. These days even plumbers and auto mechanics can make a good income. You could unclog your own toilet and grease your own automobile moving parts but do you really want to and could you do it as quickly?
In your opinion what is a Realtors time worth? How much should they be paid for selling a home? What’s a fair income for an agent who is on call seven days a week and puts in 60 hours of work a week? Most Realtors don’t make a salary, they only get paid when something sells.
As someone who advocates every day for convenience, choice and commerce on the Internet, I am happy to see this settlement reached. NAR must now actively encourage Realtors to invest in technology and try new ways of providing information and service to home buyers and sellers if they want to remain relevant in the future. For more insight: http://blog.netchoice.org/2008.....me-re.html
@sep
thank you
@ sep & Mike Brown
Thank You. Nicely written & very accurate.
For all of those who think online brokerages are going to skyrocket and become the next big thing consider what Mike said above and ask yourself this -
If selling a home is so very simple, then why didn’t For Sale By Owner (FSBO) ever “take off,” or force the traditional real estate model to a grinding stop?
Short answer - Because it does not work (for the most part).
I do wish these companies luck and think it’s great to stimulate competition while also pumping so much money into their local economies by hiring all the people within each of the online brokerages infrastructures. And do hope they keep all these jobs in the USA.
I’m a mortgage originator from Wells Fargo in California. How does this company pick their finance parnters?