Editor’s note: This story has been updated to note that Redfin has suspended its agent Scouting Reports in the Washington D.C. marketpending a review by the regional MLS, MRIS.
Realtor associations and Realtor-affiliated multiple listing services may have the legal right to change their rules in order to prevent technology-based brokerage Redfin and other Virtual Office Website (VOW) operators from publishing agent performance data culled from MLS sold data.
But any prohibitions on providing agent performance data to clients would have to apply to traditional, brick-and-mortar brokerages too, said the CEOs for Redfin and Arizona’s largest MLS.
Redfin says the agent "Scouting Reports" it began making available to registered users in 14 markets Thursday are intended to help consumers choose an agent.
The reports analyze sold data from MLSs in an attempt to show how many homes an agent has sold during the past three years, the average number of price drops for each listing sold, and median sale price. Redfin is making similar statistics available for agents who represented buyers.
Tempe, Ariz.-based Arizona Regional Multiple Listing Service Inc., the largest MLS in Arizona, today warned Redfin that a review of a random sampling of agent performance data displayed by the Seattle-based brokerage turned up a number of errors.
Redfin says the accuracy issues identified by ARMLS are largely confined to Arizona and are being addressed today.
ARMLS said only a portion of some agents’ listings and sold transactions were displayed in the reports, and that other agents were not represented at all. Redfin’s Scouting Report also failed to display listings that closed under agents’ former brokers, the MLS warned in a blog post.
While Redfin may have the legal right to display agent performance data, "ARMLS believes that the right to publish information carries with it the obligation to publish accurate information, whether or not that obligation is specified in MLS Rules," ARMLS said.
Phoenix-based broker and blogger Jay Thompson said he ran his own accuracy check, looking up about 50 agents, and found about 20 percent weren’t associated with the correct brokerage.
The number of days properties were on the market seemed "way off everywhere," Thompson blogged, noting that there appeared to be "little to no recognition of agent teams" — raising the possibility that only team leaders and not team members will get credit for closing transactions.
ARMLS CEO Bob Bemis told Inman News that Redfin is "being very responsive" in working to address accuracy issues.
In the Phoenix market, Bemis said the brokerage’s Scouting Reports seem to have been tripped up by the recent acquisition of one of Arizona’s largest real estate brokerages, John Hall & Associates, by Las Vegas-based Realty One Group Inc.
Transactions that agents completed when they were with John Hall are not showing up in the Redfin Scouting Reports, Bemis said, and as a result Redfin is erroneously showing many Realty One agents as having completed no transactions in the last three years.
"I think it’s fairly easy to correct," Bemis said, and ARMLS is working with Redfin today on how to do that.
Redfin CEO Glenn Kelman said the brokerage would stop generating Scouting Reports based on ARMLS data "for a few hours to fix it, and then we’ll turn it back on once we think we’ve gotten it right."
Kelman said a bug that affected the "days on market" calculation has already been addressed.
"The quality of the data that the MLSs provide is very good," Kelman said. "We just need to represent it accurately on our website."
Redfin’s agent Scouting Reports were initially available in Phoenix; Sacramento; the San Francisco Bay Area; Los Angeles and Orange counties; San Diego; Denver; Chicago; Boston; Las Vegas; Long Island, N.Y.; Portland, Ore.; Dallas and Austin, Texas; and Washington, D.C.
On Friday afternoon, Redfin posted a notice to consumers in the Washington, D.C. market saying it had suspended access to the Scouting Report pending a review by the MLS in the region, Metropolitan Regional Information Systems (MRIS).
"There has been no known violation of MRIS data-sharing rules, but our initial partner agreement required us to notify MRIS in advance of material changes to the website, which we failed to do," Kelman said in the notice. Since joining MRIS in 2007, he said, Redfin had never submitted site upgrades to MRIS for review, but "the changes represented by the Scouting Report are, from MRIS’s perspective, more material."
Thompson said he’s "long been a fan of transparency," and said if Redfin can resolve its accuracy issues and also provide some education for consumers and statistics for comparison, "then they are on to a winning thing here."
Consumers have no way of knowing whether 47 days on market is above or below average, for example, unless they are provided additional context, Thompson said.
Not all agents and brokers have been so accepting, he noted.
Thompson said reaction from agents and brokers has ranged from "No problem — I’ve got nothing to hide," to "I’m glad I have my attorney on speed dial."
Bemis said there’s been a similar mix of reactions from ARMLS board members. While some support Redfin’s right to display agent performance data, others are questioning it, he said.
The Seattle-based brokerage is one of a growing number employing a "virtual office website," or VOW, to provide more in-depth property listings data to consumers who provide a username and password. The data on property listings, which is comparable to what agents see when they log in to their MLS, often includes previous sales.
The right of brokerages to operate VOWs was spelled out in a 2008 legal settlement between the U.S. Department of Justice and the National Association of Realtors. The settlement prohibits Realtor associations and Realtor-affiliated MLSs from discriminating against VOWs.
"The standard the Department of Justice established in its antitrust lawsuit against MLSs is that any information we can share between agents and clients in person we can also share electronically with registered customers," said Brian Selner, Redfin’s product management director, in comments on the Redfin corporate blog. "It is the agreement which grew out of this lawsuit that tends to govern how MLSs govern data-sharing."
Bemis said that nothing in ARMLS’ rules prohibits brokerages from providing agent performance data to their clients.
"The way I read the model rules for VOWs, which were agreed to by NAR and (the Justice Department), the basic guideline is you have to treat VOW brokerages exactly the same way you treat brick-and-mortar brokerages," Bemis said. "I find no prohibition that would have prevented a brokerage, whether it’s a brick-and-mortar (company) or a VOW, from slicing and dicing sold data and creating the reports Redfin created."
But Bemis predicted "a lot of agents and brokers will disagree, and insist we revisit our rules."
As long as any rule changes apply equally to all brokerages, regardless of whether they employ a traditional or VOW model, Bemis said it’s possible a rule change banning the provision of agent performance statistics to consumers could be worded so that it complied with the settlement between the Justice Department and NAR.
Whether that would be a good business decision is another matter, Bemis said.
"One of the hardest things for real estate brokers and agents to come to grips with is the growing demand of the consumer for complete, honest and transparent information," Bemis said. "What we’re seeing in many areas is: If the brokers don’t provide it, someone (else) will," he said, citing Zillow’s home valuation estimates as an example.
Kelman, for his part, questions whether Realtor associations and MLSs would be able to defend or enforce a ban on the provision of agent statistics.
"It’s certainly possible that MLSs will change their rules. Then it becomes a question of whether those rule changes are within the provenance of this settlement between NAR and DOJ," Kelman said.
"We think it would be difficult to enforce a rule whereby agents have access to this information and aren’t allowed to share (it) with their clients either in person or on the Web, but that would be the standard we would all have to cleave to: ‘If I can’t publish it on the Web, we can’t talk about it in person.’ "
That’s "a dangerous path" to start down, Kelman said, arguing that brokers should take charge of the provision of information rather than leave it to websites not affiliated with an MLS. Those sites will present less accurate information and be less accountable, Kelman said, charging agents for the leads they generate.
"I just don’t want us to put our heads in the sand on this one," Kelman said. "There is a way we can do this that will help the good agents at every brokerage."
The debate that’s playing out in the industry since Redfin launched its Scouting Reports has already taken place within the brokerage, he said, with some agents questioning why the company would publish data that might make them look bad.
"A Redfin agent is not the best choice in every neighborhood," Kelman said. "We decided if we don’t do it, somebody else outside the real estate industry will, and we would rather have reliable info up on the site."
That’s essentially the same argument made by Bob Hale, CEO of the Houston Association of Realtors. Last year, HAR, which operates Texas’ biggest MLS, briefly offered a tool that allowed consumers to see which agents had the most transactions and listings within a user-defined map area. HAR quickly disabled that feature of its "Realtor Match" tool when agents protested.