Some brokers and MLSs are rushing to distribute property information for display on popular third-party real estate Web sites, and a paper released this week by a Minneapolis law firm encourages a thorough review and negotiation of terms to help ensure that the deals properly protect industry interests.
Brian Larson, a Minneapolis lawyer who works with dozens of Realtor associations and multiple listing services, said the paper was prompted by an industry trend to broaden online distribution channels for property information by working with a range of Web sites.
His firm began seeing contracts regarding this syndication of listings last year, and some industry participants "were just signing them without negotiating them," Larson said. That prompted the production of the research paper to serve as a guide for other industry participants that are considering such agreements.
Within the past couple of months, brokerage giants Realogy and Prudential Real Estate Affiliates are among the companies that announced new or expanded distribution deals to bring property listings information to unaffiliated Web sites. Sites like Cyberhomes, FrontDoor, Google, Trulia and Zillow have sought out these deals to bring fresh for-sale property listings information to their audiences.
Some MLSs want in, too, and Massachusetts-based MLS Property Information Network, a privately owned MLS that serves the New England area, this month announced that it will supply daily feeds of property listings information to real estate valuation and marketing site Zillow. The Houston Association of Realtors has also been a pioneer in sending a bulk feed of MLS data to Google.
With this backdrop of high-profile data distribution deals, Larson said the report will hopefully serve as a reminder for industry participants to take proactive steps in reducing their liabilities and protecting their data when forging ahead with content syndication and distribution.
The paper notes that there can be costs associated with setting up data feds to third-party sites, even if the data recipients do not charge any fees. For example, there may be technical costs in setting up and supporting the data feeds.
A subsidiary of the Florida Association of Realtors trade group released a similar paper last year titled "Data Distribution on the Web" that offers sample licensing agreements offered by real estate sites and tips for those who are considering online data agreements.
Companies like Google, which seek to aggregate for-sale property information from a range of sources, are referred to in Larson’s paper as commercial distributors, while listings syndicators are described as companies like Threewide and Cyberhomes that receive data from MLSs and brokers and then transmit that data for display at multiple sites.
"We understand that brokers are anxious to get their listings marketed, that MLS leaders want to deliver value to brokers, and that these factors encourage haste," the paper states. "In light of the risks involved … we think excessive haste is unreasonably risky."
The paper states that the intent is not to discourage real estate industry participants from pursuing listings syndication. "We propose only that MLSs and brokers consider all the risks and costs before agreeing to any particular deal."
Standard contracts drawn up by data recipients "often place legal risks squarely on MLSs," the paper states, though they are generally agreeable to negotiating the terms of these contracts.
Misuse and currency of property data are among real estate industry participants’ concerns when entering into data distribution agreements, according to the paper. "Many brokers and MLSs are concerned and agitated when listings appear on national Web sites weeks, months and even years after they become inactive," though most listings distribution and syndication agreements drafted by data recipients "are silent on the … obligation to remove inactive listings."
The paper cited an example of contract language that could give the data recipient "almost complete control of the listing data." Likewise, contracts drawn up by data recipients often seek to place the lion’s share of liability on the data provider.
Larson’s paper recommends that MLSs and brokers consider the adoption of a data use policy. Such guidance on data distribution could serve useful for MLSs in reducing antitrust risks by having a clearly stated policy to guard against the perception that actions taken are a part of an illegal collective boycott, for example.
Because brokers have liability for property listings information that is disseminated by real estate agents, Larson said that brokers should have a policy that specifies "where listings from its firm can go, so that agents can understand when they should be uploading listings to Web sites and when they shouldn’t," Larson said.
"For brokers not to be engaged in decisions about advertising, it puts their brand at risk — it puts their inventory at risk, I think," he said.
Data distribution deals should also take into account copyright protections, as a real estate photographer may have authorized photos to appear in an MLS but not at other Web sites, Larson said.
When the MLS is acting as the lead in the data distribution agreement, brokers should have ample choice in how to manage the distribution of property data, he said. There are antitrust risks if the MLS is making distribution decisions without the consent of brokers.
Some of the key priorities in establishing data agreements are to ensure that the broker or MLS "isn’t making promises about the data that it can’t keep," he said, such as ensuring that the data is free from any defects; and that the use of the data by data recipients is well defined and properly restricted.
Marlow Harris, a Seattle real estate agent, shared an experience at her blog about the potentially broad risk of content control for real estate professionals on the Internet. She said in her post that even after she cancelled her subscription to a particular Web site, "I was told by a representative of the company: ‘Please note the Web site still remains live online so it can be resold by our sales team.’ "
She said that her name, photo and contact information had been stripped from the site, but "all of the original content and photos" remained.
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