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by CareyBot

Seattle-based online discount brokerage company Redfin, under pressure from the multiple listing service, has pulled the plug on its Web logs offering reviews of properties for sale.

The broker-owned listing service, Northwest MLS, of which Redfin is a member, ruled that the reviews violated its regulations against advertising other brokers’ listings. The MLS has issued a $50,000 fine to Redfin and threatened to terminate the brokerage firm’s access to MLS data, which it displays on its Web site.

A representative from NWMLS did not immediately respond to Inman News’ request for comment.

Redfin said it is appealing the fine.

The company said the review sites, dubbed Sweet Digs, had attracted more than 3,000 e-mail subscribers over the last five months. The sites included postings from 15 independent reviewers who were paid by Redfin to visit properties in person and write reviews about the homes and neighborhoods they visited in Seattle and the San Francisco Bay Area.

“We’re not trying to stir the pot,” said Redfin CEO Glenn Kelman, who said the struggle with the MLS over the review sites had been a year in the making.

Redfin posted a notice on the Sweet Digs blogs and started receiving media attention and decided to release a statement Friday about the situation. The attention follows a Sunday night segment about the company that appeared on “60 Minutes” looking into the traditional commission structure of typical real estate agents.

Redfin is an online brokerage that rebates a portion of its commission back to home buyers in exchange for buyers doing most of the research themselves. The company also offers to list homes for sale for a flat rate.

The company’s business model is not new; other real estate companies such as ZipRealty and Help-U-Sell have similar models that rebate portions of commissions or perform services at flat rates.

Redfin has spoken out at congressional hearings about rules and regulations set by the industry that the company says limit its ability to innovate. Industry insiders have fired back criticism that the company has used this as a crutch to make itself look like an underdog.

“We’ve said before that all the MLS rules form a thousand tiny shackles on our ability to innovate,” Kelman said.

He noted that the MLS has a policy against commingling listing information with other non-MLS information on a Web site, though he said that Redfin’s reviews were clearly separate from the listings on its site. What concerns the executive about this policy is that in a Web 2.0 world where information is constantly being mashed up together in new ways, that consumers won’t be getting what they are looking for in real estate sites, he said.

Redfin plans to maintain the Sweet Digs sites as a local source of information about each of the markets it serves, but will have to shift its focus to analyzing price trends and recent sales.

Kelman said the company will change the names of the sites.