Hordes of angry Realtors have called on the National Association of Realtors to come out swinging against Zillow Instant Offers, the pilot program that lets consumers request quick offers from investors.
In response, the trade group has started disparaging Zillow Instant Offers, emphasizing its continued support of realtor.com and doubling-down on its mission to broadcast the value proposition of Realtors to the public.
NAR told Inman that Zillow Instant Offers is an “FSBO program,” shortchanges agents and may not have consumers’ best interests at heart. The Chicago-based trade group also published a blog post echoing those sentiments.
NAR warned that Zillow is still losing money and beholden to shareholders, not agents.
“As a publicly traded company that has yet to show a profit, Zillow will always be experimenting with ways to generate revenue as it must placate its shareholders,” the trade group said in the post.
“The company was not created to protect the interests of real estate professionals.”
Despite its posturing, NAR has its hands tied. The trade group knows from experience that zapping the Zillow program might violate antitrust laws.
Zillow Instant Offers allows homeowners to receive all-cash offers from a group of 15 large investors along with a side-by-side comparative market analysis (CMA) from a local Zillow agent advertiser.
The company says that through language on the site, email and phone calls, the test “aggressively” encourages homeowners to use agents, either by listing with the agent advertiser or helping the homeowner sell to one of the investors.
In a column, Zillow Chief Business Officer Greg Schwartz called out the company’s deep financial ties to the industry. “Seventy percent of our revenue is from working with more than 80,000 agents, teams and brokers who advertise with Zillow Group,” he wrote. “We believe in agents, and we always encourage consumers to work with them.”
Early results show that the program is generating significant consumer interest, according to Zillow. One agent had received more than 100 leads through Zillow Instant Offers and has converted at least two of them into listings, according to Zillow Group.
Many Realtors see the program as an attempt to elbow them aside and accused the company of breaking its promise to steer clear of the transaction.
At least two petitions have been launched calling on NAR to act, with one having racked up more than 12,000 signatures since debuting May 31.
The National Real Estate Post, a video blog, ran a segment on the topic, criticizing the trade group for inaction and questioning its value to members.
“Seriously, the[y] make over $200 million a year, and they’re literally watching Zillow take over the real estate industry,” the post said about NAR.
“I get no benefit per year from my NAR membership,” read a comment on the post.
“They provide useless affirmative advertising and beneficial lobbying for laws, that’s it,” said another. “Their slow reactions and illusion of security is their demise.”
Some have exhorted NAR to blackball Zillow Group or threaten to yank Realtor listings from the company’s portals if it doesn’t discontinue Instant Offers.
But NAR has said in response what plenty of other Realtors already knew — these options are non-starters because they would be illegal under antitrust laws.
“[It] would be unlawful for NAR to discourage its members from using any product or service provider; such decisions must be made independently by brokers and agents,” NAR told Inman when asked if it would comply with a demand made in the “Stop Zillow” petition.
It added that its guidelines for multiple listing services (MLSs) give brokers and agents the flexibility to withhold listings from a third-party recipient. “But, again, they must make this decision independently,” NAR said.
“NAR cannot sponsor or encourage a boycott,” the trade group added in a blog post.
The organization knows from experience what can happen if it tries to knee-cap businesses.
In 2005, the U.S. Department of Justice (DOJ) sued NAR over industry attempts to curtail the content of property listings and control what companies could publish them. Tagged as anti-consumer by the DOJ, the case was settled in 2008.
Back then, fear of new business models and conflicts of interest spurred industry big shots to take aggressive action against startups with offbeat business plans or anything that competed with its coveted realtor.com investment.
So what will NAR do?
Asked if the group would take any steps in response to Instant Offers, NAR said it would continue to promote realtor.com and Realtors overall.
The organization has long aligned itself with realtor.com “to ensure that at least one portal available to consumers would recognize and promote the true value” of Realtors, it told Inman.
The listing portal “realtor.com continues to remain faithful to that ideal by refusing to accept FSBO listings and by not facilitating instant offers directly to homesellers without the use of a real estate professional,” it said.
The organization will do “the same thing we’ve always done” in the face of many business models designed to cut Realtors out:
“Undertake renewed efforts to remind the public, and to encourage and help members inform their clients and customers, of the value they bring to the real estate marketing and sales transaction, and the problems and risks sellers may encounter in marketing and selling their home without using a Realtor,” NAR said.
Bill Lublin, a broker-owner who has served on NAR’s Risk Management Committee, said that a U.S. Department of Justice (DOJ) investigation would cost associations and members “lots of time and money.”
“Our industry is competitive and Zillow is expert at exploiting that to obtain data feeds from agents, companies, offices and MLSs,” he said in the real estate Facebook group Inman Coast to Coast.
“It would take a firm resolve and the decision of a large group of brokerages not to use that particular portal to begin any sort of trend in the industry, and even then there will be those who see some perceived competitive advantage in remaining as providers of data.”