ZipLogix competitors never had a shot at licensing CAR forms

CAR subsidiary granted exclusive licensing agreement to its own software firm

Brokers and agents who want to fill out the California Association of Realtors' (CAR) electronic forms in software other than the solutions offered by its for-profit subsidiary are out of luck, because of a long-term exclusive license the subsidiary granted its own software firm, zipLogix LLC, when it acquired the firm more than a decade ago.

CAR and its subsidiary, Real Estate Business Services Inc. (REBS), make decisions to license CAR's electronic forms to other companies, a CAR spokeswoman told Inman News.

Sea of forms image via Shutterstock.
Sea of forms image via Shutterstock.

CAR founded REBS in 1991 and retains a 100 percent stake in the company. Through its ownership of REBS, CAR has a stake of just under 65 percent in zipLogix. NAR has owned a 30 percent stake in zipLogix since 2001. Several other state and regional associations hold the remaining 5 percent.

Some CAR members and technology providers, most notably transaction management platform maker dotloop, have been critical of CAR for not allowing firms other than zipLogix to license its electronic forms.

CAR leaders have cited a number of reasons, including security and privacy concerns, for the association's decision to exclusively license its electronic forms to zipLogix. ZipLogix offers both a form-filling technology, zipForm, and a paperless transaction management platform, "relay."

But according to REBS CEO Debbie Ferrier, even if those concerns were addressed, CAR could not license its electronic forms to other firms because of the long-term exclusive licensing agreement REBS entered into with zipLogix 14 years ago. Ferrier was general counsel for CAR and its subsidiaries when REBS acquired zipLogix in 1999.

Article continues below

"The main reason that we don't license our forms to be filled out in other software is because we've exclusively licensed the electronic forms to (zipLogix)," Ferrier told Inman News. "That was part of our agreement when we created the company and what we wanted to do about protecting our members and making sure they had the latest and greatest."

"If we weren’t in this business, the cost of e-forms would be higher and there’s no question about that." --Joel Singer

"Our exclusive (zipLogix) relationship was approved by the appropriate authoritative bodies years ago," a CAR spokeswoman told Inman News. The association compared the exclusive agreement to a 1996 agreement between the National Association of Realtors and Move Inc. governing the operation of realtor.com.

Although Move and NAR have negotiated several amendments to the agreement over the years, industry leaders like Gregg Larson, CEO of real estate consulting firm Clareity Consulting, consider it to be nearly ironclad.

"The only way NAR could get out of the contract is if it breached it or if Move went bankrupt," Larson said.

It's not clear if REBS' agreement with zipLogix to license CAR's electronic forms is as binding as the realtor.com operating agreement, or whether there might be loopholes that would allow REBS or CAR to license electronic versions of CAR's 115 standard forms to other firms.

CAR invests significant resources to make sure its forms are legally sound and up to date, said CAR's CEO Joel Singer, who also serves as the CEO of zipLogix.

Those resources make the forms immensely valuable to CAR members and technology providers who want to license them -- especially since California is a litigious state, and CAR says it will back its members in court disputes involving its forms if they've been used properly.

Some CAR members including David Cabot, who has served as a CAR director since 1997 and was a REBS director from 2010 to 2012, hope that CAR will look at other technologies in the forms software space.

"Software technology has changed in the last five years," said Cabot, CEO and president of Prudential California Realty, a 62-office, HomeServices of America Inc.-owned brokerage in Southern California.

"There are better, quicker, easier solutions out there and they're worth looking at," Cabot said.

Other CAR members like Robin Dickson, executive vice president of San Francisco Bay Area-based J. Rockcliff Realtors and president of the Contra Costa Association of Realtors, like that zipLogix is run by a Realtor association because she feels that there's less of a chance for "unethical" or "illegal" activity occurring with the technology, she said.

However, Dickson, who is also currently a CAR board member, says zipLogix' relationship with REBS gives her pause.

"Sometimes I'm annoyed that we can't use (software to fill out forms) that's not associated with REBS," Dickson said.

Singer has made comments similar to Ferrier's about the binding nature of REBS' exclusive deal with zipLogix.

"We're not in a position to support multiple platforms," Singer said.

"One platform is the right choice," Singer said. "It makes a lot of sense for the members. It creates standardization; it makes education easier; and it makes it easier to protect their interests."

CAR CEO Joel Singer, who is also the CEO of zipLogix LLC, talks about dotloop and CAR's decision to not license the ability to electronically fill out its real estate forms to a software other than zipForm. (6:04)

Singer has said that underlying CAR's decision to license, via REBS, the ability to fill out its electronic forms exclusively to zipLogix is the belief that a Realtor association is the safest, most secure and best organization to provide technology to its members.

As the "official forms software" provider for NAR, zipLogix offers a $20-a-year discount off the regular price of zipForm, and $10 a year off its transaction management platform, "relay."

The role of an association

In their head-to-head debate at Real Estate Connect San Francisco in July, Singer and dotloop CEO Austin Allison differed on what role Realtor associations should play in providing technology to the industry.

"(Realtors) benefit when the association itself is the competitive provider of technology," Singer told Allison and a roomful of Real Estate Connect San Francisco attendees during their head-to-head panel at the event.

CAR CEO Joel Singer and dotloop CEO Austin Allison discuss licensing of CAR forms onstage at the Real Estate Connect conference in San Francisco on July 10, 2013. (19:50)

Some industry observers, including Brian Boero, founding partner of real estate marketing and design firm 1000watt, disagree.

"The ingredients necessary for a software company -- agility, a capacity for recruiting top talent, acute sensitivity to market and competitive pressures -- are just not in the association pantry," Boero wrote in a recent blog post on 1000watt's website.

Others have questioned whether CAR's role in the tech space does a disservice to members.

"Had CAR licensed access to the forms to dotloop or other vendors, maybe new and potentially better programs and services could be used by the members of CAR, who already pay CAR $3-4 million a year for the privilege of using zipForms," wrote Russ Bergeron, CEO of Midwest Real Estate Data Inc. MLS, in a comment to a post at the real estate blog Vendor Alley. "Is this a case of protecting a copyright or protecting a revenue stream?"

Singer argues that an association is an optimal technology provider, because it has the best interests of the Realtor ingrained in its business ethos. Realtor associations, he says, have an inherent interest in protecting the privacy and security of its members' data and a freedom from the bottom-line demands of investors.

Singer explained that CAR electronic forms and zipForm, the technology from zipLogix used to fill them out, are inextricably linked in an "ecosystem" that protects members. That relationship ensures that the appropriate, up-to-date forms are used and sensitive information is handled securely, he said.

ZipForm features like "Forms Advisor," which helps members choose the correct forms for a transaction, "Forms Tutor," which explains how to fill the forms out, and tools that auto-populate data into forms are built into that e-forms "ecosystem," and with the exception of e-signature service DocuSign, most are free member benefits, according to CAR.

"ZipLogix works with many third parties" -- including DocuSign, the transaction management platforms Cartavi and SureClose and Move Inc.'s customer relationship management platform Top Producer -- "that are covered under confidentiality provisions, which do not allow us to discuss details of individual agreements," a CAR spokeswoman told Inman News.

These companies do not license CAR's e-forms. "ZipLogix licenses Web services that allow members and third parties to move data in and out of forms and move completed locked PDF forms," the spokeswoman said.

The overlap between CAR and zipLogix has led some to question whether Singer has a conflict of interest as the CEO of both organizations.

Singer -- who, according to CAR, is not compensated in his role as CEO of zipLogix -- says he has no conflict of interest.

"The reason I run (zipLogix) is because (CAR members) want to make sure that the not-for-profit and the goals and aspirations of the Realtors in that organization, that voluntary organization, are also reflected at our for-profits," Singer said.

"If we weren't in this business, the cost of e-forms would be higher and there's no question about that."

Profits generated by zipLogix have enabled the association to keep a lid on member dues, according to CAR. CAR hasn't had to raise its member dues for operating fees in more than 10 years, although it has raised them to support political activities.

CAR members receive zipForm and the association's electronic forms as part of their annual $115 membership dues while nonmembers may gain access to zipForm and the association's forms for $999 per year.

ZipForm is also used by 600,000 agents in markets across the nation, who, when not receiving it as a benefit as a member of another association or through a deal via their MLS or broker, pay $159 per year to use the technology, according to CAR.

Many associations invest in for-profit technology solutions, most notably in multiple listing services, often in partnerships with other associations, pointed out Clareity Consulting's CEO Gregg Larson.

The Houston Association of Realtors (HAR), for example, is the sole operator of a for-profit MLS of the same name. HAR's public-facing website was the 18th most-visited U.S. real estate-related website in July, according to Experian Marketing Services. Bob Hale serves as CEO of both organizations.

"As a matter of fact, (having the same leadership of both organizations) is why we find that things run seamlessly versus those markets in which there tends to be almost a rivalry between the local association and the MLS," said David Mendel, HAR's public relations manager.

Choice?

Dotloop's Allison thinks that because CAR members pay for access to the association's electronic forms, they should have the ability to choose which technology they use to fill them out.

Dotloop CEO Austin Allison talks about dotloop's desire to license the ability to fill out CAR's electronic forms. (3:53)

But exclusive licensing agreements are not uncommon in the real estate industry.

For example, zipLogix itself, a CAR spokeswoman pointed out, could make an argument in Minnesota similar to the one Allison has been making about CAR in California.

A year ago, the Minnesota Association of Realtors (MNAR) chose to exclusively license its forms to Instanet Solutions Inc., another transaction management platform and a national competitor of zipLogix.

MNAR CEO Christopher Galler told Inman News that an exclusive agreement with Instanet made sense because the bulk of MNAR members were already using it, and the association wanted to choose a single form-filling technology in order to secure a bulk discount for its members.

Before MNAR signed the exclusive deal with MNAR, any firm could pay $1,000 per year to license the association's forms, Galler said. Now, MNAR's electronic forms may not be filled out using any other software but Instanet Solutions.

CAR said zipLogix has been shut out of other state associations, too -- including Idaho, Maine, North Carolina, New Jersey, Oregon, Rhode Island, .

Who makes the decisions?

CAR declined to provide details about which "authoritative bodies" approved its agreement with zipLogix to exclusively license its electronic forms, or exactly when they did so.

Although Singer says CAR's 150,000-plus members have the power to authorize other firms to license the association's electronic forms, some members say it's unclear how the decision-making process works.

Part of the confusion stems from the overlap between the leadership of CAR and its subsidiaries, REBS and zipLogix, that has existed over the years.

Name Position at CAR Position at REBS or zipLogix
Joel Singer CEO, 1989 - present CEO, zipLogix, 2000 - present; president, REBS, 2000 - present
Joshua Sharfman Chief technology officer, 2004 - present Chief technology officer, zipLogix, 2004 - present
Debbie Ferrier General counsel, 1989 - 2010 CEO, REBS, 2010 - present; general counsel, REBS, 1989 - 2010
Don Flynn Chief financial officer, 2008 - 2012 Chief financial officer, REBS, 2005 - 2012

Sources: LinkedIn and CAR website.

Singer is not only the CEO of both CAR and zipLogix, but he is also the president of REBS. A seat on the nine-member REBS board of directors, which CAR leaders say makes the decisions about licensing the association's electronic forms, is also reserved for CAR's CEO.

"We're beholden to our members and no one else," Singer said. "Our members are in a position to make this change (to allow other firms' to license the association's electronic forms)."

"New partnerships are routinely approved by zipLogix and REBS boards and generally do not need CAR board of director action," a CAR spokeswoman told Inman News.

Since seven of the nine persons on the REBS board of directors are elected by the CAR board of directors, "(CAR members) can easily direct changes in REBS policy were there dissatisfaction," the spokeswoman said.

The decision to license CAR's electronic forms to other software providers lies with the board of directors of REBS, which makes the software that has an exclusive license to fill out those forms.

And, it's not clear how often REBS considers allowing other firms to license CAR's electronic forms, or if the long-term agreement between it and zipLogix precludes any evaluation.

Cabot, who sat on the REBS board of directors from 2010 to 2012, says no decisions related to forms software came up to the REBS board for the two years he was on it.

Editor's note: Annual membership dues to CAR are $115. A previous version of this story incorrectly stated they were $215. "Relay" is not a CAR member benefit as incorrectly stated in a previous version of this story. ZipLogix can do business in Maine, North Carolina, New Jersey, Oregon, South Carolina and Washington; a previous version of this story incorrectly noted it couldn't.


Related Articles