NAR throws cold water on ‘Powered by Zip’ and RealEstate.com

'Paper brokerages' flying under the radar

Icy water image via Shutterstock.Icy water image via Shutterstock.

Editor’s note: This is the third in a four-part series examining website operators who use brokerage licenses to obtain shared listing feeds from multiple listing services to generate leads for other brokerages. In this article, Inman News reporter Andrea V. Brambila looks at whether website operators who obtain Internet Data Exchange (IDX) listings are complying with MLS rules governing their display. See Part 1, an overview of Inman News’ findings, and Part 2, which examined how MLSs are struggling to interpret whether their rules allow “paper brokerages” and fears that denying them listings could violate antitrust law. Part 4 looks at whether widespread adoption of the paper brokerage business model could undermine participation in IDX, and the MLS system itself.

Companies publishing Internet Data Exchange (IDX) listings from multiple listing services without providing brokerage services have more than the MLS participant rule to worry about.

In response to inquiries from Inman News, Laurie Janik, the National Association of Realtors’ general counsel, recently reviewed RealEstate.com and ZipRealty.com and declared portions of the websites noncompliant with IDX display rules.

Janik said both sites failed the “apparent control” section of IDX rules, which requires that a “reasonable consumer” viewing the broker participant’s display of IDX listings will understand the display to be the participant’s and under the participant’s control.

Market Leader subsidiary FastStart Real Estate Services, which does business as RealEstate.com, has brokerage licenses in at least 38 states, Inman News has found, and has joined many MLSs as a broker member. Nonetheless, Janik noted that the RealEstate.com site appears to be that of a third-party aggregator.

“There is no indication the display is that of a specific participant in the MLS where the displayed properties are located, or even that the display is that of a real estate broker,” she said.

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“The description on the home page gives no indication whatsoever that this is a real estate broker’s website. Even the explanation under the heading ‘About RealEstate.com’ fails to mention that it is a real estate brokerage,” she added.

"The site looks like a national syndication site, not a broker or an agent site." --Glenn Christoph, Bay East Association of Realtors

Janik noted that listing pages from market to market do not change to identify the individual broker member of the MLS in each market.

In May, when searching for listings in San Francisco, for instance, she noted that a picture of Lynnette Fox-Rindner, an agent with BMC Real Estate at the time, appeared in the upper right-hand corner under the heading “Get expert Advice Today.”

“Her identity was prominently displayed at the same time San Francisco listings appeared,” Janik said. “I think a reasonable consumer would think that they were at her website or at a website of a third-party aggregator,” she said, “but certainly not at the website of another broker.”

Market Leader did not respond to repeated requests to comment for this series.

In assessing the Jacksonville, Fla., portion of ZipRealty’s website, Janik came to a similar conclusion. She said the site appeared to be ZipRealty’s and not that of Coldwell Banker Vanguard Realty, ZipRealty’s Powered by Zip partner in that market and through whom ZipRealty is obtaining IDX listings from the local MLS, Northeast Florida MLS, as a vendor.

On ZipRealty.com, Janik searched for listings in Amelia Island Plantation, Fla., in the Jacksonville area.

“When the listings appeared, there was a bright orange banner over the first listing. It said, ‘We show you up to 30 percent more.’ I clicked on the banner to determine who ‘We’ is,” she said. “If this were Coldwell Banker Vanguard Realty’s website, you would expect ‘We’ to be they. But, the banner took me to a promotion for ZipRealty, including Zip’s phone number,” she said.

Janik also noted that each property listing had a field for days “On ZipRealty,” not on Coldwell Banker Vanguard, and the tabs across the top of the page — “My ZipRealty,” “Find an Agent,” “Buy a Home,” “Sell a Home” and “Go Mobile” — were all about ZipRealty and did not mention Coldwell Banker Vanguard.

Janik also called the phone number in the Coldwell Banker Vanguard banner at the top of the page telling users to “Call your local brokerage.”

“I called that number, at least half-way expecting to be connected (finally) with someone at Coldwell Banker Vanguard. The taped voice that answered the phone greeted me with ‘Welcome to ZipRealty,’” Janik said.

“So, in sum, nothing, absolutely nothing, on the site was about Coldwell Banker Vanguard. All links took me to ZipRealty. All promotion on the site was Zip’s. Same with the phone number. The branding on the site was predominantly ZipRealty,” she said. “No reasonable consumer who explored the content on that site could conclude that it was anything other than ZipRealty’s site.”

Samantha Harnett, ZipRealty’s general counsel and senior vice president of business development, told Inman News that Powered by Zip partner brokerage pages are designed to comply fully with IDX display rules and customized for each partner.

“Each partner page is created pursuant to an agreement with that partner, which provides the partner the ability to control and modify content on the partner page, including IDX listings display,” Harnett said.

“The Powered by Zip pages not only display but prominently market each partner’s brand and agents. Each partner’s brand and logo is displayed at the top of that partner’s page more prominently than any other logo on the page, and again at the bottom of each page accompanied by the statement ‘Local real estate services provided by,’ with the partner’s contact information.

“Further, each partner’s agents are marketed exclusively on its page and in the geographic area served by that partner. When a customer clicks the ‘Find an Agent’ tab at the top of the Web page to search in a Powered by Zip market, a list of partner agents is displayed and each agent profile contains the partner’s branding and logo, as well as the agent’s contact information through the partner brokerage.”

In response to ZipRealty’s statement, Janik said she did not question the company’s intent to comply with IDX rules, but her opinion differs on whether the partner pages in fact comply with the requirement that the IDX site be under the “apparent” control of the MLS participant.

“That determination will be up to each local MLS,” Janik said. “However, in my view, based on my limited sampling, the website for Jacksonville carries more prominent branding for ZipRealty (including the phone number and the orange color) than for the ‘partner’ Coldwell Banker broker (whose corporate color is blue),” she said.

“Reality does not match” Harnett’s description of what happens when a user clicks on the “Find an Agent” tab, Janik said. Users are asked to enter a city, ZIP code or agent name into a search box to “find the local expert who is right for you” and below the box, the page says, “Real estate agents on ZipRealty.com are completely in sync with your needs,” Janik said.

“Not a single Coldwell Banker Vanguard agent mentioned. No agent profile, no branding, no logo, no contact information,” Janik said.

Inman News confirmed this. However, partner agents from the Powered by Zip brokerage in that market do appear after a user enters a geographic area in the search box.

NAR does not plan to take any action against either ZipRealty or RealEstate.com, or issue guidance to MLSs, Janik said.

“NAR has no authority to enforce the rules of a local MLS. All enforcement of the rules is done by the MLS,” she said.

MLSs respond

Responses from MLSs to Janik’s assessment of the sites demonstrate the variability and subjectivity involved in interpretations of MLS rules.

Ron Stephan, CEO of NEFMLS in the Jacksonville market, told Inman News about four months ago that the MLS considered ZipRealty’s and RealEstate.com’s display of its listings compliant with IDX rules.

Upon learning of Janik’s assessment of the sites a few days later, Stephan said, “No argument from me! If Laurie says the sites are not compliant we will go with that decision.”

Coldwell Banker Vanguard did not respond to a request for comment.

At the time, Stephan said he would notify all parties in writing as appropriate. Since then, RealEstate.com has pulled down NEFMLS’s IDX listings and ZipRealty has joined NEFMLS as a broker member and displays its IDX listings in that capacity. The site continues to display co-branding from Coldwell Banker Vanguard. Stephan said ZipRealty’s display now appears to be IDX-compliant.

The ZipRealty broker who joined NEFMLS is based in Maitland, Fla., near Orlando — one of the 19 markets where ZipRealty continues to maintain brokerage operations. Stephan said NEFMLS accepts any broker in the state of Florida and, per Florida law, has no requirement that brokers do business or reside in the MLS’s coverage area.

Merri Jo Cowen, CEO of My Florida Regional MLS, said the MLS agreed completely with Janik’s comments regarding RealEstate.com and ZipRealty’s noncompliance with IDX rules.

“The IDX program is one that is intended for MLS participants of individual MLSs — and does not extend to franchisor or national portals,” she said.

“MFR is reviewing the agreements on file that relate to not only RealEstate.com and ZipRealty, but to any others who may be using IDX data in a similar manner, and will take appropriate steps to clarify the terms of our agreements and the use of IDX data with our brokers who have requested an IDX feed as well as with those corporate entities that may not be aware that they are not entitled to display IDX data on their corporate sites.”

MFRMLS listings no longer appear on RealEstate.com. Cowen said they were removed at MFRMLS’ request. The MLS’s listings still appear on ZipRealty.com. Cowen said the MLS is “moving forward on getting that resolved,” saying the MLS had not yet informed ZipRealty that its national site is not IDX-compliant. “In the next week we will be sending correspondence to them,” she said in mid-June. As of today, the MLS has yet to reach out to ZipRealty, according to Cowen.

Tucson Association of Realtors MLS in Arizona has determined that neither RealEstate.com nor the portion of ZipRealty’s site that displays TARMLS’s listings are compliant with its IDX rules. Tucson was one of the first markets in which ZipRealty pioneered its Powered by Zip program in 2011.

“When ZipRealty left the Tucson real estate market and became a technology provider, it opened up many challenges to convert the ZipRealty presence and branding to Long Realty without inconveniencing the consumer,” said Sean D. Murphy, vice president of MLS at the Tucson Association of Realtors and MLS.

“We are working with Long Realty currently and are committed to bring all aspects of the site into compliance with our rules with minimal disruption to Long Realty or their clients.”

In order to ensure IDX compliance, TARMLS IDX listings on ZipRealty.com will be moved to a Long Realty website, Murphy said.

“We need to be sure that the consumer is fully aware that they are working with Long Realty and not ZipRealty. We are working with Long Realty to have their own site using Zip’s technology platform,” he said.

After being notified that RealEstate.com was noncompliant, the site voluntarily took down TARMLS’s listings, Murphy said.

Janik’s assessment prompted further reviews of the sites from other MLSs. Two MLSs in Powered by Zip markets, Virginia Beach, Va.-based Real Estate Information Network Inc. and Sandy, Utah-based Wasatch Front Regional MLS, determined that ZipRealty’s display of their MLS listings was compliant with IDX rules because the site did not operate the same way in their market as in other markets, they said.

Lydia Kapetanakis, executive vice president of Real Estate Information Network Inc. (REIN), said the ZipRealty approval process with the company’s broker partner, William E. Wood & Associates Realtors, was “very arduous and drawn out” last year.

“They did make several changes to gain approval at our request,” she said.

“REIN staff has reviewed other ZipRealty-powered broker sites outside of our market and determined that it IS NOT implemented the same in other markets as it is here,” she added.

“For instance, MLS disclosures may be missing in other markets, but it is present in ours. A consumer is clearly led to believe they are dealing with ZipRealty in other markets, but here they are directed to William E. Wood.”

Rebecca Jensen, CEO of WFRMLS, made a similar observation about both RealEstate.com and ZipRealty.com in her market.

“The websites in question appear to behave differently in each market. I cannot comment on the status of their compliance in markets outside of Utah. On the pages that display our content, the contact information, branding requirements, and other details appear to be in compliance with our policies and Utah law,” she said.

“However, if there is a difference of opinion from NAR in the interpretation of their policy in our market, we will work with all parties involved to bring sites into compliance.”

Stuart White, CEO of Mid-South MLS RealTracs, said ZipRealty’s local broker partner in the Nashville area, Bob Parks Realty, appeared to be in control of the portion of the ZipRealty site showing RealTracs listings. He said Bob Park Realty’s logo was bigger than the one that says “Powered by ZipRealty.com technology,” and the site contains a disclaimer at the bottom saying local real estate services are provided by Bob Parks Realty.

“The ZipRealty ad mentioning 30 percent more listings is not a big deal. If Bob Parks can move that stuff, he’s in control of that site,” White said.

On the other hand, White said RealEstate.com was displaying RealTracs’ listings not as a broker member of RealTracs, but without permission through Market Leader’s status as a vendor powering 437 IDX websites for RealTracs’ agent members.

The MLS asked the company to pull down their listings from RealEstate.com or risk losing RealTracs’ IDX feed. Market Leader took down the listings and continues to power members’ IDX sites.

Market Leader’s misappropriation of RealTracs’ IDX listings was not an isolated incident. Glenn Christoph, MLS director for Bay East Association of Realtors and Contra Costa Association of Realtors in the San Francisco Bay Area, said he discovered his MLS’s listings on RealEstate.com in early March, despite there being no agreement to feed listings to the site.

He contacted Market Leader and the listings were pulled down “within the hour,” Christoph said, but he had “no idea” how long they had been up there in the first place. Immediately thereafter, Market Leader submitted an IDX application to the MLS, but it was never approved due to objections similar to Janik’s.

“The site looks like a national syndication site, not a broker or an agent site, which is a whole other look and feel,” Christoph said.

In Brooklyn, N.Y., ZipRealty’s brokerage partner is Fillmore Real Estate. But Rich Schulhoff, executive officer for the Brooklyn Board of Realtors, which operates the Brooklyn New York MLS, said ZipRealty is obtaining the MLS’s IDX feed as a broker member, not as a vendor partnering with a local brokerage. Therefore, ZipRealty’s site is IDX-compliant, he said, because the site looks like that of the MLS participant: ZipRealty.

“I don’t think there’s any confusion whatsoever whose website you’re on there,” Schulhoff said.

On the southern end of the East Coast, however, Wes Wiggins, who until August served as general manager of Jupiter, Fla.-based Regional MLS, came to the opposite conclusion. There, in the Palm Beach area, ZipRealty also received an IDX feed from the Regional MLS as a broker member. Its Powered by Zip partner is Illustrated Properties.

Regional MLS is the predecessor of what is now BeachesMLS and South Florida MLS. The two MLSs formed after the dissolution of Regional MLS on July 31. Two of Regional MLS’s three shareholder associations subsequently merged and formed BeachesMLS with the remaining association launching South Florida MLS. The merger became official on Sept. 1. ZipRealty’s site still cites Regional MLS as the source of its Palm Beach listings.

Inman News first contacted RMLS about ZipRealty and RealEstate.com in April. At the time, Wiggins said both sites complied with IDX rules. The MLS reassessed the site in light of Janik’s comments in May and found them both to be noncompliant, though in ZipRealty’s case, the MLS’s judgment of the site differed from Janik’s.

“Upon closer look, when searching listings in our market area, ZipRealty is not in compliance because the prominent brokerage name on the site is not ZipRealty. We will be notifying ZipRealty and the brokerage that is prominently displayed,” Wiggins said.

“In the case of RealEstate.com, we cannot find any link to a broker or agent for RealEstate.com, which supports Laurie Janik’s comment that the site functions more like that of a third-party aggregator.”

RMLS notified both sites of the discrepancies and RealEstate.com stopped displaying RMLS listings. ZipRealty agreed to make changes to the site that would address the co-branding issues, Wiggins said.

“We have not performed followup audits on either site due to higher priorities, but will do so in the near future,” he said.

Ziprealty declined to comment on whether it had resolved the issues Wiggins noted. The company also declined to say whether it planned to update the source of its Palm Beach area listings on its website, though a spokeswoman noted ZipRealty is a broker member of the Realtors Association of the Palm Beaches.

Wiggins said the fact that RMLS found the sites compliant in its initial assessment is indicative of the need to better define “active participant” as well as a further review of IDX rules.

“Right now the active participant definition is fairly clear, but there are portions of the definition that are left up to the discretion of the service that can be perceived as conflicting,” he said.

“Whether or not we change the way we evaluate websites will depend upon how we address the active participant issue. We have been and will continue to move forward as an MLS, but we welcome direction from NAR as well.”

IDX rules provide some guidance regarding how the name of a brokerage firm appears on a website, namely in a “readily visible color and typeface,” but the requirement that the control of the site be apparent to a “reasonable consumer” makes interpretation of the policy’s implementation inherently subjective.

“I have seen different MLSs come to different conclusions with almost identical website designs,” said Brian Larson, a former MLS executive who’s now partner at the law firm Larson/Sobotka PLLC.

“I’m afraid that’s the problem with reasonable-person tests, but I can’t envision a better way of codifying the requirement.”

Inman News reporter Paul Hagey contributed reporting to this series.

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